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Market Research Report

Payments Landscape in Iran: Opportunities and Risks to 2021

Published by GlobalData Product code 635182
Published Content info 41 Pages
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Payments Landscape in Iran: Opportunities and Risks to 2021
Published: May 3, 2018 Content info: 41 Pages
Description

Iran's payment card market recorded robust growth in terms of cards in circulation, transaction volume, and value during the review period (2013-17e), primarily supported by government initiatives to encourage electronic payments and reduce dependency on cash payments. Consumers are charged a fee for using cash to pay utility and mobile bills. Many banks refuse to accept bill payments through cash, forcing consumers to use cards. Barcode readers and POS terminals are installed in branches to facilitate bill payments using cards. Furthermore, many government organizations pay bonuses to their employees in the form of gift cards, which can only be used for making purchases but not for cash withdrawals. These initiatives have also led to an increase in the banked population. Consequently, the percentage of the population aged 15 or above with a bank account increased from over 87% in 2013 to more than 95% in 2017. The gradual adoption of contactless technology, supported by the availability of various alternative payment methods, is likely to drive the Iranian payment card market throughout the forecast period (2017-21f).

The Iranian government has taken several initiatives to increase credit card adoption and use. In September 2016, the CBI introduced a guideline under which banks are required to issue credit cards as part of its nationwide credit card scheme. However, card issuers must consider applicants' credit worthiness and monthly income before a credit card can be issued. Based on these parameters, banks can issue credit cards in three variants - Bronze with a maximum credit limit of IRR100m ($2,770.67), Silver with IRR300m ($8,312.01), and Gold with IRR500m ($13,853.35). No interest rate is levied on card holders if they clear their debt within one month. Card holders are also permitted to repay their debt over 12-18 instalments, with annual interest capped at 18%. According to Bank Melli Iran, nearly 20,000 individuals applied for credit cards within two days of the launch of the scheme.

To promote electronic payments and reduce dependence on cash, especially among the low-income segment, in April 2017 the government introduced a scheme called Yarakart. Under the scheme, banks can issue credit cards for low-income individuals, providing an alternative to bank loans. To complement this government initiative, Bank Keshavarzi introduced the Yarakart credit card in June 2017. To minimize chances of default, repayment is automatically made from the cash subsidy given by the government to the individual. The cards are only issued to individuals who are eligible to receive cash subsidies from the government, which also acts as collateral for the credit card-issuing bank. Iran Post Bank began offering Yarakart credit cards from February 2018. The card is available with a credit limit ranging between IRR10-50m ($277.07-1,385.34).

The adoption of alternative payments among Iranian consumers is slowly rising, as a result of the emergence of a number of payment options. The latest of these is the launch of the mobile wallet Keypod by Iran-based technology company FANAP, in partnership with Bank Pasargad in December 2017. Users can store multiple debit cards and bank account numbers on their smartphones, enabling them to make contactless payments. Earlier in October 2016, the Sekeh mobile wallet was launched by Bank Mellat. This service enables users to make contactless payments at POS terminals and also supports payments by scanning QR codes. Likewise, in November 2015 PayPing - a payment solution for P2P payments - was introduced in the country. The solution can be used for fund transfers among individuals as well as by vendors, schools, societies, and companies to receive payments from their customers.

The report "Payments Landscape in Iran: Opportunities and Risks to 2021", providetop-level market analysis, information and insights into the Iranian cards and payments industry, including -

  • Current and forecast values for each market in the Iranian cards and payments industry, including debit and credit cards.
  • Detailed insights into payment instruments including payment cards and cheques. It also, includes an overview of the country's key alternative payment instruments.
  • Analysis of various market drivers and regulations governing the Iranian cards and payments industry.
  • Detailed analysis of strategies adopted by banks and other institutions to market debit and credit cards.

Companies mentioned in this report:Bank Saderat Iran, Tejarat Bank, Bank Melli Iran, Bank Mellat, Bank Sepah, Bank Keshavarzi, Bank Pasargad, Parsian Bank, EN Bank, Bank Maskan, Parsian E-Commerce Company

Scope

  • The Iranian government has taken several initiatives to increase credit card adoption and use. In September 2016, the CBI introduced a guideline under which banks are required to issue credit cards as part of its nationwide credit card scheme. However, card issuers must consider applicants' credit worthiness and monthly income before a credit card can be issued. Based on these parameters, banks can issue credit cards in three variants - Bronze with a maximum credit limit of IRR100m ($2,770.67), Silver with IRR300m ($8,312.01), and Gold with IRR500m ($13,853.35). No interest rate is levied on card holders if they clear their debt within one month. Card holders are also permitted to repay their debt over 12-18 instalments, with annual interest capped at 18%. According to Bank Melli Iran, nearly 20,000 individuals applied for credit cards within two days of the launch of the scheme.
  • To promote electronic payments and reduce dependence on cash, especially among the low-income segment, in April 2017 the government introduced a scheme called Yarakart. Under the scheme, banks can issue credit cards for low-income individuals, providing an alternative to bank loans. To complement this government initiative, Bank Keshavarzi introduced the Yarakart credit card in June 2017. To minimize chances of default, repayment is automatically made from the cash subsidy given by the government to the individual. The cards are only issued to individuals who are eligible to receive cash subsidies from the government, which also acts as collateral for the credit card-issuing bank. Iran Post Bank began offering Yarakart credit cards from February 2018. The card is available with a credit limit ranging between IRR10-50m ($277.07-1,385.34).
  • The adoption of alternative payments among Iranian consumers is slowly rising, as a result of the emergence of a number of payment options. The latest of these is the launch of the mobile wallet Keypod by Iran-based technology company FANAP, in partnership with Bank Pasargad in December 2017. Users can store multiple debit cards and bank account numbers on their smartphones, enabling them to make contactless payments. Earlier in October 2016, the Sekeh mobile wallet was launched by Bank Mellat. This service enables users to make contactless payments at POS terminals and also supports payments by scanning QR codes. Likewise, in November 2015 PayPing - a payment solution for P2P payments - was introduced in the country. The solution can be used for fund transfers among individuals as well as by vendors, schools, societies, and companies to receive payments from their customers.

Reasons to buy

  • Make strategic business decisions, using top-level historic and forecast market data, related to the Iranian cards and payments industry and each market within it.
  • Understand the key market trends and growth opportunities in the Iranian cards and payments industry.
  • Assess the competitive dynamics in the Iranian cards and payments industry.
  • Gain insights into marketing strategies used for various card types in Iran.
  • Gain insights into key regulations governing the Iranian cards and payments industry.
Table of Contents
Product Code: FS0130CI

Table of Contents

  • Market Overview
  • Executive Summary
  • Card-based Payments
  • Alternative Payments
  • Payments Infrastructure & Regulation
  • Appendix
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