Credit Cards Gaining Popularity in Iran

Iranians used 73 million bank cards by Dec. 20, of which 68 million or 93.29% were debit cards, the latest official data revealed. 

Gift cards and vouchers comprised 6.5% of the total cards used in the Iranian banking system.

The data released by Shaparak Company, the payment industry’s regulating body affiliated with the Central Bank of Iran, shows that 169,115 credit cards were used by Iranians during the one-month period, marking a 2.03% growth month-on-month. 

The number of credit cards has registered a significant increase since September when the Central Bank of Iran required lenders to offer credit cards to the public as part of the bank's plans to stimulate spending. 

According to Shaparak's data, 81,682 active credit cards were in circulation by Sept. 20.

CBI required banks to start offering credit cards at three credit levels, based on the applicants’ creditworthiness. The nationwide scheme was aimed at stimulating demand and replacing the defective micro-lending methods that banks use these days.

However, many banks balked at participating in the scheme citing lack of resources. The 18% interest rate–imposed by the Money and Credit Council–could be named as the main reason for banks' lackluster reception of the plan that they considered impractical. 

While the state-owned Bank Melli Iran–the country's biggest lender–seemed to have implemented the credit card scheme as advocated by CBI, Bank Pasargad Iran and Ayandeh Bank were private lenders that tweaked CBI rules, coming up with stricter conditions to offer credit cards. 

By Dec. 20, BMI had issued 64% of the total active credit cards, according o Shaparak. 

The market share of Bank Mellat, another big lender, has gone from zilch to 20% since the credit card initiative was launched in Sept. Surprisingly, the bank made no announcement that it was going to take part in the scheme.  

Pasargad and Ayandeh had a 4.7% and 3.7% share, respectively.

Bank Melli Iran also accounted for 21.68% of total active debit cards during the month ending Dec. 20. 

Bank Mellat and Bank Saderat Iran ranked second and third, accounting for 13% and 10% of total debit cards, respectively. 

Saderat accounted for 37% of total gift cards issued during the period. Tejarat Bank took the second spot, accounting for 17% of total issued gift cards. 

Fees

Shaparak also outlines the performance of acquiring banks. Bank Mellat was the acquiring bank for 34.5% of total transactions during the month ending Dec. 20. 

Parsian Bank and Bank Melli Iran followed, by accepting 7.39% and 7.12% of the total digital transactions respectively.

Mellat also had a 32.32% share in the worth of acquired transactions. Saderat and Bank Melli are the next best scorers at 12.45% and 10%, respectively. 

CBI regulations require acquiring banks to pay the fees when customers use bank cards for purchasing goods and services. Cardholders only foot the bill when transferring money or checking account balances.

Parsian Bank, another leading private lender, paid an average of 237 rials for every 100,000 rials worth of transactions, paying the highest fees in the banking system as an acquirer bank. 

Export Development Bank of Iran paid the lowest fees–an average of 17.84 rials for every 100,000 rials worth of transactions.

The issue is among key challenges for lenders, according to Shaparak, as “they have to balance between the interest earned from keeping the received money and all the fees they pay”.

Acquiring banks are also required to pay the fees for the rent and maintenance of POS terminals. Parsian has paid an average 782.89 rials for every 100,000 rials worth of transaction during the period.