B anker magazine recently covered an article on the use international debit cards in Iran, with the history of when their use was prevalent in society and where their usage stands today.
About 10 years ago, domestic banks in conjunction with Cypriot financial institutions attempted to run a service by which Iranian consumers could use those respective cards when travelling abroad. Many state-owned banks along with a few private ones offered a service by which customers would pay roughly $200-$1000 on average for a prepaid version of the well known brands. However, like in many other cases, Iranian private consumers got caught up in the onslaught of financial restrictions against Iran and these services were quickly shuttered by international authorities.
In 2007, it was Azerbaijan’s turn to try and offer a back door for Iranian consumers. The bank’s name was Royal Bank and had a brief existence in Baku. The move however turned out to be a scandal in Iran’s northern neighbor and eventually caught out many Iranians who just wanted cards to take abroad and go shopping.
Speaking on behalf of the 2,500 Iranian depositors of the closed Azeri bank, Vahid Bazaz-zadeh stated that these Royal Bank’s customers who had held Visa and MasterCard accounts lost.
Unfortunately after the Azeri episode the few thousand Iranian citizens lost a good chunk, if not all, of their money as the bank was based in a foreign jurisdiction. Due to the severity of the situation in Baku, many Iranian citizens seeking recourse on their funds were dealt a blow, with Visa and MasterCard not recognizing their accounts in the first instance.
Like a bad itch, the idea of prepaid Visa cards and MasterCards won’t go away. Now new companies – private financial companies and not banks this time – are offering the service in conjunction with some other unknown outfit abroad. One such company is Iranicard, an online outfit which supposedly can grant any Iranian citizen with enough cash; Visa Electron, Visa Debit, MasterCard, Maestro Debit and even American Express.
The Banker’s article goes on to say that in the present circumstances of international sanctions and the difficulty Iranians in general have, when transferring money, it is no wonder that these operations exist.
The article goes on to say with the help of companies like Iranicard and the likes, Iranians can now access their funds in foreign countries for a price. It adds that the service offers a range of different cards linked to different banks around the world, mainly in Easter European countries like Montenegro.
However, the Rouhani administration in recent months has warned against the use of the so-called credit cards, with banking officials warning against their use due to their unregulated nature within the country.
The Financial Tribune spoke with a banking expert in Tehran who stated that “these cards come with precautions before people rush into using them.”
Like the Azerbaijani cards before them, these cards are usually offered by third-party banks in former Soviet states providing no guarantees for Iranian cardholders. Also, in the event of a run on the bank like the one in Baku in 2007, the Iranian cardholder would likely be shortchanged if something were to go wrong. Because of the very nature of these card-offers, the companies running them may go under the radar.