Bankers eye boom in credit card usage

This means the country’s financial sector has finally managed to overcome the misgivings and misconceptions surrounding credit card use and is also sophisticated enough to deal with security and fraud.

By May, there were 900 000 debit card holders and that number is expected to reach one million by the end of July. Part of this optimism is being driven by banks’ aggressive issuance of the card and the subsequent acceptance by both businesses and users, as the country’s commerce gets more sophisticated by the day.

By contrast, there are only 60 000 credit card holders. But the industry sees the debit card base as a launch pad for credit cards, with the potential market now estimated at half a million users.

Currently, 18 banks offer debit cards and have stepped up awareness campaigns on the benefits of credit card use.

Concerns brought on by the high rate of robberies directed against individuals and businesses, forced the industry to recommend the use of credit cards to cut down the holding of excess cash.

“We particularly encourage the use of credit or debit cards where possible as a precaution in the event of a robbery,” said Maj (Rtd) Jan Kamenju, director of the Security, Crime, Research and Information Centre. Catherine Mugambi, chairperson of the Kenya Credit and Debit Card Association, said: “There are still major misconceptions about credit cards and the 1980s experience with Diners Card will take a while to wear off, but I see an increase in credit card use in the next two or so years time.”

She further said: “It is a realistic expectation and certainly debit card holders are aware of the credit card; the only trouble is that they are afraid of it.”.

She said that a majority of credit card users are expatriates or Kenyans who have lived abroad where the credit card is an everyday necessity. The campaign by banks now is to promote a wider use among Kenyans.

“Frequent travellers and top corporate executives are already receptive but the bigger market is still resistant,” she said.

Two months go, Visa Card had an inter-bank promotion with prizes designed to encourage credit card holders to use their cards more and also attract potential users.

The optimism in the industry is reinforced by the growth of consumerism in the capital city and other major urban areas, which is driving consumption of luxury goods and utility products in the now burgeoning mall and supermarket culture.

“We are seeing increased preference for the credit cards, so we are hoping for more users,” says Joseph Mwiraria, head supervisor at the Downtown Nakumatt supermarket branch. Credit card use has reduced the problems of loose change at checkout tills, which is a problem with many businesses too.

But security concerns still dog the sector. “We foiled a case last week when a fraudster attempted to use a stolen American Express card,” said Mr Mwiraria of Nakumatt.

According to statistics by the Kenya Credit Card association, an average of Ksh10 million (US$138 888) of the Ksh100 million (US$1,38 million) sector, is lost through fraud annually.

The industry has responded by introducing training for outlets to detect fraud. ‘ The East African Standard.

July 2006
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