Payments Landscape in Iran: Opportunities and Risks to 2022

Payments Landscape in Iran: Opportunities and Risks to 2022

Summary

Iran’s payment card market is developed, with penetration of 4.3 cards per individual in 2018 - the highest in comparison to peers Israel, Kuwait, the UAE, Bahrain, Saudi Arabia, Lebanon, and Oman. The high penetration is a result of the country’s strong banked population and various government initiatives to encourage electronic payments. Meanwhile, the overall payment card market registered robust growth in terms of transaction volume and value at respective compound annual growth rates (CAGRs) of 17.9% and 15.8% over the review period. The country’s improved payments infrastructure, growth in the number of retailers accepting payment cards, and a consumer shift towards card-based payments supported this growth.

Debit cards remain the preferred card type among Iranian consumers, with every individual holding more than four debit cards in 2018, aided by the country’s high banked population. Growth was also supported by government efforts to encourage retailers to accept card-based payments, as well as banks’ promotional activities. Consumers’ preference for debt-free payments and prudent spending have resulted in the dominance of debit cards for payments, which accounted for 99.1% of total card payment value in 2018. Debit cards will continue to lead the Iranian payment card market, supported by the gradual migration of low-value cash payments to payment cards.

Credit card adoption in Iran stood at 2.5 cards per 100 individuals in 2018, the lowest in the region (primarily due to cultural and religious factors). But the market registered strong growth in terms of payment volume and value at respective CAGRs of 16.6% and 17.2%. This was mainly supported by government initiatives, in addition to banks offering flexible payment options and other incentives on card purchases.

The number of point of sale (POS) terminals recorded a CAGR of 17.6%, rising from 3.8 million in 2014 to 7.2 million in 2018. Iran’s card acceptance infrastructure is highly developed, with one POS terminal for every 11 individuals. This can be attributed to the strong domestic payment system Shaparak, which enables merchants to accept payment cards at lower costs. Growth was also supported by the increasing preference for mobile POS (mPOS) terminals among merchants.

The report “Payments Landscape in Iran: Opportunities and Risks to 2022” provides detailed analysis of market trends in the Iranian cards and payments industry. It provides values and volumes for a number of key performance indicators in the industry, including cards and cheques during the review-period (2014-18e). The report also analyzes various payment card markets operating in the industry, and provides detailed information on the number of cards in circulation, transaction values and volumes during the review-period and over the forecast-period (2018e-22f). It also offers information on the country's competitive landscape, including the market shares of issuers and schemes.

The report brings together research, modeling, and analysis expertise to allow banks and card issuers to identify segment dynamics and competitive advantages. The report also covers details of regulatory policy and recent changes in the regulatory structure.

The report “Payments Landscape in Iran: Opportunities and Risks to 2022” provides:

• 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 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

The report “Payments Landscape in Iran: Opportunities and Risks to 2022” enables the user to:

• 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

Companies mentioned: Tejarat Bank, Bank Saderat Iran, Bank Sepah, Bank Mellat, Bank Melli Iran, Bank Maskan, Refah Bank, Bank Keshavarzi, Parsian Bank, EN Bank, Post Bank of Iran.

Scope

• To increase the adoption of credit cards, the Iranian government has undertaken several initiatives. For instance, in May 2017 the central bank introduced a scheme called Yarakart. Under the scheme, banks are required to issue credit cards for low-income individuals, providing an alternative to bank loans. The card is only issued to individuals who are eligible to receive government subsidies, which also acts as collateral. In September 2016 the central bank started allowing domestic financial institutions to issue credit cards in three variants with predefined credit limits: Bronze with a credit limit of IRR100m ($2,381.21), Silver with a IRR300m ($7,143.63) limit, and Gold with a IRR500m ($11,906.05) limit. Extending this concept, in April 2018 the government announced a new scheme in which credit cards are offered at a lower interest rate when the card is used to purchase domestic products. The aim of this scheme is to boost consumption of local products.


• Iranian banks are downsizing their branch networks to reduce operational costs, instead focusing on alternative channels to offer banking and payment services such as banking kiosks. In June 2017, Bank Mellant installed 500 new non-cash banking terminals in addition to its existing fleet of 2,000. These kiosks provide a range of services including fund transfers, installment payments, utility bill payments, donations, and viewing account balances and statements.


• The Central Bank of Iran - in association with Shaparak - launched a nationwide NFC-based system in May 2017 in an attempt to increase mobile payment uptake. Named Tap-and-Go, the service enables users to make contactless payments of up to IRR200,000 ($4.76) at merchant stores using NFC-enabled mobile devices. Users can scan and add their payment cards to their mobile banking apps and use them for contactless payments.

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.