The FINANCIAL — More than half of the population of Georgia possesses a banking card: 46 percent have at least 1 debit card, while 23 percent have at least 1 credit card, shows MasterCard’s MasterIndex Survey, exclusively published by The FINANCIAL newspaper.
However, the amount of people with both types of card has more than doubled in comparison with 2012. Only 6 percent had debit and credit cards in 2012, while the number reached 15 percent in 2013. The number of people with no credit cards has changed slightly since 2012 as it dropped from 49 percent to 46 percent. In total, 43 percent of payment card owners had at least 1 credit card in 2013.
Cash payments are decreasing in parallel with increasing card payments, shows the survey. Georgians generally pay for amounts of between GEL 25-250 with payments cards. However, cash is still the dominant payment method in spite of the increased rate of payments made by card. About 15 percent of the population used to pay with debit cards in 2012 while 2 percent paid with credit cards. These numbers have now reached about 19 percent and 7 percent according to the research. Most of the respondents – 85 percent – said that they tend to pay for things up to a value of GEL 20 with cash. This indicator has decreased by 10 percent as 95 percent paid by cash in 2012.
The introduction of contactless cards in 2012, new participants on the payment market in 2013, and the development of internet technologies – are the main reasons for the increased usage of payment cards in Georgia, according to banking sector representatives.
“Modern technological development makes the national payment system more varied,” says NBG’s annual report. “The number of companies who are engaged in payment services has increased in Georgia due to the new law about Payment System and Payment Services which was introduced in 2012. Traditional as well as new participants were represented on the payment market in 2013, which include commercial banks, micro financing organizations, remittance entities and other providers of payment services, who provide payment services as a result of registration at National Bank of Georgia,” the report says.
“The development of internet technologies and e-commerce has also contributed to the development of innovative services. Internet and mobile payment providers were registered at National Bank of Georgia in 2013. In addition, networks of self-pay kiosks are actively used by people and the share of their payments make up a large part of electronic payments in general. Electronic money has appeared, which has also contributed to the development of the payment system in Georgia. More foreign companies are expressing their interest in the Georgian payment market as time goes by,” says the report.
The number of payment cards issued by commercial banks in Georgia reached 5.9 million by the end of 2013, 13 percent more than in 2012. This is equivalent to 13 cards issued per capita. 23 percent of the total number of cards issued were credit cards and 77 percent – debit cards, according to the report.
During 2013 the share of VISA cards out of the total number of cards issued decreased by 10 percent, amounting to 66 percent at the end of the year. The shares of MasterCard and local cards increased by 9 percent and 6 percent respectively. The share of MasterCard cards was 20 percent, while local cards made up just 15 percent.
The total number of transactions executed by payment cards issued in Georgia during 2013 was worth GEL 9.0 billion in terms of value and involved 69.4 million operations in terms of volume, out of which 96 percent in terms of volume, and 93 percent in terms of value, were performed inside the country. In 2013 the volume of payment card transactions increased by 19 percent, and their value by 17 percent, compared to 2012, according to NBG’s annual report.
Payment cards are mainly used in shops and markets, while electronic goods stores, home appliance shops and furniture stores remain places where cash is still dominant compared to other payment methods, according to MasterCard’s MasterIndex Survey. The reason for this is that the goods sold at all of these places cost quite a lot and, as MasterIndex has shown, people still prefer to pay by cash or use consumer loans to finance such purchases.
Most frequently, debit cards are used up to 1-3 times a month and mainly for withdrawing cash in banks or from ATMs, for buying food in markets and buying clothes from shops. The number of people who never use a debit card has decreased significantly. It amounted to 29 percent in 2012 but makes up just 5 percent according to the current research. Credit cards are mainly used for buying food and clothes; paying utility bills by card is also common among the respondents interviewed.
In total 8 percent of all cardholders have contactless cards and they are mainly used on public transport as well as in markets and shops. MasterCard claims that the contactless penetration rate is quite good as this is an innovation for Georgian society. 65 percent of interviewees claim to use contactless payment cards in shops, supermarkets and on public transport. Digital payment is frequently used at petrol stations, pharmacies and in taxis as well. The average amount per payment for people who prefer to use a contactless card is up to GEL 50.
