Emerging Opportunities in Lebanon s Cards and Payments Industry Industry Size, Trends, Factors, Strategies, Products and Competitive Landscape Product Code: VR0918MR Published Date: May 2013 www.timetric.com
TABLE OF CONTENTS TABLE OF CONTENTS 1 Executive Summary... 7 2 Industry Attractiveness and Future Prospects of the Cards and Payments Industry... 9 3 Analysis of the Lebanese Cards and Payments Industry Drivers... 11 3.1 Macroeconomic Fundamentals... 12 3.1.1 Rising per capita income... 12 3.1.2 Stable GDP growth... 13 3.1.3 Declining unemployment rate... 14 3.2 Infrastructure Drivers... 15 3.2.1 Improving payment infrastructure... 15 3.2.2 Growing number of ATMs... 15 3.2.3 Increasing number of POS terminals... 16 3.2.4 Internet penetration... 17 3.3 Business Drivers... 18 3.3.1 Retail dynamics... 18 3.3.2 Emergence of contactless payments... 18 3.3.3 Rising demand for prepaid cards... 18 3.3.4 Growing e-commerce market... 20 3.4 Other Growth Drivers... 21 3.4.1 Travel sector... 21 3.4.2 Growing mobile commerce... 22 3.4.3 Increased focus on target product offerings... 23 3.5 Card Fraud Statistics... 24 3.6 Regulatory Framework... 25 3.6.1 Installation of ATM... 25 3.6.2 Types of card accepted in the country... 25 3.6.3 Regulation related to E-commerce... 25 3.6.4 Regulation with respect to anti-money laundering... 26 4 Emerging Consumer Attitudes and Trends... 27 4.1 Market Segmentation and Targeting... 27 4.1.1 Retail customers... 28 4.1.2 Corporate customers... 31 4.2 Consumer Preference Price, Convenience and Service... 32 4.2.1 Price... 33 4.2.2 Convenience... 34 4.2.3 Services... 34 5 Competitive Landscape and Industry Dynamics... 35 5.1 Debit Cards Category Share... 35 5.1.1 By bank... 35 5.1.2 By scheme... 36 5.2 Credit Cards Category Share... 37 5.2.1 By bank... 37 5.2.2 By Scheme... 38 Emerging Opportunities in Lebanon s Cards and Payments Industry Page 2
TABLE OF CONTENTS 5.3 Charge Cards Category Share... 39 6 Strategies Adopted by Key Operators... 40 6.1 Marketing / Product Strategy... 40 6.1.1 Debit cards... 40 6.1.2 Credit cards... 41 6.1.3 Prepaid cards... 44 6.2 Pricing Strategies... 46 7 Industry Size and Growth Potential... 47 7.1 Industry Share Analysis by Type of Card... 47 7.2 Total Industry Size and Forecast of Cards Industry... 48 7.2.1 Analysis by number of cards... 48 7.2.2 Analysis by transaction value... 49 7.2.3 Analysis by transaction volume... 50 7.3 Debit Cards Category Size and Forecast... 51 7.3.1 Analysis by number of cards... 51 7.3.2 Analysis by transaction value... 52 7.3.3 Analysis by transaction volume... 53 7.3.4 Other key performance indicators... 54 7.4 Prepaid Card Category Size and Forecast... 56 7.4.1 Analysis by segment open and closed-loop cards... 57 7.4.2 Analysis by transaction value... 59 7.5 Charge Card Category Size and Forecast... 60 7.5.1 Analysis by number of cards... 60 7.5.2 Analysis by transaction value... 61 7.5.3 Analysis by number of transactions... 62 7.5.4 Analysis by frequency of use... 63 7.6 Credit Cards Category Size and Forecast... 64 7.6.1 Analysis by number of cards... 64 7.6.2 Analysis by transaction value... 65 7.6.3 Analysis by transaction volume... 66 7.6.4 Other key performance indicators... 67 8 Company Profiles, Product, and Marketing Strategies... 69 8.1 Byblos Bank S.A.L.... 69 8.1.1 Strategies... 71 8.1.2 Debit cards offered... 71 8.1.3 Credit cards offered... 71 8.1.4 Prepaid cards offered... 73 8.1.5 Charge cards... 74 8.2 Bank of Beirut... 75 8.2.1 Strategies... 76 8.2.2 Debit cards offered... 76 8.2.3 Credit cards offered... 77 8.2.4 Prepaid card offered... 80 Emerging Opportunities in Lebanon s Cards and Payments Industry Page 3
TABLE OF CONTENTS 8.2.5 Charge cards offered... 81 8.3 Banque Libano-Française... 83 8.3.1 Strategies... 84 8.3.2 Debit cards offered... 84 8.3.3 Credit cards offered... 87 8.3.4 Prepaid cards offered... 88 9 Appendix... 89 9.1 Methodology... 89 9.2 Contact Us... 89 9.3 About Timetric... 89 9.4 Disclaimer... 90 Emerging Opportunities in Lebanon s Cards and Payments Industry Page 4
