The Law Enforcement Forces (LEF) have called on the Central Bank of Iran to work on integration of debit cards owned by each individual to reduce the risk of fraud and selling bank cards to money mules. The CBI, however, has other solutions.
Increase in financial crime using rented bank cards has become a source of concern for the LEF. In a recent interview with ISNA, Tehran Police Chief Brigadier General Hossein Rahimi said, "Owning multiple bank cards has increased the risk of criminality. Fraudsters easily persuade cardholders to rent their less-used debit cards for a fixed monthly payment."
He proposed integration of debit cards issued by different banks in a single bank card or integration of bank cards with other smart cards like the ID card or driving license, to minimize the temptation of lending bank cards and prevent legal consequences for cardholders.
According to the official, fraudsters and money mules make use of other people’s bank cards for illegal operations, money laundering or evading taxes, while the real owners of the bank cards are legally responsible for such illegal activities.
Mehran Moharramian, the CBI deputy for innovative technologies, says that integration of bank cards entails a highly time-consuming and complex procedure and would likely create more problems.
"It must be said that the risk of selling bank card information would not be reduced by eliminating physical cards simply because criminals can access bank accounts electronically by using cardholders' account information," he said.
"Indeed individuals should be thoroughly informed about the whole range of legal consequences of lending bank account to others…”
The senior official referred to the technical and legal constraints of integrating bank cards and other smart documents. "The types of information in bank cards is much different from other smart cards."
Besides, there would be a regulatory challenge regarding the issuer of an integrated card because each of the necessary document is issued by a different state/government authority, he stressed.
Moharramian called on policymakers to create a balance between crime and punishment as a deterrent and to discourage financial fraud.
Card Data
CBI data shows that banks issued more than 420 million cards (debit cards, credit cards, and prepaid cards) up until mid-July.
This is while, data released by Shaparak, the company in charge of Iran's domestic payment network, show 132.3 million bank cards were used at least once in the month to July 20, and the remaining were dormant. This was down 0.08% on the month before when it was 132.4 million, the company said in a report seen on its website.
Debit cards were the most common accounting for 95.09% (125 million) of the total active cards. Debit card use jumped 0.04% during the period.
More than 21.78% debit cards were issued by Bank Melli Iran, followed by Bank Sepah 11.93% and Bank Mellat and Bank Saderat 11.29% and 10.87%, respectively.
Credit cards are not a norm in Iran and for long were limited to VIPs. But now that seems to be changing. CBI policy of promoting credit cards as an instrument for microloan has encouraged banks to rethink.
The number of credit cards increased by 9.1% to 682,575 or 0.5% of the total cards used in the month. Bank Melli was the issuer of 78.15% of all credit cards, followed by Bank Saderat 4.9% and Bank Sepah 4.1%.
Electronic payments, namely the use of bank cards, are popular among Iranians, though it is not risk-free.
An estimated 3.77 billion retail transactions were processed by the domestic electronic payment network in the fourth month of the calendar year to July 20.
These were worth 6,857 trillion rials ($21.49 billion) – up 1.8% in volume and down 5.43% in value on the month before.
Transactional value jumped 22.33% on the same month last year when 3.37 billion transactions worth 5,605 trillion rials ($17.5 billion) were processed. In volume terms it was 11.68% higher y/y.
