The world's biggest electronic payment network is tapping into burgeoning demand for prepaid credit cards among the region's youths.
Transactions using Visa prepaid cardsgrew by 182 per cent in the Middle East last year, making the region one of the fastest growing for the company, said Scott Salmon, the head of prepaid global market expansion for the company.
Visa predicts card transactions will top US$250 billion (Dh918.19bn) in Central Asia, the Middle East and Africa next year.
Prepaid credit cards, which require a deposit before use, are a halfway house between debit cards and credit cards. They allow users to top up their cards as they do with prepaid mobile phones, allowing banks to generate interest on those deposits in the meantime.
In some cases, they allow for small lines of credit, which are secured by the initial deposit.
However, prepaid credit cards, which are marketed mainly to young adults and people with lower incomes, have already drawn criticism in the US because of high fees. "There are a number of important factors driving this growth, including globalisation of the workforce, increasing spending power among youth, [and] a general shift from paper to electronic payments," said Mr Salmon.
RAKBank has aggressively targeted this section of the market in the UAE, although other banks, including Emirates NBD and National Bank of Abu Dhabi, also offer prepaid cards.
Julien Faye, the head of financial services at the business consultancy Bain & Company Middle East, said prepaid credit cards allowed banks to serve segments of the market that they otherwise tended to avoid.
"The problem for the banks with credit cards and debit cards is that it's difficult for them to tap into the huge part of the market which is risky, less well-paid, or with no regular salary," Mr Faye said.
Because those earning low wages tended to spend their income quickly, "usage of direct debit cards isn't always optimal for end users or even the banks", he said.
But intense competition in this nascent market has generated controversy in the US. The Kardashian Kard, a prepaid credit card marketed by the reality show family, was pulled from the market last year after the Connecticut state attorney general, Richard Blumenthal, questioned the legality of the card's "pernicious and predatory fees".
These included monthly charges, loading fees, activation and cancellation fees, and a fee for talking to a call centre operator - all of which Mr Blumenthal said made the card unsuitable for the "financially unsophisticated" young adults to whom it was marketed.
Many banks have competed aggressively for the prepaid credit card market, seeking to capitalise on micropayments associated with computer gaming and digital music downloads. Banks have sought a foothold in this market against PayPal, a dominant online payments provider, and prepaid credit cards are seen as one way of securing a piece of the business.
Francesco Burelli, a principal at the consultancy Value Partners, said "the online games segment alone has 400 million active users worldwide, all ripe for a prepaid product to support swift purchase and download of new games".
ghunter@thenational.ae
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Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
Confirmed%20bouts%20(more%20to%20be%20added)
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Alan%20Wake%20Remastered%20
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Recipe
Garlicky shrimp in olive oil
Gambas Al Ajillo
Preparation time: 5 to 10 minutes
Cooking time: 5 minutes
Serves 4
Ingredients
180ml extra virgin olive oil; 4 to 5 large cloves of garlic, minced or pureed (or 3 to 4 garlic scapes, roughly chopped); 1 or 2 small hot red chillies, dried (or ¼ teaspoon dried red chilli flakes); 400g raw prawns, deveined, heads removed and tails left intact; a generous splash of sweet chilli vinegar; sea salt flakes for seasoning; a small handful of fresh flat-leaf parsley, roughly chopped
Method
▶ Heat the oil in a terracotta dish or frying pan. Once the oil is sizzling hot, add the garlic and chilli, stirring continuously for about 10 seconds until golden and aromatic.
▶ Add a splash of sweet chilli vinegar and as it vigorously simmers, releasing perfumed aromas, add the prawns and cook, stirring a few times.
▶ Once the prawns turn pink, after 1 or 2 minutes of cooking, remove from the heat and season with sea salt flakes.
▶ Once the prawns are cool enough to eat, scatter with parsley and serve with small forks or toothpicks as the perfect sharing starter. Finish off with crusty bread to soak up all that flavour-infused olive oil.
ON%20TRACK
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Tightening the screw on rogue recruiters
The UAE overhauled the procedure to recruit housemaids and domestic workers with a law in 2017 to protect low-income labour from being exploited.
Only recruitment companies authorised by the government are permitted as part of Tadbeer, a network of labour ministry-regulated centres.
A contract must be drawn up for domestic workers, the wages and job offer clearly stating the nature of work.
The contract stating the wages, work entailed and accommodation must be sent to the employee in their home country before they depart for the UAE.
The contract will be signed by the employer and employee when the domestic worker arrives in the UAE.
Only recruitment agencies registered with the ministry can undertake recruitment and employment applications for domestic workers.
Penalties for illegal recruitment in the UAE include fines of up to Dh100,000 and imprisonment
But agents not authorised by the government sidestep the law by illegally getting women into the country on visit visas.
Company%20profile
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
MEDIEVIL%20(1998)
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The biog
Born: near Sialkot, Pakistan, 1981
Profession: Driver
Family: wife, son (11), daughter (8)
Favourite drink: chai karak
Favourite place in Dubai: The neighbourhood of Khawaneej. “When I see the old houses over there, near the date palms, I can be reminded of my old times. If I don’t go down I cannot recall my old times.”
The specs
Engine: 4-litre twin-turbo V8
Transmission: nine-speed
Power: 542bhp
Torque: 700Nm
Price: Dh848,000
On sale: now
Kill%20
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BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
RedCrow Intelligence Company Profile
Started: 2016
Founders: Hussein Nasser Eddin, Laila Akel, Tayeb Akel
Based: Ramallah, Palestine
Sector: Technology, Security
# of staff: 13
Investment: $745,000
Investors: Palestine’s Ibtikar Fund, Abu Dhabi’s Gothams and angel investors
The specs
Engine: 3.8-litre, twin-turbo V8
Transmission: eight-speed automatic
Power: 582bhp
Torque: 730Nm
Price: Dh649,000
On sale: now
Company%20Profile
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Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
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