Economy, Business And Markets

Credit Cards Coming in a Month

Banks issued 330 million cards in the last Iranian year,1.6 million of which were credit cards.Banks issued 330 million cards in the last Iranian year,1.6 million of which were credit cards.

The banking system will start issuing credit cards to gradually meet the customers’ needs for small loans and help pull "the real economic sectors" out of the prolonged recession, a statement by the Central Bank of Iran said on Friday.

Three kinds of credit cards will be offered: Golden, with a credit of 500 million rials ($14,000 at market exchange rate), Silver, with a credit of 300 million rials ($8,400), and Bronze, with a credit of 100 million rials ($2,800), based on the applicants’ creditworthiness, measured by banks.

According to Farshad Heydari, CBI’s deputy for supervisory affairs, “Cardholders would be charged at the common lending rates of the banking sector, set by the Money and Credit Council”.

The move also aims to lower speculative activities in the market, “leaving no chance for the use of fake invoices, when taking out loans from the banking sector,” according to the statement.

The credit cards would promote the quality of banking services and improve public opinion about the sectors.

Each person is allowed to have one credit card, according to the CBI’s website. Cardholders have one month to settle their debts and if they fail to do so, they will have to repay the amount in 12-36 installments.

“Banks are supposed to prepare the grounds for implementation of the plan by September 20,”he added.

Iranian banks currently issue credit cards, debit cards and gift cards, though the first type is not commonly used, as it is limited to VIP customers.

According to Shaparak’s data, banks issued 330 million cards in the last Iranian year (ended March 20, 2016), 1.6 million of which were credit cards. The numbers indicate that even those who managed to get credit cards did not use it, since only 2.64% of credit card transactions were recorded.

Bank Melli Iran accounted for 30.84% of the total credit cards issued and used last year. Bank Pasargad Iran, Bank Keshavarzi and Ayandeh Bank followed BMI, in terms of the total number of credit cards issued in this period.

Last year, CBI Governor Valiollah Seif unveiled an incentive package aimed at financing manufacturers and providing credit services to consumers. Credit cards up to 100 million rials were to be issued to help consumers purchase domestic durable goods, while card holders would be charged 12%.

However, the plan failed, due to restrictions on purchasable goods and eligible applicants.

But in the new plan, credit card holders are allowed to use the credit for buying all types of goods and services.

The Central Bank of Iran has announced in the past it was engaged in primary talks with foreign payment networks as well, including European companies.  

Japan’s JCB and China’s UnionPay cards are most likely to be the first international payment cards to enter Iran after the lifting of sanctions on January.