JCB Credit Cards to Debut in Iran
I. New development
It is reported on the website of tasnimnews.com on February 29, 2016 that:
Japanese financial services company JCB is going to distribute its credit cards in Iran within the next few months, an official at the Central Bank of Iran announced.
The information provided by tansnimnews.com includes the following points:
a. Iranians can use the cards to easily purchase goods and services in Southeast Asia and Europe.
b. Thirty million shops in 130 countries worldwide accept the JCB cards.
c. JCB is the only international payment brand originating from Japan. Founded in 1961 as Japan Credit Bureau, JCB established dominance over the Japanese credit card market when it purchased Osaka Credit Bureau in 1968, and its cards are now issued in many countries.
II. Analysis of the news
The following explanations may help us to better understand the above news:
1. JCB issues different types of credit cards in countries covered by services of this country. For example, 19 types of credit cards are offered in Japan while in Bahrain and the UAE only two types are offered to the clients. How many types of credit cards will be offered to the Iranian clients? What are the services offered under each of them? Would they be subject to the usury-free rules of the Islamic banking in Iran? What would be the mechanism and the modality of interaction between JCB credit card system and Shetab Banking System (SBS) in Iran? It must be noted that SBS is an electronic banking clearance and automated payments system that is introduced in Iran in 2002. The objective of this system is to create uniformity in handling ATM, POS and other card-based transactions.
2. Recently JCB entered into an agreement with the International Bank of Azerbaijan. Under this agreement, JCB cards will be accepted at all of IBA's acceptance locations throughout Azerbaijan by the end of February 2016. As reported on the website of JCB, IBA is the largest government financial institution in Azerbaijan. It has an extensive network of more than 11,000 POS terminals and over 730 ATMs across Azerbaijan. JCB has signed a similar agreement with the Bank of Mongolia in July 2015 and with the Myanmar Payment Union in July 2013. Which Iranian bank or banks have entered into a similar agreement with JCB? It may be presumed that the Central Bank of Iran (CBI) has signed an agreement with JCB because the announcement is made by a CBI official. If CBI has entered into an agreement with JCB, what are the terms and conditions included in this agreement?
3. What are the international laws and regulations that shall protect privacy, confidential information and financial security of the Iranian clients if and when they use their cards in East Asia or Europe?
4. There is a strong possibility that JCB and CBI have entered into a Master License Agreement (MLA). The terms that are normally included in an MLA will be reviewed in one of our Legal News in the near future. It suffices to say that in the USA, Marukai (California) and JCB have created a premium credit card program that offers the following services:
Up to 3% plus an additional $50 Bonus Cash Back
Balance Transfer APR
NO ANNUAL FEE for the first year.
$15.00 annual fee beginning the second year.
Marukai Membership Fee
NO MARUKAI MEMBERSHIP FEE for the first year.
$10.00 annual fee beginning the second year.
It goes without saying that the terms to be offered to the Iranian clients will not be the same as above.
5. JCB also offers special services to businesses and merchants. It would be reasonable to presume that similar services will be offered to Iranian merchants and business person under the Master License Agreement signed with an Iranian bank.
The banking system of Iran is taking small but important steps towards internationalization. The banking and financial law of Iran has to follow suit. The current laws and regulations of the country need a serious overhaul to adapt themselves to the banking and financial needs of the business persons and the Iranian population in general. The first step in this direction is to distinguish between the domestic banking operations that are subject to Islamic banking law and the international banking operations that are subject to internationally accepted rules and standards. The next step would be to promote and encourage the development of international banking law in Iran. UN organizations such as UNDP are the most suitable entities to initiate this process. This may accelerate the process of Iran joining the WTO too.
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