E-Government in Oman

Issuer
Oman Arab Bank

System Description
Nationwide E-Government Payment System

Business Sectors
Retail, Government, Fleet Operators


Why Shift To Smart?

• To provide a technological foundation for a cashless society via EFT (electronic funds transfer) by offering a real cash substitution. Cash usage is projected to drop by 70% in the next seven years.
• To both complement and reduce the usage of international cards for local transactions in the Sultanate of Oman
• To reduce the total cost of ownership on transaction and operating cost (only the card-to-card technology could meet the requirements for an off- and online solution enabling frequent mass payments without having to reinvest in telecom infrastructure, wireless connectivity and online connection time)
• To implement a system that is easy to maintain, operate and administer and can be interfaced/integrated with existing back-end systems

Prior to the introduction of the smart card payment system in 2003, the Omani government was receiving and collecting money via cash and cheques. The payment process was manual, time consuming, and required much paperwork (eg. one of Oman’s ministries was collecting in excess of USD 2.5 billion in notes and coins annually, and a further 500,000 cheques were being processed each year). The cost of cash and cheque management, in addition to the slow manual process, was very high. Challenges that had prevented a move to a cashless payment solution so far included the high cost of transactions and operation of traditional payment instruments (e.g. international card systems). Another very important issue was to ensure confidentiality of sensitive payments and ID information which was a concern that could not be adequately addressed by the available schemes. The government needed a local, domestic payment system that would be managed, operated and processed from within the Sultanate. In addition, the retail payment segment had problems linked to cash collection, cheques and online authorization for card payments. Loyalty schemes were non-existent and ATM transactions were costly.

Oman Arab Bank (OAB) decided to address the difficult challenges the government and payment industry were facing by establishing the infrastructure for, and then providing the required e-Payment services to the Omani government for both the corporate and retail segments.

The e-Government solution is running very profitably in all government ministries including airports and seaports, Royal Oman Police, Ministry of Finance, Ministry of Commerce and Industry, Ministry of Manpower (labour fees and renewals/income taxes), Muscat Municipality (all permits) et al. The largest telecom and private enterprise in Oman (PTT) is also offering OAB payment facilities in all of its 40 branches for telephone and utility bill payments. OAB’s smartcard retail solutions incorporate 80% of the retail market in addition to offering its facilities on all British Petrol (BP) Oman outlets (now Oman Oil). On the same smart card, OAB has extended its service offerings to include loans and savings facilities.

As OAB and the government commence their seventh year of operations with the smart card solution, transaction volumes are reaching several hundred million Euros with hundreds of thousands of transactions being processed.