The FINANCIAL -- In terms of contactless cashless payments Georgia is the leader of 17 countries in Visa’s CIS-SEE region (Commonwealth of Independent states and South-East Europe).
If we name just a recent development Georgia is the first to have launched Visa’s payment stickers. Transactions via payment cards have increased by over 2 million as of the end of May 2014 in comparison with the same period of the previous year. Andrei Shcherbina, Visa Emerging Products and Innovations Director, made an average of nine Visa card payments with his Visa contactless card out of every ten card payments during a recent visit to Georgia. Travelling by taxi is the only area in Tbilisi where people are not offered card payment option and have to pay by cash, he discovered. In regard to this, Visa has a product it is offering as a solution.
According to NBG, transactions made by payment card reached 8,457,857 units, valued at GEL 963,861,000, as of the end of May 2014. The figure was 6,044,065 units, valued at GEL 785,914,000, as of the end of May 2013.
The number of transactions made via the Internet was 1,050,090 units, valued at GEL 34,962,000, as of the end of May 2014. The number was 738,802 units, valued at GEL 28,882,000, as of the end of May 2013.
The total number of credit and debit Visa cards in Georgia is 3,929,722, out of a total number of 7,112,673.
“Georgians appear to be very progressive in terms of adopting payment technologies and banking technologies in general. It can be compared to only a very limited number of countries worldwide. Therefore, we expect for Georgia to soon become one of the leaders in cashless payment systems in the CIS&SEE region,” Andrei Shcherbina, Visa Emerging Products and Innovations Director, told The FINANCIAL.
In his exclusive interview with The FINANCIAL Shcherbina talked about the potential of a cashless economy and its importance in today’s world.
Before coming to Georgia, Shcherbina was on a business trip in Kazakhstan. Comparing these two countries he said the following: “In Georgia there is almost nowhere where I can’t pay by card. However, one of the most critical areas for me remains transit, taxi in particular. Unfortunately there is no taxi service that provides the option of payment by card. As Georgians are so open to card payments, including contactless they would be eager to pay with a card in taxis also. I understand that it is a specific segment and it would not be easy for all taxi drivers to cooperate and keep bank equipment in their vehicles. Hence, we have another option to offer both to taxi-drivers and consumers; mPOS solution. It is a form of technology which enables one to use the smartphone of a taxi driver as a POS terminal to accept card payments. This technology is cheaper than most POS terminals. It is transparent and convenient for drivers and of course for passengers. This segment could be very interesting to assimilate. We launched mPOS solution in Kazakhstan and it has proved successful. This was my fifth trip to Kazakhstan and the first time that I did not have to withdraw cash from an ATM at any stage,” said Shcherbina.
“I was on vacation with my family in Georgia this May. At the time I was actively using my Visa contactless card and was proud to find that on average nine out of ten card payments made on my card were actually contactless. The only place I found that I had to withdraw cash for was taxis. These results are very promising, even for my home country and others as well, this is a dream. Every fourth card payment at supermarkets is made via contactless cards there. This is a very serious result. Of course, there is room of improvement. Globally we have countries leading by Visa payWave transactions and payment volume. For example, in Australia the number of contactless transactions is around 20 million monthly. Considering the current position of Georgia, it has the potential to achieve similar results,’ he added.
Q. How would you assess your business in Georgia?
A. For Visa, Georgia is included in the geographical area of Central Europe, the Middle East and Africa. Out of these countries Georgia holds a separate place in term of implementation of innovations in cashless payments and adoption of innovations by Visa client banks and consumers. Georgia was the first country in the region to have launched Visa payWave contactless payments back in 2009. In 2013 banks in Georgia along with merchants were actively adopting Visa contactless payments. Since then the country has become a leader in volume and number of contactless payments in the region. The Georgian market is innovative, has good perspective, and continues to demand and successfully adopt payment innovations.
Several months on from the commercial launch of contactless payments we saw a huge rise in interest in this technology from consumers. Thus, we developed it further. Besides standard contactless cards we offered customers different types of payment. For example, recently Visa payWave sticker was launched. Payment stickers can be attached to the back of mobile devices or any other portable item which a consumer always carries around with them and thus transforming this item into a payment device. We are already seeing successful and active adoption of this payment option. Georgians are active on-line consumers, e-commerce is rapidly growing. In order to protect cards against unauthorized use and give users peace of mind when shopping online, we developed Verified by Visa technology. It is already offered by various banks on the market. We are actively working on its development in order to bring added comfort to our customers and secure their payments. We are also observing a huge demand for remittances via quick and comfortable card payments. Many banks offer alternative ways to transfer money such as internet banking or mobile banking. What we offer is Visa Direct money transfers. It is very convenient as consumers can send funds from their Visa card to another card and the only information they need to complete money transfer is the sixteen digits of another person’s Visa card number. These are but some of the main directions of Visa’s services in Georgia that have huge potential and are being quickly adopted by consumers.
