The FINANCIAL — Mastercard has placed Georgia in a leading position in terms of cashless payments compared to its other ‘Ukraine Cluster’ countries. Georgians’ addiction to innovation in payment systems makes the company optimistic about predicting a cashless future for the country. Together with growing numbers of card payment transactions, the country maintains low fraud level. In Georgia, Mastercard has introduced its premium cards portfolio, particularly World Elite card, which has broken down the standard understanding of payment cards.
“As of April of the current year, the number of card-payment transactions in sale points reached 55% of the total volume, which is twice more comparing to the year before. Approximately every fourth transaction in Georgia is contactless. Card payments are accepted almost everywhere in the country. The trend developing in Georgia makes us optimistic about foreseeing a cashless economy in Georgia,” Igor Stepanov, Country Manager in Georgia, Turkmenistan, Tajikistan, Kyrgyzstan and Uzbekistan, Mastercard Europe, told The FINANCIAL.
“We recognize our global experience but there is indeed much more we can also learn from Georgia. Development processes ongoing in Georgia can contribute to positive changes taking place in other countries,” said Stepanov.
According to the National Bank of Georgia, the number of debit cards in circulation totalled 7,643,761 units as of June 2016. The number is almost twice the population of the country. Out of total debit cards, the number of Mastercard cards amounted to 2,668,212.
The FINANCIAL met with Stepanov in Tbilisi, during the launch of Mastercard’s premium class card portfolio to Georgians.
“Georgia is one of the prioritized markets in our Ukrainian cluster, which incorporates Ukraine; Moldova; Georgia; Kyrgyzstan; Turkmenistan; Tajikistan; and, Uzbekistan. Accordingly, we regularly arrange visits here to meet representatives of our partner banks. The main purpose of our visit this time was the introduction of innovative premium class cards. The new products, Platinum and World Elite card, were first launched in Ukraine, later in Moldova. Now we are presenting cards to Georgians with renewed and modernized services,” Stepanov said.
According to Stepanov, the new premium Mastercard Platinum and World Elite cards carry additional services which include more tangible opportunities and values for cardholders. “I will not pay special attention to discounts as they are the most widespread benefit nowadays. In addition, as our experience shows, discounts are no longer the most valuable benefit. Our World Elite card offers exceptional benefits worldwide. For example, when a cardholder is staying at a hotel we try not to offer some standard discount only. We offer something more unique and special like a bottle of Champagne or a free night’s stay at the hotel. One of our main sources of pride is Mastercard Concierge Service. It offers clients a 24/7 service of assistants. Concierge is a special service provider solving delivery, booking and various issues all over the world. It is also available in Georgian. Furthermore, ‘Lounge Key’ or ‘Priority Pass’ will be additional functions that will soon be added. The product offers free entrance into Mastercard Business Lounges in Tbilisi, Batumi for World Elite and Platinum cards, and Kiev, Bucharest, Budapest, Prague, Vein and Moscow airports for World Elite cards. So the product will provide a sense of prestige for customers.”
Q. Georgian customers are now able to make payments even from their watches. Considering the constant transformation of payment systems, where do you see the future of payment technologies in a short-term perspective?
A. As a global technological company, Mastercard is targeted at promoting cashless payments within countries. Cashless payments are positively influencing the development of economies, more transparent money circulation, and supporting the fight against corruption and other related processes. Considering our goals, we are constantly developing innovative payment solutions. We frequently hear that plastic cards will stop existing as a payment tool, and today we are standing in the forefront of payment innovation bringing them to live. All over the world Mastercard eliminates the barriers for payments: today you can pay with card or sticker, any wearable device, mobile phone, clothes, or even shop from your fridge (this year Mastercard launched a new app which enables consumers to order groceries directly from Samsung’s Family Hub refrigerator)! In Georgia our cardholders can pay with cards, smartphones and Watch2pay, watches enabled with contactless payments technology. The world of payments is changing very fast from an external perspective. Meanwhile, internal means of payment, which include payment for a purchase, will remain the same. On our side, we always make a decision in advance about which payment source would be more safe, convenient and well-demanded on the market. Thus, we are keeping step with the development of any technological evolution and are ready to bring them to our customers.
