The basic credit card has come a long way since it was introduced to the world in the mid-1940s by Diners Club. Although it wasn't until the late 1980s that credit cards arrived in the Emirates, consumer expectations have grown quickly - and become more sophisticated.
These days, it is not enough to have quick access to credit via a card, albeit at the UAE's high rates. Instead, customers are demanding premium credit cards that reward them for their spending, such as on travel, dining and retail deals. PJ Hill, Visa's head of consumer products for the Middle East and North Africa region, explains why.
When were credit cards introduced into the UAE?
Credit cards were first introduced into the UAE during the late 1980s.
How has the premium card market evolved here?
The evolution of the premium credit cards began with standard credit cards issued by the consumer's bank. This gradually opened up the market for specialist credit-card companies that cross-sold other products, changing the way cards were offered and focusing on promotions to attract customers. Increased savviness from the consumer drove the market, which led to cards that offered charity donations linked to card spend and then on to co-branded reward cards, which have led to the premium cards that we are now familiar with.
What is this segment worth?
Sixty-five per cent of the Visa cards in circulation in the GCC are premium cards, a figure that has risen by 19 per cent since July last year. We have seen that the average spend on "high premium" cards is more than 10 times higher than on non-premium cards.
What is classed as a premium card?
A premium card is one that offers more than a regular card. This could mean higher spending limits, spending rewards, air miles with a particular airline, discounts at restaurants or hotels, access to special invitation-only events, access to airport lounges or free leisure pursuits such as golf.
Are they aimed solely at the high-net-worth demographic, or has this group widened over the past couple of years?
Premium cards are issued, like all credit cards, on the basis of certain criteria such as income and ability to repay the debt. In terms of demographics, premium cards are issued on a tiered basis such as mass affluent, core affluent and then high-net-worth individuals.
What is the future of the premium card market?
The future will involve more partnerships, more rewards, increased benefits and loyalty programmes.
Is it a saturated market?
There are millions of premium credit-card users in the UAE. This segment of the market still has room to grow as customers seek to find the card with the right bundle of offers to suit their needs. In a market such as the UAE, where the consumer experience is constantly evolving, the way in which they pay for that experience must evolve with them, which means a premium credit card to match their lifestyle. It is also worth remembering that this is a transient market with new expats arriving as well as people entering higher-profile jobs with matching incomes.
What do clients expect from their premium cards?
Put simply, we believe that clients expect a significant amount of value-add when they sign up for a premium credit card and this value-add must be in terms of their lifestyle. This is why we work with our financial and retail partners to develop packages that meet the needs of their clients when it comes to both the eligibility for the card itself and the additional offerings. Ultimately, we are talking about helping to provide lifestyle benefits at no additional cost for individuals and helping outlets to enjoy increased spending and repeat business.