Card growth in Lebanon has been restricted by high fees and a lack of infrastructure. However, there are signs of positive growth as a result of moves to allow tax and utility bill payments by debit or credit card, and the rising popularity of prepaid cards for the purposes of social and humanitarian assistance
Cash remains a popular mode of payment in Lebanon, particularly in rural and suburban areas. Inadequate infrastructure and high transaction fees charged on card-based payments have restricted the growth of electronic payments.
Payment card penetration stood at 45.8 cards per 100 individuals in 2015 – lower than regional peers such as Iran (316), the UAE (147.3), Kuwait (108.3), Bahrain (106.6), Israel (103.2), Oman (91.4) and Saudi Arabia (82.9).
However, with the government’s financial inclusion initiatives and the adoption of advanced technology such as EMV and contactless, penetration is expected to rise.
In December 2015 the government introduced a new system, allowing Lebanese residents to pay utility bills, business licenses and property tax by debit or credit card.
The percentage of the population aged 15 or above with a bank account rose from 37% in 2011 to 49.8% in 2015, according to the World Bank’s Global Findex survey. Rising banking penetration is anticipated to support the growth of debit cards in Lebanon.
Lebanese banks began offering credit cards in 1995 to serve high-income consumers and frequent travellers. However, the introduction of a revolving credit facility in 2002 pushed credit card market growth through the concept of mini-loans, which provided temporary liquidity solutions to consumers. Credit card penetration in Lebanon is still very low, at 12.3 cards per 100 individuals in 2015.
Banks mainly focus on offering reward programmes and value-added services to encourage credit card use. These incentives are considered a driver of credit cards in Lebanon, with cashback, loyalty and mileage reward points being the most successful programmes.
Byblos Bank launched the World MasterCard credit card in May 2016. Cardholders are offered free membership of the World MasterCard Travel Program, providing discounts at hotels and restaurants worldwide.
Similarly, Bank Audi partnered with Middle East Airlines to launch the Corporate Cedar Miles card in July 2015. Cardholders are offered benefits such as travel cover, a purchase protection programme, corporate deals, and savings on hotel bookings.
Emergence of contactless technology
Contactless technology is slowly gaining prominence in Lebanon. Creditbank offers contactless cards equipped with either Visa payWave or MasterCard PayPass technology.
The bank also offers contactless stickers, which can be attached to a mobile phone or identity card and be used to make payments. Bank Audi launched cards with contactless functionality in 2013, and in June 2014 it partnered with Visa to launch debit cards with Visa payWave technology.
Bank Audi partnered with MasterCard to launch Tap2Pay NFC wearables in March 2015. The bank offers NFC watches and bracelets, each allowing consumers to make up to 10 transactions per day.
E-commerce to support card payments
E-commerce grew in value from $133.5m in 2011 to $435.7m in 2015, at a compound annual growth rate of 34.41%.
Growth was driven by the presence of secured electronic payment solutions.
Banks and payment providers also supported the growth of e-commerce by offering customized payment solutions.
Bank Audi partnered with MasterCard and Visa to launch security tools for online payments in March 2016. The bank offers 3D-Secure and Tokenization services. While the 3D-Secure service offers a password for online transaction, Tokenization replaces the cardholder’s 16-digit card number with a token number for use in online transactions.
Bank Audi and Credit Libanais introduced e-commerce programmes in collaboration with online payment gateway Net Commerce. Bank Audi offers the Audi e-payment internet gateway, providing a secure payment processing service for merchants.
Similarly, Blom Bank provides the eBlom online payment gateway. In partnership with Net Commerce and the Ministry of Finance, Credit Libanais provides an e-service that enables citizens to pay property tax online using Visa and MasterCard cards.
Prepaid cards record robust growth
Lebanon’s prepaid card market has grown rapidly since 2011 in terms of both the number of cards in circulation and the total value transacted. To prevent money laundering and the misuse of prepaid cards, the central bank issued a circular in March 2016, directing financial service providers to discontinue issuing and marketing prepaid cards.
However, the circular was amended in May the same year and permitted banks to issue prepaid cards to customers who are already account holders and therefore have a financial history. International issuers are also permitted to issue prepaid cards for use in social and humanitarian assistance at the central bank’s approval.
The central bank of Lebanon is responsible for supervising and developing the banking sector.
In 1967, the Banking Control Commission (BCC) was created within the central bank. It is an independent commission which regulates banks and ensures their compliance with legal provisions. The BCC manages the records of all banks. Islamic banks are able to establish branches in Lebanon.