LIST OF FIGURES LIST OF FIGURES Figure 1: Growth of Various Card Categories in Lebanon, Review and Forecast Periods... 9 Figure 2: Growth Potential of the Lebanese Cards and Payments Industry by Area of Usage... 10 Figure 3: Lebanon Cards and Payments Industry Drivers... 11 Figure 4: Per Capita Income (Million LBP) in Lebanon, 2008 2012... 12 Figure 5: Lebanese GDP Growth Rate (%), 2008 2017... 13 Figure 6: Lebanese Unemployment Rate (Percentage of Total Labor Force), 2008 2012... 14 Figure 7: Number of ATMs (Thousands) in Lebanon, 2008 2017... 15 Figure 8: Number of POS Terminals (Thousand) in Lebanon, 2008 2017... 16 Figure 9: Lebanese Internet Penetration Rate (%), 2008 2012... 17 Figure 10: Lebanese Taverna E-Gift Card Format... 19 Figure 11: Internet Penetration in the MENA Region (%), 2012... 20 Figure 12: Lebanon Outbound and Inbound Travel Segment Volume (Million), 2008 2012... 21 Figure 13: Lebanese Smartphone Users (Million), 2011 2012... 22 Figure 14: Type of Cards Offered by Banks in Lebanon... 23 Figure 15: Lebanon Card Fraud Statistics (LBP Million), 2008 2012... 24 Figure 16: Lebanon Cards Industry Segmentation... 27 Figure 17: Cards Offered to Specialized Professionals in Lebanon... 28 Figure 18: Lebanese Population Distribution by Age (%), 2012... 29 Figure 19: Student Cards Offered by the Bank of Beirut in Lebanon... 29 Figure 20: Cards Targeting HNWIs by Byblos Bank in Lebanon... 30 Figure 21: Corporate Cards Offered in Lebanon... 31 Figure 22: Consumer Preferences on Various Card Types... 32 Figure 23: Annual Fees for American Express Charge Cards in Lebanon... 33 Figure 24: Value Added Services on Byblos Bank s Visa Platinum Credit Card... 34 Figure 25: Lebanese Debit Card Category Share by Bank (%), 2011... 35 Figure 26: Lebanese Debit Card Category Share by Scheme (%), 2011... 36 Figure 27: Lebanese Credit Card Category Share by Bank (%), 2011... 37 Figure 28: Lebanese Credit Card Category Share by Scheme (%), 2011... 38 Figure 29: Lebanese Charge Card Category Share by Scheme (%), 2011... 39 Figure 30: Byblos Bank Debit Cards Loyalty Program... 40 Figure 31: Byblos Bank s Loyalty Points Program for Credit Cards... 41 Figure 32: Value Added Services on Credit Cards in Lebanon... 42 Figure 33: Co-Branded and Affinity Cards Offered in Lebanon... 43 Figure 34: Prepaid Gift Cards Offered in Lebanon... 44 Figure 35: Internet Prepaid Cards Offered in Lebanon... 45 Figure 36: Pricing Strategies of Various Service Providers... 46 Figure 37: Lebanese Cards Industry by Type of Card (%), 2008 2017... 47 Figure 38: Lebanese Cards and Payments Size by Number of Cards (Thousands), 2008 2017... 48 Figure 39: Lebanese Cards and Payments Size by Transaction Value (LBP Billion), 2008 2017... 49 Figure 40: Lebanese Cards and Payments Size by Transaction Volume (Million), 2008 2017... 50 Figure 41: Lebanonese Debit Cards Category Size by Number of Cards (Thousands), 2008 2017... 51 Figure 42: Lebanese Debit Cards Category Size by Transaction Value (LBP Billion), 2008 2017... 52 Figure 43: Lebanese Debit Cards Category Size by Number of Transactions (Million), 2008 2017... 53 Figure 44: Lebanese Debit Cards, Frequency of Use, 2008 2017... 54 Figure 45: Debit Card Transactions at ATMs and POS Terminals (Million), 2008 2017... 55 Figure 46: Lebanese Prepaid Cards Category Size by Number of Cards (Thousands), 2008 2017... 56 Figure 47: Lebanese Open-Loop Prepaid Cards Segment Size by Number of Cards (Thousands),... 57 Figure 48: Lebanese Closed-Loop Prepaid Cards Segment Size by Number of Cards (Thousands), 2008 2017... 58 Figure 49: Lebanese Prepaid Cards Category Size by Transaction Value (LBP Million), 2008 2017... 59 Figure 50: Lebanese Charge Cards Category Size by Number of Cards (Thousands), 2008 2017... 60 Figure 51: Lebanese Charge Cards Category Size by Transaction Value (LBP Million), 2008 2017... 61 Figure 52: Lebanese Charge Cards Category Size by Number of Transactions, 2008 2017... 