The FINANCIAL — With 25% of the total amount of transactions made at terminals being payWave, Georgia is a definite leader in the region and one of the leading markets globally. According to Visa Inc. at some merchants, like petrol stations, this share reaches 75%. The correlation between payment volumes to total volume amounts to 17%, while in the neighbouring Azerbaijan it is around 9%. As the market is so open to innovations Visa has recently introduced its Cloud-Based mobile payment in Georgia.
“The Georgian market is ready for innovations. The experience of contactless payment, Visa payWave, proves that. In just a very short term, specifically two years since when we started actively promoting the Visa payWave payments, Georgia has become a definite leader in our region and one of the leading markets globally for the contactless payment technology–Visa payWave. One of the parameters of this leadership is the share of Visa payWave transactions out of the whole share of transactions made at terminals. This share in Georgia is 25%, which is very high. If we take just credit cards, the share amounts to 40%. At some merchants, like petrol stations, this share sometimes reaches 75%. So, these are quite impressive results. We see that Georgia is now ready for mobile contactless payment. VTB Bank Georgia is the first bank in Georgia and the Caucasus countries to have launched this service, based on Visa-Cloud technologies. This is an interesting advanced technology developed by Visa a year ago. It has become very popular in a very short term. It is now available to Georgian consumers as well. This opens the door to a new era – the era of digital issuance. Whereas previously banks were issuing plastic cards, now they can issue digital cards. This allows customers to pay with their phones just as they would with their contactless plastic cards,” Andrei Aleikin, Head of Emerging Products & Innovations at Visa International (CIS/SEE), told The FINANCIAL.
One of the key indictors used by 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 17%. By comparison, the figure is around 9% in Azerbaijan, while in Belarus and Serbia this ratio is around 30%.
“Cash is our main competitor. The opportunity to replace cash payments with card payments is still enormous,” said Aleikin.
Q. What are the global trends in electronic payment innovations?
A. We see very clearly that a new era of mobile payments is coming. It is a significant shift both in technical capabilities, a lot of different mobile devices can now do payments, and also in terms of the behaviour of customers. They prefer to use mobile devices for payments instead of traditional payment tools, like plastic cards. So, these two factors combined brought a lot of new start-ups, new technology companies that are offering new technology implementations. These technologies are driving Visa to change. We are in a period of significant changes for Visa itself. There are two directions of these changes. One is the opening of the Visa network. Until recent years Visa was a proprietary network, which connects thousands of banks all over the world. It is a global network with global processing capabilities. No other players were allowed to connect directly to Visa. This was done because of security, traditions and some other reasons. Now we see the importance of changing this model. Visa is now allowing other partners, including small companies, developers, start-ups, to connect directly to Visa. We are doing it in two ways. One way is that we have developed and are now offering our partners special, so called APIs (application program interface). API is a standard protocol which allows any partner to connect to Visa and send transactions and receive data from Visa in a standard way. It is easy to implement. Software developers can do it very quickly and easily. Through this service we can expand the accessibility of our network and provide it to a much wider range of partners and companies. One of the examples is the P2P money transfer service, which is called Visa Direct. It allows one to pull money from one card and send it to another one. Until a couple of years ago, we were doing it only through banks. Banks were sending these transactions to Visa. Now banks can partner with external companies, like web service providers, internet payment providers, wallet providers. These companies will use our API interface to send transactions directly to Visa from their platforms on behalf of the bank. This speeds up the process of the creation of new solutions significantly.
Visa is also providing so-called SDK (software development kit). It is a piece of code, developed by Visa. It can be embedded in the solutions of our partners. For example, for mobile payments which we develop on Visa-Cloud technology, the most difficult part for software developers is the transaction itself. It has to follow international EMV standards, the chip technology and it is very complicated for non-professionals that are doing it for the first time. Visa has provided a standard code. The developers of these solutions are inserting it in their applications and are saving lots of time and effort on this work. This is another example of how Visa is opening itself up to its partners.
The third way of expansion of our network is the opening of developing centres. The first of them opened in San Francisco in July 2014. It is called one market. It is a huge centre that combines all the demonstration facilities, where our banks, partners, processors and potential partners can come and see and feel and try all the new technologies offered by Visa. All of them are demonstrated in live mode in this huge centre. There are about 500 software developers from the Visa side, which are sitting and working there. They are ready to work with partners on doing joint projects together. The second centre opened this August in Bangalore, India. We are preparing to launch the third one for the CEMEA region in Dubai. I am sure it will speed up the development of new ideas and solutions.