Q. By how much percent are cash-payments reducing within your cluster countries?
A. As of April of the current year, the number of card-payment transactions in sale points reached 55% of the total volume in Georgia, which is twice more comparing to the year before. Approximately every fourth transaction the country is contactless. As for Ukraine, in 2015 the share of cashless payments involving the use of payment cards increased by 6.2% out of total transactions, reaching UAH 384.8 billion (representing 31.2% of the total amount of payment card transactions). In terms of the number of transactions, the share of cashless payments increased by 9.6%, reaching 1,286,8 million transactions (accounting for 65.5% of the total amount of payment card transactions). In July 2015 we implemented contactless card payment in Kiev’s metro. The city became the fifth in the world where card payments are accepted at the turnstiles. The number of payments being made in Kiev subway this way already equals 16,000 per day. The number is growing every day; there hasn’t been a single day that has shown a drop in comparison with the one before. Contactless payments are also available in the trams of Kiev, vending machines, as well as on the parking meters in Lvov and Kiev. Every comfortable service always becomes a habit.
Commercial banks are trying hard to raise the literacy of customers and promote card-payment advantages. As a result, we see a positive trend of cashless payments all over countries. Our company will continue its activity to maintain this progress.
Q. Georgia has always been considered one of the most open countries to adopting innovations. How advanced is our country in terms of payment systems compared to your other cluster countries?
A. Each country has its own stage of development. Accordingly, I will not make a direct comparison. However, Georgia is definitely in a leading position in terms of cashless payments within our cluster countries. Our team in Kiev in cooperation with commercial banks has also made huge advancements in Ukraine. Georgia joined this cluster in autumn 2015. We recognize our global experience but there is indeed much more we can also learn from Georgia. Development processes ongoing in Georgia can contribute to positive changes that are taking place in other countries.
Q. Mastercard is quite well-positioned on the Georgian market. Meanwhile, the leading company in payment solutions is Visa Inc. What are your plans regarding expansion of your market share in Georgia?
A. I want to make the point that at Mastercard we are not competing with other payment systems; our main competitor is cash. But if we look through the chronological processes as mentioned above, only last year company’s business in Georgia was placed under management of the Kiev office of Mastercard. Mastercard has a very strong expertise and portfolio, the company is very well positioned to provide the best solutions to its partners and customers. Today we bring true innovation to the Georgian market, and we also deliver breakthrough premium products which set up a new level of supreme service. As for Ukraine, we have intensified our business for the recent years dramatically, and currently Mastercard is an undoubted leader on the card payment market in Ukraine. So we are confident, that our expertise and unique proposition will help us to offer tangible benefits to the partners and cardholders in Georgia, and, thus, to further develop actively the Georgian payment market.
Q. Scandinavian countries, in particular Sweden, are a flagship of cashless economy. Do you think that it is the future of all countries?
A. Definitely. The main goal of Mastercard is to create a world beyond cash, where the global economy will be more secure, effective, mature and transparent for everyone. Nevertheless, there are primary steps to be taken in order to achieve it: like providing each person with a payment card; educating them on how to use it; providing proper infrastructure, such as POS terminals; and constantly updating financial literacy. This involves the complex work of government, commercial banks and payment companies as well. For example, in Ukraine we are constantly doing these things, and it brings outstanding results. In 2015 65.5% of the total payment card transactions in Ukraine were made at POS-terminals. Furthermore, Ukraine is the fastest growing e-commerce market in Europe today: according to the research, its growth in 2015 equalled 35%. This year we launched Masterpass in Ukraine, and it has every reason to boost e-commerce in the country considerably. With Georgians’ openness to innovations, we are also confident in cashless future of Georgia.
Q. What is the fraud level of card payments within the countries of this area?
A. As European countries, Georgia, Ukraine, Moldova are among a group of countries with relatively less fraud level, according to the world rankings. From the very start we have launched plastic cards with EMV chips and contactless technology, protected by multiple layers of security, as well as by additional safety services (e.g. Mastercard Securecode). Mastercard provides cardholders with a maximum level of security.
Q. Recent years have been quite hard for Ukraine, which was involved in military conflict in its region. Georgia, like Central Asian countries, faced economic difficulties due to the devaluation of national currencies. How have these trends influenced Mastercard’s plans?
A. The recent years were indeed quite difficult in terms of economic development. Meanwhile, based on our practice I can say that crisis is a time of opportunities. On the one hand it is a time of pressure on the country, however such processes always encourage something new. There are no stalemates in nature. The issue is whether one is looking for solutions or not. Luckily Mastercard has been one of those companies which has never stopped its development and continued implementing innovations against the background of tough economic conditions.