62 Figure 53: Lebanese Charge Cards Category Frequency of Use, 2008 2017... 63 Figure 54: Lebanese Credit Cards Category Size by Number of Cards (Thousands), 2008 2017... 64 Figure 55: Lebanese Credit Cards Category Size by Transaction Value (LBP Billion), 2008 2017... 65 Figure 56: Lebanese Credit Cards Category Size by Number of Transactions (Million), 2008 2017... 66 Figure 57: Lebanese Credit Cards Category Frequency of Use, 2008 2017... 67 Figure 58: Lebanese Credit Cards Category Size by Average Transaction Value (LBP), 2008 2017... 68 Figure 59: Byblos Bank s Customer Segmentation by Cards Offered... 70 Figure 60: Bank of Beirut s Customer Segmentation of Cards Offered... 75 Figure 61: Banque Libano-Française s Customer Segmentation of Cards Offered... 83 Emerging Opportunities in Lebanon s Cards and Payments Industry Page 5
LIST OF TABLES LIST OF TABLES Table 1: BankMed s MedMiles Program on Credit Card Products... 42 Table 2: Lebanese Cards Industry by Type of Card (Thousands), 2008 2017... 47 Table 3: Lebanese Cards and Payments Size by Number of Cards (Thousands), 2008 2017... 48 Table 4: Lebanese Cards and Payments Industry Size by Transaction Value (LBP Million), 2008 2017... 49 Table 5: Lebanese Cards and Payments Size by Transaction Value (US$ Million), 2008 2017... 49 Table 6: Lebanese Cards and Payments Size by Transaction Volume (Million), 2008 2017... 50 Table 7: Lebanese Debit Cards Category Size by Number of Cards (Thousands), 2008 2017... 51 Table 8: Lebanese Debit Cards Category Size by Transaction Value (LBP Million), 2008 2017... 52 Table 9: Lebanese Debit Cards Category Size by Transaction Value (US$ Million), 2008 2017... 52 Table 10: Lebanese Debit Cards Category Size by Number of Transactions (Million), 2008 2017... 53 Table 11: Lebanese Debit Cards, Frequency of Use, 2008 2017... 54 Table 12: Lebanese Prepaid Cards Category Size by Number of Cards (Thousands), 2008 2017... 56 Table 13: Lebanese Open-Loop Prepaid Cards Segment Size by Number of Cards (Thousands),... 57 Table 14: Lebanese Closed-Loop Prepaid Cards Segment Size by Number of Cards (Thousands),... 58 Table 15: Lebanese Prepaid Cards Category Size by Transaction Value (LBP Million), 2008 2017... 59 Table 16: Lebanese Prepaid Cards Category Size by Transaction Value (US$ Million), 2008 2017... 59 Table 17: Lebanese Charge Cards Category Size by Number of Cards (Thousands), 2008 2017... 60 Table 18: Lebanese Charge Cards Category Size by Transaction Value (LBP), 2008 2017... 61 Table 19: Lebanese Charge Cards Category Size by Transaction Value (US$), 2008 2017... 61 Table 20: Lebanese Charge Cards Category Size by Number of Transactions, 2008 2017... 62 Table 21: Lebanese Charge Cards Category Frequency of Use, 2008 2017... 63 Table 22: Lebanese Credit Cards Category Size by Number of Cards (Thousands), 2008 2017... 64 Table 23: Lebanese Credit Cards Category Size by Transaction Value (LBP Million), 2008 2017... 65 Table 24: Lebanese Credit Cards Category Size by Transaction Value (US$ Million), 2008 2017... 65 Table 25: Lebanese Credit Cards Category Size by Number of Transactions (Million), 2008 2017... 66 Table 26: Lebanese Credit Cards Category Frequency of Use, 2008 2017... 67 Table 27: Lebanese Credit Cards Category Size by Average Transaction Value (LBP), 2008 2017... 68 Table 28: Lebanese Credit Cards Category Size by Average Transaction Value (US$), 2008 2017... 68 Emerging Opportunities in Lebanon s Cards and Payments Industry Page 6
