The FINANCIAL -- In Georgia the number of Visa cards has grown by 30%, payment volume has
grown by 63% while total volume has increased by 33% according to the
statistics provided by Svetlana Georbelidze, Visa Country Manager for
Ukraine, Georgia, Armenia and Moldova.
Visa card usage at merchants has grown by 23% compared to Q4 2011 results.
“Georgia is number one in the Caucasus when it comes to the number of Visa cards in the country, and number two after Armenia when it comes to PV/TV ratio,” Svetlana Georbelidze told The FINANCIAL in an exclusive interview.
Q. Development of the e-payments market in CIS countries started around fifteen years ago. Most of the countries, including Ukraine , Russia, Georgia, Armenia and Moldova started as debit payroll cards markets. What has changed?
A. To a large extent cash is still a king in these markets. One of the key indictors we use at Visa is the PV/TV ratio that is a correlation between payment volumes to total volume on Visa cards. For Georgia the PV/TV ratio is about 8%, while in Armenia this ratio is 9.8%, in Ukraine this ratio is 7.5% vs. 10-11% in Russia and about 15% in Belarus. In developed countries, such as the USA or United Kingdom, this figure is about 40-50% while in Iceland this ratio is as high as 80%.
According to the latest statistics of the Central Bank of Georgia the number of payment cards issued in Georgia has exceeded four million, but the number of transaction per card is still low - about four per year. Thus, in Georgia as well as in other markets in the region, the payment industry is streamlining its efforts to achieve normal use of plastic cards as a traditional e-payment instrument.
Q. What are the expectations of Visa in Georgia?
A. In Georgia we see the potential for further growth in debit and premium segments, innovations and card acceptance infrastructure development. In debit our priority remains penetration, activation and usage. To enhance Visa premium proposition we launched Visa’s new Premium offers programme which includes about 600 offers available in CIS/SEE (Commonwealth of Independent States and South-East Europe) countries, and a number of international offers.
Currently fourteen Visa-client banks in Georgia issue Visa premium cards and banks are paying a lot of attention to cards portfolio segmentation and movement to Visa cards of a higher class. Another thing we need to do is to help open up more merchants. This will increase convenience for our customers and business on the one hand, and help Georgia to use its tourism potential in full on the other. In terms of acceptance, together with Visa acquiring banks we are focusing on key segments, such as retail, restaurants, and airlines in the most popular tourist destinations. Another trend is a growing tendency in electronic payments adoption by the Government in Georgia.
Q. Online payments and e-commerce are rapidly developing in Georgia. What are the statistics of Visa card usage for online shopping in Georgia? And in CIS countries?
A. E-commerce is one of the fastest growing segments of electronic payments: year-on-year growth in e-commerce is estimated at nearly 20% for the next two years. In Georgia four Visa client-banks are certified for e-commerce acquiring and e-commerce volume grew two times over the last years, generating over 30% of Visa payment volume in Georgia vs. 70% generated in physical environments.
Visa card-holders in Georgia most often go online to pay for utilities, buy things and top-up their mobiles.
Q. According to NBG the number of transactions increased by 200% during the last few years. What is the share of Visa in these operations?
A. If we compare Q4 2011 to Q4 2010 I can say that the growth of Visa card transactions is remarkable, specifically, the number of transactions grew by 29%, and as I mentioned earlier Visa card-holders are using their cards for payments at merchants more frequently - Visa POS transactions grew even faster at a level of 61%.
Q. You served as Vice President of several Georgian banks for seven years. What is your evaluation of the current Georgian banking system?
A. I have spent over thirty years in the financial and payments business; for about twenty years in my career I was working in the banking sector in Georgia. And it’s not only business that makes Georgia special to me - my family and a lot of my friends live in Georgia, so my heart and my soul is always with Georgia. I am happy to say that the banking system in the country, the electronic payments sector in particular, is one of the most advanced in the region which is the result of several factors: the governmental proactive position in promoting cashless payments to make the country’s economy more transparent and efficient, focus on innovations and progressive regulation in the e- payments sphere. These three key factors foster free competition on the market and help the industry to enhance the efficiency and scope of electronic payments.
Q. Are there any other Visa services which are not offered in Georgia?
A. Visa payWave solution is particularly good for smaller payments, which are fast and easy, and very often you don’t have to sign. Contactless is also good for transport systems, quick-service restaurants, etc.
In November 2011 Georgia was the first in the region to introduce Dynamic Verified by Visa (Dynamic VbV), which helped to make online payments on Visa cards even more secure.
Currently we are working with Visa client-banks to speed up migration to chip cards, which offer a higher level of security along with enhanced functionality. Currently the Visa chip cards account for twenty-three percent of the total number of Visa cards issued in the country.
Money Transfer is another important direction for Visa business development.
Q. Electronic money is rapidly developing in Georgia, winning many clients over from Visa. What is Visa’s survival strategy? What are the advantages that will keep clients loyal?
A. What all of us are trying to do is to reduce cash. So, the more free, open competition we have, the more players in the electronic payment space there will be, the more innovations and choice for consumers we can offer. And consumers’ costs will go down.
Visa has over fifty years of experience in electronic payments, and this actually equals the history of electronic payments development. Visa has huge brand preference, huge brand recognition.
Other competitive strengths that differentiate Visa from our competitors is the extensive network of cardholders, merchants and financial institutions, unique global payments processing platform VisaNet, comprehensive suite of payment products and services, powerful global brand, long-standing client relationships.
Q. Are there enough terminals in Georgia for people to use Visa and pay with it?
A. Georgia has a relatively developed card acceptance infrastructure in key segments: daily spending (supermarkets), travel (hotels, gas stations) and entertainment (restaurants). In terms of geography we are working with Visa client-banks to develop card-acceptance infrastructure not only in the big cities, but small cities and rural areas as well. If we compare the number of merchants in 2011 compared to 2010 the growth of the number of merchants accepting cards would be 32%.
Q. What is the number of transactions made by Visa in Ukraine (2011)? What are the dynamics of development in Ukraine ?
A. Ukraine is one of the key countries for Visa in the region. This is of course due to the market size and Ukraine ’s potential as a transit country. Moreover Ukraine is a hub office for eighteen CIS&SEE countries.
The PV/TV ratio for Ukraine is about 7.5%, which means that the main challenge in Ukraine is to match the volume of POS to ATMs. Despite positive market dynamics, it is still too far from financial maturity and Visa is working closely with client-banks and other stakeholders to change consumer behaviour in terms of card usage and enhance financial literacy standards.
Q. What are the main challenges of Visa in Armenia, Moldova and Ukraine ?
A. Electronic payments are basically competing with cash in the majority of markets in the region, so payments cards activation would be the first challenge in all three markets. Financial literacy is another one. Visa’s outlook for the region, however, remains very positive.