Igor Stepanov, Regional Director of Mastercard in Georgia and Central Asia: «Over 70% of Georgia’s residents prefer to pay with a smartphone»

Igor Stepanov, Regional Director of Mastercard in Georgia and Central Asia: «Over 70% of Georgia’s residents prefer to pay with a smartphone»

The FINANCIAL -- As the digitalization process of life faces significant changes, companies, as well as customers have been forced to adapt. Mastercard has made a number of important changes over the past few years. Mastercard had to overcome significant challenges to develop effective digital tools that meet the differing needs of the countries it operates in. Also, by modernizing, particularly through digital services, banks currently have an opportunity to differentiate themselves in a crowded market.

During the last decade, the development of smartphones has had a profound impact on the way businesses operate. With the percentage of the global population using smartphones increasing every year, businesses are now expected to provide a fully integrated digital platform that can provide different services. Today digital services are no longer something new and strange: they are the bare minimum that customers expect.

Q. How would you estimate cashless payments development in the country? Has Georgia made a progress in e-economy development?

A. Georgia is very innovative country, and it’s moving towards a world without cash at a steady pace. Over the last 3-4 years both, the number and volume of POS transactions, has grown considerably. According to the National Bank of Georgia, non-cash payments increased by 20 per cent over a year. As for the contactless payments penetration, Georgia today is among the leaders in the region, almost every second transaction here made with a payment card is contactless. Online commerce is developing rapidly, the number of online payments has grown by 41 per cent in 2017. All these wins evidence a massive progress in cashless economy development in Georgia.

Q. Tell us about the key findings of a recent survey conducted by Mastercard, what is special about payment behavior and demand of consumers in Georgia today?

A. “Digitalization of Life” survey once again showed how Georgia is open to innovative payment solutions, supporting global digital trends and even outstripping European preferences for innovations in some areas. For instance, 44 per cent of research participants consider fingerprint recognition the most preferred method of identity check, whereas only about 38 per cent of Europeans prefer this method. Contactless card has already become a symbol of speed and comfort of payments in the country, where 48 per cent of respondents use it for payments. Today, we see the emergence of a new trend, smartphone payments. We at Mastercard do a lot together with our partner banks to develop a "digital" lifestyle: in particular, Georgian cardholders got new opportunities for digital payments with the launch of the first NFC-wallets for smartphone payments in the country.

Q. And what about e-shopping? You were mentioning 41 per cent growth of online payments, but is it already a trend?

A. According to our study, 38 per cent of Georgia residents are using digital services for online purchases already. Speed and time savings turned out to be the main argument for this – the most of respondents highlighted those benefits. And this is e-commerce that our respondents have referred to top-3 areas where they would like to use payment cards. Therefore, I believe e-commerce is a promising trend in the country and one of top priorities for Mastercard.

Q. What about fraud in Georgia, particularly in online?

A. Georgia has relatively low level of those; this is mainly due to popularity of contactless technology, which is now one of the most safe and secure. Data cannot be stolen, card cannot be copied. As for online payments, security is again ensured by Mastercard high level global standards, Mastercard SecureCode is a program designed to protect consumer against unauthorized use of card, as well as provide online merchants with the added security of having issuing banks authenticate cardholders and qualify online transactions for protection against "cardholder unauthorized" or "cardholder not recognized" chargebacks. Today globally Mastercard establishes biometrics as the new normal for safer online shopping, this shift is a part of Mastercard’s new action plan to help banks, retailers and partners, to prevent fraud and improve the consumer experience in the new digital environment. It also meets new requirements around customer authentication via 3D Secure protocol.

Q. Since internet banking and online payments (via bank) is developing very quickly - how significantly affects it card payments?

A. Boundaries between physical and digital purchase and payment experience are dissolving worldwide. A bank card, no matter in a physical or electronic wallet, so far remains the most popular, secure and convenient payment tool. The development of online payments and Internet banking simply creates an extra dimension for paying with the card.

Q. Don’t you think that digital wallets may replace card payments in the near future? If yes, how may cards be transformed in the future?

A. User experience is changing indeed; it’s becoming more and more digitalized and mobile. Studies carried out by Mastercard show that a quarter of Europeans (24%) would now like to pay using wearable devices (fitness-bracelets, smart watches etc.). Smartphone becomes number one gadget for payments globally. According to the Mastercard ‘Impact of Innovation’ study, mobile payments have the highest potential across all countries – nearly 50 per cent of Europeans put mobile phone on the first place among the preferable payment devices. And in Georgia this index is even higher – 74 per cent prefer this device as a payment tool. NFC payments are booming globally having a high potential for further increase, still I expect observing a variety of options for payments for consumer, both plastic and digital tools, in the near future, as this would provide the consumer with an opportunity to make a choice based on the preferences and life style.

Q. Tell us more about NFC-wallets in Georgia, which banks now offer them to consumers?

A. Recently, three NFC wallets were launched, by Bank of Georgia, TBC Bank and VTB Bank, in partnership with Mastercard. It was particularly enabled by our tokenization platform, MDES (Mastercard Digital Enablement Service), which allows to turn connected devices into payment ones. Due to tokenization, the original payment credentials (16-digit account number) is replaced with a unique “digital account number” (token) which may be used to initiate payment activity for wallet transactions. In 2017 the amount of payments via MDES has grown by 100 times globally, NFC payments is now a global trend, and we a very happy to drive it with our partners here.

Q. What about competitors, what’s your further strategy and special offer to the consumer?

A. Our key competitor is cash, and we are committed to creating future without cash in a safer, more open and comfortable world. We are constantly working on the technological side of payments introducing new ways of purchases, in online, via gadgets, etc., enabling the most demanded and secure authentication methods, including fingerprint, face recognition. We are integrating payments everywhere you need them – in shops, public transport, major events, online ecosystem. With all that today Mastercard card is more than just a payment tool. This is a key to special offers and benefits, and even more – to the priceless emotions and experiences. Special rewards and opportunities for travelers, shoppers, football fans, cinema-lovers, digital adopters, these are only few directions to mention, that we are empowering together with our partners in Georgia.