Saturday, May 28, 2005

Visa Card Has Reached Iraq

Ladies and gentlemen, Visa cards have reached the Iraqi hands. The Daily Star newspaper reported:

BAGHDAD: In a country where cash is king, the arrival of Iraq's first credit card has been greeted with a mixture of enthusiasm and skepticism. The Trade Bank of Iraq launched the Visa card at a ceremony on May 9, as part of its plan to lift the economy and revive the banking system, which collapsed after the fall of Saddam Hussein. Ten cash machines have also been set up in Baghdad.

The bank has so far issued its card to just 150 people, carefully chosen because they have both a bank account and a good credit rating. However, Hussein Isam al-Azari, Trade Bank's chief executive, expects to see 1,500 cardholders within a month.

After a one-off charge of 50,000 dinars ($34), the card can be used at 100 banks, hotels and government offices.

"This service is very good," said Jawad Ali, a new Visa customer. "We've been looking for this for years since it facilitates many financial transactions."

Satar Abdullah, a trader in electronic equipment, is yet to be convinced, saying he is unsure how credit cards actually work. "We've only seen them in the movies," he explained.


Satar, I'll tell you how they work. You receive one of those plastic cards. You go shop until you drop. You receive the bill by end of the month. You get a heartache. You can't fully pay the bill. You can't even pay the minimum amount. You fall behind with your payments. You get charged A LOT for the interest and late fees. You spend years paying off your balance due and fixing your credit report. But, you shopped until you dropped. That's the whole point of having a credit card these days.

Back to being serious. This is really good news. Iraqis handle almost all their financial transactions with cash. Business owners use checks to pay big invoices. The downside is you have to spend a long time at the bank to cash your money. Most Iraqis didn't put their money in the bank during Saddam's regime. We never trusted Iraqi banks. We had a fear that Saddam and his gang may withdraw or freeze the money at any time. There was also the rapid fall in dinar's value. So, most people with large amounts of money would exchange their Iraqi dinars for American dollars.

Also, there's no ATM machines in Iraq. Iraq runs a manual banking system. To be fair, Iraqi banks ran smoothly and almost perfectly. I always liked watching the tellers count money. They were really fast. And yes, we do have the automated money counters.

So, there's a lot of business opportunities to bring the Iraqi banking system into the 21st century.

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