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Credit ratings agencies needed, says Mastercard

Bad debt is a “manageable” problem for the region’s credit card issuers right now, but Mastercard says a lack of credit ratings agencies could stunt the industry’s future growth

Mastercard executives today admitted that a lack of credit ratings agencies is holding back wider usage of credit cards in the region. And whilst Mastercard says that it can play an important role in helping create such entities, it’s up to others to take the lead.

“It has to be driven by the market itself, and the financial institutions and regulatory authorities are key to that,” said Donald Van Stone, executive vice president and general manager, Europe and Middle East/Africa, Mastercard. “We can of course help in that.”

Mohamed Belarj, VP and general manager for the Middle East and Africa, Mastercard, added: “Bad debt is an issue. The lack of ratings agencies is limiting growth in credit card usage.”

Both Belarj and Van Stone said that the problem is manageable at the moment, but will increase as banks seek more customers for credit cards. Right now, those banks are targeting their credit card products on high value individuals that are considered less likely to default on payment of bills.

But if they want to increase the customer base for credit cards, they are going to have to start marketing to a broader sway of people. That’s when the lack of credit ratings agencies will become more and more of a problem.

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