Within its digital strategy Visa has made a decision to become an enabler for innovations, to provide basic platforms, solutions, services, which will allow other people, other companies, and not only banks, to develop innovative payment services. There are several components of this platform basis. One of them, which is a significant one, is called Tokenization. Card details can be loaded to millions of devices. This leads to the fact that it is very difficult to maintain control of this data; to provide the level of security we used to have on chip plastic cards. Now it is much more difficult to provide this level of control. So, Visa and other payment systems are working together to develop new standards for Tokenization. Visa together with other payment systems submitted the proposal to the EMV Committee and they created a standard based on these proposals. Now it has becomean international standard. This standard provides a possibility to replace real card data with Token. This card data can be used in certain, very narrow circumstances. A third person will not be able to use it to their benefit in any different way. On the basis of Token solutions Visa has developed the Visa Digital Enablement Platform. It is a set of agreements and contracts. We allow our partners to get connected to the Visa Token service and through Visa get access to lots of other partners, like Apple Pay and Samsung Pay. You do not have to have individual contracts with them. So, this is the way that we plan to simplify and speed up connections and development of this new solution in our markets.
Q. Apple, Samsung and Google have all rolled out their own payment solutions. Do you considerthese companies your competitors?
A. We do not consider them our competitors. We consider ourselves to be enablers for them. In reality, none of them can work without Tokenization. They are using our Tokenization service as their basic, background service. They receive Tokens from us and just expand the access to Token through their service. They are using banking cards as solutions. It is not a competitor which replaces us or banks. They are just reaching a wider range of clients with the services based on our support. They are very well positioned and well promoted and Visa as well as banks can benefit from it. Apple Pay was a very powerful push for the development of these technologies. It sped up significantly, and was therefore made in record time due to intensive work. So, it was a great advantage. We could combine our payment technology with this very well designed customer experience which Apple can provide. Apple Pay is currently limited to a couple of models of iPhone. Android’s share in our market is between 60 to 70%. Georgia is no exception. That is why it is very important to have a solution for Android as well. Our Cloud based payment solution works on Android phones, as well as on a wider range of phones.
Q. What is the ratio of Visa payWave payments in Georgia and its neighbouring countries?
A. Georgia is really advanced in terms of Visa payWave solutions. The share of Visa payWave transactions in Georgia is 25%, which is very high. We have four Visa certified acquiring banks. We have five Visa certified issuing banks. Some of them are more active in this process. They provide some significant impact on the market in general. Others are just getting started. However, it is good that they are getting involved because this is the background of mobile payments which is the future we are moving into. Georgia has more than 6,000 contactless terminals accepting Visa payWave transactions. It is a good number for this size of market. As for neighbouring countries, they are also going ahead in this direction. Azerbaijan is at an earlier stage of development of Visa payWave technologies. The number of certified banks is even higher there, but they are just starting and are not as advanced as Georgian banks. As for Ukraine, the absolute numbers are pretty similar in Ukraine and Georgia. However, the share of payWave transactions is much higher in Georgia. So, Ukraine still has to work on introducing this technology into everyday payment experience. I recently attended an internal event of Visa in Dubai and our team members mentioned Georgia as one of the leading markets by share of Visa payWave transactions.
Q. How would you measure the success of your company?
A. As our main goal is to convert cash payments into electronic payments, this electronification of payments is the main measure of success. We are still competing with this piece of pie which is cash. We still have lots of opportunity because this piece is still big. In terms of innovations, the success incorporates the implementation of new solutions and its security, the quality of these solutions and their acceptance by customers. If a service is convenient, easy to use and secure, customers will welcome it. One example is our new service Visa Checkout. This new service was launched by Visa this summer. It has been gradually rolling out in many markets. It allows customers to pay via the internet very quickly, conveniently and securely at the same time. Customers can make a payment by pressing just one button and entering one password. They press OK and the payment is done. Consumers only have to enter their card data once. Visathen stores it. The standard conversion ratio for e-commerce, which means the number of people who started their payment process and who ended it, is 20-25%. For Visa Checkout it is between 69 to 75%. The 69% is for new customers and 75% for those who have already tried it once. These significantly high results have been due to our attempts to eradicate issues that have been concerning customers. In this case it was a maximum level of convenience and security.
All of our innovative services, including Visa Checkout,and we hope they will come to Georgia soon, as Georgia is always one of the first places in which we are launching our new services.