Georgian commercial banks are prone to implement modern technologies and more advanced trends. On our side, we are always ready to realize their projects and equip them technologically.
Q. What are the main obstacles for the development of cashless payments in different countries in general?
A. Each country has an individual concept. The legislative base in the country where we operate, and the eagerness of the banks there to acquire modern technologies, are the key factors that determine our business development on various markets. Banks should show customers that cash payment is less comfortable, less profitable and less secure than card payment. We tend to adapt products to the various markets. We have a huge portfolio of innovative products but not all of them can be implemented on every market. If card payment and card acceptance infrastructure is less developed on the market then we try to encourage cashless payment via just mobile phones. On markets where Visa has a well-developed card acceptance infrastructure (Georgia being among these) we offer payment solutions that help to streamline migration to cashless payments. To be honest merchants are not always interested in cashless payment. In this case regulators play a huge role. They can stimulate merchants by minimize taxes as their cashless payment volume will rise.
Q. Market leader banks are always the flagmen of implementing innovations. How active are small banks in terms of acquiring your solutions and offering them to consumers?
A. Leading banks are always more prone to implement innovations. The situation is the same in Georgia as elsewhere. Due to their scale they can afford R&D (research & development) activities and accordingly become pioneers in various innovative solutions. We should say that innovations do not always bring immediate profit for banks in a short-term perspective. So, mostly it becomes a strategic direction in banks development a bank has to invest into and develop it step by step in order to have them gradually accepted by their loyal consumers. Accordingly, it is the leading companies that become trendsetters. Later, when huge players prove the profitability and success of a project, small banks start to follow their lead and become in line with the existing demands.
Q. People over the age of 50 are generally less open to modern technologies. How do you tailor your services to this segment?
A. The age factor of different generations cannot be ignored. However, it doesn’t mean that we should concentrate any less on generations that are either before or over the pension age. Banks have pension programmes for this group of people. In this segment we are mostly developing debit products, as people from this segment of the population are more likely to have savings. We also provide additional services which allow them to use card payment and get some extra benefits in comparison to using cash payment. For example, banks have programmes by which a pensioner will get a discount for buying medication if paid with a card. Other banks offer pensioners certain interest rates when they keep money on their cards. So, this segment can’t be ignored when thinking about migration to cashless payments and, together with the banks, are offering services that will be relevant to them.
Q. What are the main obstacles for the development of a card payment system?
A. Countries with more closed economies have less active cashless payment generally. They are mostly targeted on the domestic market and tend to focus on inflation problems. Most of these countries are located in Central Asia. We are actively involved in negotiations with the regulators there. We are facing issues of different nature while working on the transformation of cash payment into cashless. Sometimes this is due to a huge territory which is hard to supply with a large network of ATMs and POS terminals. Sometimes it is due to it being a country with a huge population that has a big tradition of cash payment and needs wide-reaching projects for it to transform into a cashless system. In the CIS the list of such countries is getting less and less. It might be just a couple of countries that are still like this. However, this does not mean that we are not working with them. We have already gained good experience of working on such markets.
Tajikistan, Turkmenistan and Uzbekistan are the countries where card payment is less developed. Our Central Asian office in Amaty is actively working on this. Contrary to them, Belarus is one of the leaders in cashless payment.
Q. What was the main reason for your visit to Georgia?
A. We are at the stage of developing contactless payment in Georgia. The introduction of a new payment option to the market – Visa payWave sticker - is the main purpose of my visit. We are proud that Georgia is the first country, out of the total of 17 in the region, where stickers have been launched. In this regard we came to Georgia to see how well the solution is being implemented and how it is working. We are seeing huge interest in this solution from our partnering banks. Banks never miss the chance for a competitive advantage. They are eager to offer customers the same or enhanced services, products and technologies which their competitors do. Therefore, the main goal of my visit was the further development of contactless payment in Georgia.
Q. What is the potential of a cashless economy globally?
A. To achieve a cashless economy is our dream and aspiration on every market. With our efforts we need governments’ support to implement a cashless economy. Citizens should feel the financial and operational advantage and profitability of cashless payment in order to switch to it. With cashless payment we really do reduce expenditure such as cash-in-transit. Cashless payment is faster and merchants can serve more customers while accepting card payment than in the case of cash. The e-government is also very important. In Georgia this is quite well developed in comparison with the majority of CIS countries. Offering various governmental and municipal services online and providing their online payment option is critical for establishing a cashless environment. All the technologies and products offered by Visa are in line with a cashless environment. We are the strategic partners of every country and their government that is keen to establish such an environment.