HSBC holds back client debit cards

Charlie Hamilton

• Last Updated: October 23. 2009 10:58PM UAE / October 23. 2009 6:58PM GMT

ABU DHABI // HSBC Bank Middle East will delay distributing debit cards to its 400,000 customers, bank officials confirmed yesterday.

The bank’s employees have been using the cards, which deduct the amount of purchases directly from a customer’s account, since July as part of a pilot programme. Account holders had been told they would start to receive debit cards in September, but bank officials said yesterday that the roll-out would begin by the end of this year.

HSBC Middle East, the only large retail bank in the country not to offer debit cards, declined to comment on the reasons for the delay or the details of the programme. Credit cards are generally more profitable for banks than debit cards because they allow customers to build up cumulative balances that can be paid off over time with interest. Debit cards, in contrast, deduct charges from the holder’s account immediately.

“We have had debit cards in the UK for many years. It’s strange that HSBC hasn’t introduced them already. Why should HSBC staff be afforded the luxury of not having to use credit cards when the customers are not?” said Marianne Burroughs, 30, an Abu Dhabi teacher from Sunderland, in the UK.

According to details released by the bank in July, customers would not have to pay a surcharge to use the cards, which would also give ATM access.

A statement from the bank said it had been “working hard” to provide debit card facilities to its customers in the region.

Thimal Perera, the regional head of direct channels and cards, said: “We started with Qatar and Bahrain and will be extending this to our client base in UAE in this last quarter. In the UAE, we are in the pilot stage and have issued cards to our staff, who are currently enjoying this facility and at the same time giving valuable feedback.”

Nigel Clifford, 41, an engineer from Brighton in the UK who now works in Abu Dhabi, said he was disappointed at the delay.

“I don’t like the current system because it means you are forced to rely on always being near an ATM and carrying around large amounts of cash,” he said.

The Consumer Credit Counselling Service, a non-profit body offering help to people in debt, said consumers would benefit from being able to use both cards.

“Debit cards are very useful because they allow people to keep a close track on their spending while credit cards are good for buying expensive one-off items, allowing people to manage the repayments over a longer period,” said Tom Howard, a spokesman at the group. “Credit cards themselves are not necessarily a problem; it is the mismanagement of credit that is the problem.”

Stuart Birch, a financial consultant from Acuma Wealth Management, said: “You almost have to have a credit card to live in the UAE.

If they are used in the correct way, they can be a useful tool, but they are typically the most expensive way of borrowing money. It is easy for people to forget how much they are borrowing and then load up their cards. I have seen cases where people have gone wild and spent far too much money on credit cards, and their monthly repayments are almost equal to their salaries.” RAKBank, Mashreq, Standard Chartered, Barclays, Citibank, ADCB, NBDA, Abu Dhabi Islamic Bank, Dubai Islamic Bank, NBAD, Emirates NBD and Dubai Bank all offer debit cards for savings and current accounts.

chamilton@thenational.ae