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French Version

Unprotected credit card usage soars in Lebanon

Few Banks offer customers insurance to cover cost of theft

As credit card usage becomes increasingly common in Lebanon, the country's banks are expanding their card portfolios to target middle-class consumers, but insurance to protect card-holders from theft is unavailable.

The number of credit cards issued in Lebanon increased 40 percent in 2006 to 1.3 million - 1.24 million of which were purchased by residents, according to figures from the Central Bank.

Rising credit card usage follows the financial sector's move toward retail banking over the last few years, said BLOM Bank vice president, Nicholas Photiades. "The level of credit card penetration is in line with the volume of growth for Lebanese banks, and there is still room for more credit-card penetration," he told The Daily Star.

The number of retail outlets that accept credit card payment has grown to accommodate new card holders, said Nassib Ghobril, the head of research at Byblos Bank.

"We've not only had the number of [local] points of sale who accept credit cards increased steadily, but more Lebanese customers are using credit cards abroad," he said.

At the end of 2006, a total of 43,651 stores accepted credit cards, compared to only 41,107 in 2005, according to the Central Bank.

Randa Bdeir, the head of Electronic Banking and Business Development at Banque Audi, said both the number of new credit cards issued and the level of card usage has risen 40 percent annually in Lebanon, and 100 percent for Audi in particular. In addition to lobbying points of sale across the country to install credit card terminals, Audi has launched an aggressive marketing campaign to target users from different socio-economic profiles. As a result the bank's 33-card portfolio has expanded.

In 2006 they began offering an installment card to purchase consumer loans at 6 percent annual interest.

"This type of product is attracting a lot of new, middle-income customers who want to buy televisions, washing machines, and other consumer products," Bdeir explained.

The bank is currently "tackling" pharmacies, schools and hospitals, encouraging them to accept payment by credit card, Bdeir said. Colleges such as Sagesse and the American University of Beirut, and high schools like International College and Louise Wegmann should be ready to receive tuition payments by card as early as next term, she reckoned.

Audi also continues to woo high-end clients with cards targeted toward specific niche markets. A year ago, for example, Audi launched the "Shine" Master Card in partnership with about 15 retail outlets and spas. Made of mirror, with a limit of between $500 and $500,000 per month, the card not only allows women to check their reflection, but gives them discount packages at select retail outlets.

Like all banks in Lebanon, Audi does not offer customers insurance to protect them from theft - in contrast to countries with well-developed banking sectors where customers are given the option of paying an insurance premium to the bank to cover charges made before a card is reported stolen.

"We don't want to offer this insurance, because there is a potential for card holder abuse. I mean you could go to Chanel, buy a $10,000 suit, and then claim your card was stolen," Bdeir said.

Audi and at least 10 other Lebanese banks provide an SMS notification service for $1 a month. The system alerts card-holders to transactions minutes after they are made.

Lebanese Canadian Bank (LCB) is one of the few banks to provide the service free of charge, said the manager of a Beirut-branch LCB card division on condition of anonymity.

"No Lebanese banks cover costs before the card is reported stolen, because no one can prove if the transactions are made by the cardholder or the thief," he said, though clients have the option of paying a premium for a range of insurance packages.

During the war the payment card division of LBC was the only active branch of the bank.

"Clients wanted to raise their limit immediately so they could travel and some wanted cards within 24 hours," he said. Customer charges increased an average of 20 percent during the summer, he said.

Now his branch monitors the accounts of 30,000 card holders. They receive between five and six reports of card theft or loss per week, and alert clients to abnormal spending activity.

Beirut 19-03-2007
The Daily Star

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