Card Payments on the Rise in Georgia While Less Popular in Azerbaijan and Armenia

Card Payments on the Rise in Georgia While Less Popular in Azerbaijan and Armenia

Card Payments on the Rise in Georgia While Less Popular in Azerbaijan and Armenia

accepting-online-card-payments.jpgThe FINANCIAL -- The number of transactions made within the Georgian economy with payment cards issued to residents as of the end of December 2013 was 7,337,988; the total value of the transactions - GEL 1,011,010 thousand.

 

accepting-online-card-payments.jpgThe FINANCIAL -- The number of transactions made within the Georgian economy with payment cards issued to residents as of the end of December 2013 was 7,337,988; the total value of the transactions - GEL 1,011,010 thousand. The amount of transactions as of the end of December 2012 was 5,696,796 units, with the total value of the transactions at GEL 790,768,000. The number of transactions in December 2011 was 5,347,623, total value of the transactions - GEL 758,113,000. In December 2010 the number of transactions was 3,996,092, with the value of the transactions at GEL 632,882,000.

 

The share of cash in Georgia’s GDP is currently at around 8.98%.

“The Georgian card payment market is characterized by a high rate of introducing innovative products. Alongside commercial banks, the Government has also played a big role in the development of card payments. Namely, launching pensions and all the social benefits started via banking channels; public service employee salaries are bound to their personal bank accounts; also, in a number of schools cash payment has become limited,” said Giorgi Melashvili, Executive Director at National Bank of Georgia.

“As the statistics show, cardholders are using their cards more and more in sales and service facilities. Although there is still a limited amount of data on this, the withdrawal of cash from ATM transactions in respect to non-cash payments by credit cards is greater, but the trend of the latter has been steadily increasing in recent years,” said Melashvili.

The number of POS terminals in merchant and service outlets is also on the rise in Georgia. It totalled 13,565 as of the end of December 2013, up from 11,119 from the same period of last year. It was 4,651 units less in 2011 compared to in 2013.

In Melashvili’s words, Georgians are increasingly using electronic payments: payment cards, electronic money, internet banking or mobile banking. Accordingly, NBG is interested in making them more safe, comfortable to use and secure. “In this regard, we are working on the relevant rules of consumer protection and electronic payment instruments,” he said.

The statistical data of NBG shows that there has been an increase in numbers of cards. The number of payment debit cards in circulation as of December 2013 reached 4,580,156 up from 4,121,162 from the same period of last year. Compared to the 3,390,928 debit cards in circulation in 2011, the figure has increased by over 25% this year.

In Melashvili’s words, the main advantages of non-cash are: security, as it reduces the risk of carrying cash; convenience - unlike cash it is easy to carry, secure while travelling or is not required to carry at all; time-saving - you can order goods and services over the internet from your very home; you have operational control of account transactions via sms, online, mobile banking and other remote sources; also, you are able to participate in various promos and discounts.”

Last week, Azerbaijan’s Ministry of Taxes announced that the measures taken for the promotion of non-cash payments have failed to take effect.

According to Sahib Alakbarov, the Deputy Minister of Taxes, the Ministry considers the level of non-cash payments in the country to be unsatisfactory.

“Unfortunately, in spite of sufficient numbers of POS terminals, as well as credit and debit cards held by the population, the level of non-cash payments is unsatisfactory,” said Alakbarov.

The Central Bank of Azerbaijan estimates that the volume of card transactions (in terms of cash withdrawal from ATMs) hardly makes up 10% of overall payment transactions in the country and is just 0.5% of the domestic consumer market.

According to abc.az, such a situation and the dissatisfaction of the Tax Ministry is partly due to the fact that several years ago the Ministry got permission for the payment of taxes to be made in cash, though today this permission is no longer valid.

Ishkhan Mkhitaryan, Head of the Armenian Card National Payment System, in an interview with ArmInfo, stated that banks are actively working to expand their customer base through various campaigns for cardholders, launching their own unique card projects, introducing bonus programmes, and expanding the network of POS-terminals, as well as stimulating the development of non-cash payments in Armenia,” Mkhitaryan said. Nevertheless, he said, one of the major problems of the local card market is that most of the operations with cards are cash withdrawals. “This is the objective, given the size of the average withdrawal amounts. The average cash withdrawal transaction in the system totals some 40,000-45,000 Drams. Some cardholders make one to two transactions per month,” he said. According to ArCa, non-cash payments make up some 20% of total transactions, which, he thinks, is not a bad indicator for the Armenian market.