EXECUTIVE SUMMARY 1 Executive Summary Lebanon s cards industry recorded a CAGR of X.XX% in volume terms during the review period (2008 2012). The total number of cards increased from X.X million in 2008 to X.X million cards in 2012. Over the forecast period, the industry is forecast to grow at a CAGR of X.XX%, from X.X million cards in 2013 to X.X million in 2017. Prepaid cards are considered a growth driver After the debit and credit card categories, a prepaid card is the most popular card payment category in Lebanon. Indeed, in 2012, the category held the third-largest industry share of X.X%. The total number of prepaid cards in circulation increased significantly during the review period, from XXX,XXX in 2008 to XXX,XXX in 2012, at a CAGR of XX.XX%. Over the forecast period (2012 2017), this category is expected to post a CAGR of XX.XX%, rising from XXX,XXX cards in 2013 to XXX,XXX in 2017. Demand is increasing due to the diversity of card s payment functions. Increasing competition the in credit and charge card categories is expected reduce interest rates Both credit and charge cards are major revenue sources for financial institutions. Annual fees, interest on cash advances and value added services all contribute to the generation of profit. The categories held respective industry shares of XX.X% and X.X% in 2012. Relatively low penetration rates are encouraging the entry of new operators and in 2011, CSC Bank (CSC) established an agreement with JCB International (JCBI) to issue JCB cards in Lebanon. Increasing levels of competition are expected to lower interest rates on credit limits and consequently encourage consumers to use more cards. Improving broadband infrastructures to accelerate e-commerce transactions In 2012, The Ministry of Telecommunications signed an agreement the Cyprus Telecommunications Authority (Cyta) in order to acquire XX% capacity in the Alexandros international submarine cable that connects Cyprus, Egypt and France. Through this agreement, Lebanon can access an additional XXX gigabits of bandwidth. It also signed an agreement to aid the construction of the Europa system a submarine cable between Cyprus and Lebanon which will be operational by the end of 2015. This broadening of telecommunication infrastructure is expected to reduce broadband rates and increase the volume of online transactions. Improving economic performance In 2009, Lebanon s overall economic activity decelerated due to a period of recession which negatively impacted the country s exports. Due to political instability and war in neighboring country Syria, this trend continued until 2012 and adversely impacted tourism, exports and foreign direct investment (FDI). The government is taking initiatives such as the implementation of an appropriate tax policy and administration reforms and the utilization of funds to improve public financial management. Despite these adverse economic conditions, the IMF expects Lebanon to register stable growth over forecast period, ranging from X.X% in 2013 to X.X% in 2017. Competition in online payment services In Lebanon, the e-commerce channel is still in its developmental stages and only X.X% of internet users actively purchase products online. Many use the internet to facilitate online banking rather than purchasing goods and services. This is mainly due to a lack of online payment platforms rather than a weak telecom infrastructure. In April 2013, PayPal introduced its services in Egypt and Lebanon. Until PayPal s entry, Lebanese online shoppers were forced to use foreign debit and credit cards to make online payments. PayPal s entry is anticipated to increase the number domestic online card payments and reduce charges. Emerging Opportunities in Lebanon s Cards and Payments Industry Page 7
EXECUTIVE SUMMARY Emergence of contactless technology Smart cards which incorporate contactless technology are emerging as a trend across the globe. Contactless technology increases the speed of a transaction and such cards were introduced in Lebanon in association with MasterCard. Fransabank has been offering contactless payment technology in Lebanon since 2006 and in 2012, Bank Audi launched the contactless ABC MasterCard. This is a co-branded card in association with a a prominent shopping mall. Contactless cards are expected to gain popularity over the over the forecast period and establish themselves as a mainstream payment platform. Emerging Opportunities in Lebanon s Cards and Payments Industry Page 8
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