The FINANCIAL — While around half of the population of Tbilisi possess banking cards, the majority of these cards are actually ‘debit cards’, reports the first MasterIndex study conducted in Georgia.
The FINANCIAL — While around half of the population of Tbilisi possess banking cards, the majority of these cards are actually ‘debit cards’, reports the first MasterIndex study conducted in Georgia. Cards mainly belong to people who have either completed, or are in the process of completing, higher education and those between the ages of 18-34. Cards are used on average one to three times a month and mainly just for the purpose of withdrawing cash. Interest free instalments, money refunds and promotional lotteries are the top three initiatives that would promote the usage of cards in payments. The acceptance rate of cards is the top factor influencing card selection.
MasterCard is holding the second place the market in terms of penetration. “We, however, are much closer to our cardholders,” said Hakan Acar, MasterCard Country Manager, in an exclusive interview with The FINANCIAL. “We try to be a part of their daily lives. Our cards are created to make people’s lives easier. The main advantage of MasterCard is that we are more open to innovations. We focus fully on customer needs. That is the key to our success.”
The study showed that cash still remains the leading method of payment for both cardholders and non-cardholders. In all of the different shops/institutions that were investigated in the study, cash remains the dominant form of payment. Nevertheless, in theory cardholders would be willing to use their cards for payments in taxis, public transportation, open markets and other places. “The most solid example that we have now in Georgia is Express Card, which is completely meeting all of these requirements. PayPass technology is the best if you want a card to be used often and in many locations. When a cardholder is using their card on a daily basis, even for transportation, it means that they are getting used to making card payments, which is good.”
Express Card by Bank of Georgia gained success in just a short period of time. This is the first contactless card in the Caucasus region. “As far as I know, this is the most frequently-used card in Georgia.” Hakan Acar added.
“The study showed that people tend to be hesitant about going to the bank to apply for a payment card. If you somehow raise people’s awareness of payment cards however, they will become more interested in getting one. We asked people a number of loyalty questions, for example what would the reason be for them getting a payment card. Most of all, respondents would like to get discounts at chain supermarkets and clothing stores for using their cards for payment purposes. They would like to have interest free instalments. Interest free instalments are becoming increasingly popular in Turkey as well.”
The types of stores at which instalments are most frequently requested, are: supermarkets, clothing stores, electronic goods and home appliance shops. The preferred VIP features are: high credit limit, rewards and car assistance.
75% of users say that they are aware of the fees they are charged, 14% are not sure about the rates of the fees but are still aware that they are being charged.
The survey shows that while internet is used quite frequently (especially among cardholders), online shopping has not yet become widespread, and identity verification has slight potential to increase the number of online shoppers.
“When we asked about e-commerce, the majority of respondents said that they like to actually see what they are buying in front of them before paying for it, and therefore don’t tend to shop for things online. They also have some concerns about the level of customer service. This is not unique to Georgia but is an issue that is encountered everywhere. The two go hand in hand. For example, in Turkey customer service is better and therefore they have more developed e-commerce. When you want to return something you have bought online, you need time, money and energy to exchange it. This process has to be improved in Georgia. MasterCard ensures safe online shopping. Cards include the holder’s ID information and the seller is sure that the purchase is being carried out by an actual person. We are improving e-commerce and making it more comfortable for our cardholders,” he explained.
Mobile, and especially contactless payment, have good potential on the market, shows MasterIndex.
“Mobile is the new era. In answer to the question ‘would you rather lose your wallet or your mobile?’ 60 percent said that they’d rather lose their wallet. Mobile phones are getting cleverer and cleverer. Now we have the mobile payment system Turkcell in Turkey, which is one of the biggest operators. We have mobile wallet which enables P2P payments, money transfers and other innovations. These technologies will be brought to Georgia for certain. We are in talks with Georgian banks to introduce these technologies. I feel optimistic about this market as Georgia is very open to such innovations. A payment card chip will be installed in the mobile card and this then makes the life of the cardholder easier.”
MasterCard has six member Georgian banks including Bank of Georgia, Liberty Bank, TBC Bank, Cartu Bank and ProCredit Bank. They are trying to expand that number. MasterCard is going to add six more banks by the end of 2013. Negotiations with the banks are at different stages. “We are working very closely with Georgian banks. All of our ideas and innovations are for the most part accepted and appreciated by them. They are really very cooperative and passionate about implementing new products. We are eager to do our best with them as they are very supportive and cooperative. In turn MasterCard is always supporting them with global know-how.”
Commercial cards are not currently available in Georgia but MasterCard may introduce these cards to SMEs soon.
This is the first MasterIndex survey to be conducted in Georgia. MasterCard first introduced MasterIndex in Turkey several years ago. Since then the company has been trying to monitor the post-Soviet market. They are conducting surveys in Greece, Spain and other European countries as well. Last year MasterCard did it for the first time in Azerbaijan. “We are paying a lot of attention to the Georgian market and trying to do the same here. It is the first time here but won’t be the last. Georgia is one of the most welcoming countries in the region. We will be introducing some loyalty programmes in the country this year,” Hakan Acar claims.
72% of respondents said that they knew MasterCard and for both holders and non-holders it is first of all recognised as the global payments company, and then as sponsor of the UEFA Champions League.
MasterCard operates in 210 countries and has 23 thousand members.
The number of payment cards issued in Georgia as of January 2013 is 4,145,364 according to the National Bank of Georgia. Out of that number, 3,127,643 are Visa cards and 529,660 are MasterCard, while 488,061 belong to others. The number of payment cards has grown significantly since January 2012 when it amounted to just 3,404,788.
GEL 668,808 thousand was transacted through 4,714,588 transactions in January 2013. GEL 421,051 thousand was transacted through 2,540,255 ATM transactions; GEL 37,353 thousand – through 245,041 transactions at POS-terminal and imprinters in banks and their branches; GEL 177,422 thousand – through 1,774,411 transactions at POS-terminal and imprinters in trade and service outlets; while GEL 26,269 thousand was transacted through 644,163 internet transactions.
There are 1,936 ATMs, 11,125 POS terminals in merchant and service outlets and 2,495 POS terminals in bank branches and service centres in Georgia as of January 2013.
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