In total, 68 percent of users and 63 percent of non-users prefer to use loyalty offers at supermarkets. This indicator hasn’t changed significantly at all since last year. Clothing stores are some of the preferred places for Georgians to get discounts as well.
Every 1 Georgian out of 2 expects to get loyalty offers from using their credit card. One third of participants state that they would rather use their cards to benefit from payment instalments if such an offer were available in home appliance, electronic goods and furniture stores. Almost half of all respondents state that they could pay 12 month instalments of an amount not exceeding GEL 50 a month, according to MasterIndex.
“There is increasing interest in loyalty cards from consumers in Georgia. Therefore MasterCard will be focused on offering instalments to meet consumers’ expectations,” said Hakan Acar, Regional Manager of MasterCard in Azerbaijan. “I would also like to mention that the Georgian market is unique for us in a certain way. How promptly the market accepted contactless payment and the growth dynamic has made Georgia a shining example of the concept of contactless payment for the rest of the world, and we see that there is big potential in Georgia,” he added.
“Individuals as well as organizations have increased their usage of debit cards as they are safe, convenient and adapted to the internet,” said Salome Shelia, financial adviser of TBC Bank. “Another reason might be the increased number of POS-terminals at sales points. All of these aspects mean that the environment is improving which encourages customers to use payment cards more often. The loan products which are offered by banks from using plastic cards is another reason as well. As for the barriers, I would say that the main barriers are people’s habits and conservative attitude towards cash; many people still prefer to have actual money in their wallets. Another barrier might be the technologies which are necessary for card payments. These technologies, like POS-terminals and ATMs, are sometimes not comfortable for certain parts of society to use,” she added.
“Payment cards are now more attractive for consumers to use as they offer many additional services such as special discounts in certain stores as well as other offers,” said Giorgi Tsutskiridze, Executive Director at the Association of Banks of Georgia. “Besides, the banks offer cashback cards, where a percentage of the amount spent is paid back to the cardholder. People also like contactless payment cards which have been offered by Bank of Georgia for the first time in the country,” he added.
“The only barrier for using payment cards in Georgia is credit cards. Cashless payment in terms of debit cards and credit cards are the same – the tariffs are the same. If a consumer withdraws money using their credit card, then they pay a higher percentage. Lack of infrastructure is the main problem and the main barrier for developing a cashless payment system in Georgia and especially in the regions,” he said.
“I would not say that the number of credit cards users is decreasing. On the contrary – if we look at the statistics, the number of loans issued for individuals is 2.5 times more than the business lending rates. Credit cards are the same as loans for individuals. So this means that credit card usage has increased. I would guess that the number of issued credit cards has decreased. But in most cases, credit card holders, which have used a credit card for the first time and covered the first limit, then continue using the old credit card and taking out new loans. As the interest rates on consumer loans have decreased people are more eager to take out loans. In general, the prices of electronic items have decreased and they have become more affordable. As for the reason why people don’t use payment cards when buying electronic items or furniture for example, it is that such stores do not have the special infrastructure to offer customers this service,” Tsustskiridze said.
“A cashless payment system is very useful for consumers, banks and the economy in general. For the consumer, it saves time and expenses (for example transportation costs), it develops service quality. When people have less expenditures, they are able to have more savings, which go to the banking sector as deposits. This money, in turn, goes from the banks to the economy and contributes to its development,” he said.
“Year by year I make less cash withdrawals from ATMs and this is really convenient for me,” said Natia Dvali, a consumer. “There are several benefits that I get from this. One of the main advantages of cashless payment is that I am more eager to control my funds. I actually spend less when paying for things by card. Another important advantage is that carrying less cash makes me feel safer. I was robbed a year ago. Luckily I had only GEL 2 in my wallet which was the only loss for me as I immediately contacted my private banker and they blocked my cards in seconds,” she added.
“The only disadvantage is that there are still some sales points especially in local ‘corner shops’, usually located in the suburbs, where paying by cash is the only method possible. I am optimistic that the number of such places will soon be reduced,” Dvali said.
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