Cashing in on remittances in the UAE

The Life: The booming remittance industry has many firms in the region innovating special salary cards for workers.

Customers send money from a UAE Exchange branch. Remittances from the country have jumped since the start of the year.

The Dh10 billion (US$2.72bn) a month remittance business is booming in the Emirates, and offering the latest technology for workers has become something of an arms race as firms battle for market dominance.

Since the Ministry of Labour's introduction of the wage protection system a couple of years ago, which mandates that more than 4 million foreign workers in the UAE get paid on time and through reliable electronic means rather than cash or cheques, companies have been innovating their products and services. One area of focus is to enable cards to make cashless remittances to loved ones back home.

"We are working on that and it will be implemented soon," says Ibrahim Darraz, the general manager of Workers' Equity Holding, a payment processing company.

Since the start of the year, expatriates have been sending home about Dh10bn every month. That is an increase of 10 to 15 per cent on last year and as much as Dh1.5bn more a month, says Mohamed al Ansari, the chairman of the UAE's Foreign Exchange & Remittance Group, which represents companies involved in the money transfer sector.

The industry's push to include more than just basic offerings is occurring as more companies in the region try to capitalise on a growing demand for financial services from migrant workers.

In the past, workers often had to withdraw funds from an ATM and then wait in long lines at a financial firm like an exchange house until a teller could transfer their payment. But earlier this week, Workers' Equity Holding and the money exchange house Al-Bader Exchange announced they would be offering prepaid payroll cards to 50,000 migrant workers.

While similar cards have been rolling out in recent years for employees who want to link to their salaries and make cash withdrawals or check account balances, those to be distributed over the next few months will also activate additional features such as the ability to top up accounts via mobile phone and automatically send money back to family members abroad.

The announcement follows similar partnerships, such as one in September between the payment solutions company, Network International, and Al Fardan Exchange, one of the oldest exchange houses in the Emirates. Their tag-team solution was an "e-money" card that allows workers to use an ATM network to remit money to more than 110 corresponding banks worldwide. In December, Emirates NBD joined the fray and became the first bank in the UAE to offer the card on its network of ATMs for salary withdrawal, balance inquiries and money transfers.

Other ideas on the table for these prepaid salary cards include building in a bill-paying option. Although the feature might not sound particularly novel, it's still relatively new for so-called "unbanked" workers in the Emirates who do not have, or qualify for, a bank account or credit card.

"We're working on new features, and I can tell you the main objective of that initiative is to increase new avenues of revenue," says Imran Saeed, the vice president of business development for the Middle East and North Africa at TPS, a company that provides electronic payment services on more than 400,000 cards for workers.

Companies such as TPS earn their business by providing technology and back-end support for salary cards, which they provide to the likes of payroll firms and exchange houses. These companies then lease the cards out to employers for a fee, which can add up in costs but is still less than the labour and time needed to dole out cash or cheques every month in worker camps.