Plastic is safe, more secure

The increase in debit card usage can be attributed to the deteriorating law and order situation.

KARACHI: In a country where financial institutions are aggressively pursuing the huge unbanked population, the use of plastic money, especially debit cards, is not just increasing but is expected to grow further, says Country Manager VISA for Pakistan and Afghanistan Amir Pasha.

VISA, with its headquarters in San Francisco, came to Pakistan in 1994 when Citibank launched the Citi VISA credit card. However, VISA transactions have taken flight over the past six years after local banks started issuing debit cards, explained Pasha.

The service provider is a beneficiary of this healthy growth in the financial sector. Given the country’s predominantly young population, there are millions who complete their first transactions through VISA services. “Pakistan is one of the emerging markets where consumers are more open to new technologies and try new things more frequently compared to some other markets.”

Explaining the company’s role, Pasha insisted that they are very different from banks because “[VISA] does not give you a credit card or urge you to spend money. We simply facilitate you in making transactions.”

What do consumers prefer? Debit cards, says Pasha, used mostly for shopping in malls and superstores, as an increasing number of merchants now accept plastic money.

Responding to a query on the impact of financial slowdown, he admitted to a reduction in the use of credit cards.  “Our credit portfolio has seen stagnation but our non-credit portfolio has grown,” he informed.

Interestingly, the increase in debit card usage, at least in Karachi, can be at least partially attributed to the deteriorating law and order situation. However, Pasha said that up country it is more fashionable to use plastic cards – Lahore being one example.

Fraud!

On the use of credit cards abroad, Pasha pointed to plastic money frauds as the reason behind the implementation of various security measures, including formal notification by customers to their banks every time they travel abroad.

Banks do this to secure their networks, which in turn also help keep a customer’s transactions safe. Given prior information, the bank can verify any transaction immediately by locating the customer when their card is used, explained Pasha. “There have been numerous instances where local cards were fraudulently used in Far East by organised gangs operating in the region,” he added.

The use of SMS services by local banks to inform debit card holders of all transactions, as they are carried out, has helped in reducing fraudulent activity. This becomes more significant as people are increasingly relying on electronic transactions owing to their transparency and efficiency, said Pasha.

Educating customers so that they can save themselves from frauds is one of the challenges, according to Pasha. With an increasing number of customers, the risk of fraud increases – which can only be reduced by collaborating with banks and other stakeholders.

Published in The Express Tribune, November 10^th, 2010.