Card Business Analysis

Transcription

1 20 December 2012 Card Business Analysis Mariana Velikova-Chausheva, Head of Cards Department at UniCredit Bulbank The Bulgarian market in bank cards has seen a distinct growth. This is evidenced by both the increased number of transactions and the volume achieved with bank cards at POS terminals. The number of purchases made with credit cards at POS terminals in 2012 already exceeds the number for 2011 by approximately 20%, and the volume by approximately 10%. For debit cards these rates are respectively 28% and 9%. Traditionally, the growth of UniCredit Bulbank in card payments is above the average market growth. This is proven by the activity of cards used for payments at the POS terminals of UniCredit Bulbank in Compared to 2011 there is a growth of 39% in the number of transactions and 40% in the volume. The information about the last quarter is still incomplete but during the holidays the volume of card payments is generally on the rise. In December cardholders are expected to spend 60% more than the average monthly amount of purchases at POS terminals for Actually this is the second peak within one calendar year after that in the summer holidays, namely July and August. The past year distinctly showed that bank cards are used more and more for POS payments than for cash withdrawal at ATMs. The average amount of an ATM withdrawal transaction has not changed this year, the slight increase in the number of ATM withdrawals being due only to the increased number of cards. The more frequent use of cards as payment tool for everyday purchases is evidenced also by the decreased average value of purchases made by Bulgarian consumers in the past few years. The average amount spent at a POS terminal with one card in December 2011 was BGN 74, whereas a year earlier it was BGN 77. In December 2012 we expect an even lower average value.

2 Online trade is the fastest growing service in the card business in The number of transactions executed on the Internet in the first 9 months of 2012 is already 16% more than those executed in the whole At the same time the volumes are 4 million more compared to the whole previous year. There is a significant increase in debit cards, especially those for business clients. Transactions with business credit cards grow on average by 45% and volumes by over 30%. Transactions with individuals debit cards are 20% more, and with credit cards 10% more. In connection with this in one year there has been a 15% increase in the number of people who want to use the 3d Secure service. This service gives an additional personal code for protection in online shopping. It gives holders of bank cards bearing the logos of Visa and MasterCard greater control when using their cards on the Internet, limits the possibility of unauthorized use and enhances security for consumers shopping online. UniCredit Bulbank offers this service to its cardholders free of charge. The overall analysis of card payments on the market shows that cardholders most frequently pay through POS terminals in supermarkets, shopping malls, gas stations, shops for clothes and shoes, technology stores, and hotels, which trend is preserved in the years. Network of terminals The banking sector in Bulgaria is very competitive and saturated, and in this sense the servicing of cards and the card payment infrastructure develop at good rates. According to the statistics of the Bulgarian National Bank, merchants equipped with POS at the end of the first half of 2012 are more than 33,000, and the POS terminals installed are approximately 66,000, i.e. 2 terminals per merchant on average. According to Eurostat calculations, the total number of merchants in Bulgaria mid-2012 is slightly over 100,000. The growth in the POS terminal network compared to the same period of 2011 is about 6.5%. It is important to note that actually a big number of terminals belong in big chain stores with locations in several towns or cities, and there is still tangible need for development of the market in smaller towns and smaller merchant outlets. In connection with this, the banks in

3 Bulgaria that have a well-developed network of terminals focus predominantly on developing these locations jointly with the international card organizations. According to a research of the international card organizations, more than half of the small merchants say that the change towards electronic and card payment tools is positive for their business there is an average increase of about 20%. Moreover, one in four owners of such companies claims that revenues after this change grew in the range of 25% to 50%. With respect to those small companies who still do not use tools for electronic and card payments, a special approach will be needed involving clear communication of the advantages offered by this technology, which is a task of the banks. The ATM network in Bulgaria has traditionally had good coverage. According to BNB the number of ATMs is more than 5,800 on the territory of the country at the end of the first half of the year. In small settlements where it is impossible to install and service an ATM (for financial and other reasons) cardholders may use the cash back service (supported by both international card organizations), which is a secure, convenient and fast way to receive BGN 50 in cash directly in the shop where they make a purchase. The only requirement is that the shop must be marked with the logo of the service and the cardholder must state that he or she wants to receive cash at the time of paying the goods, which amount will be additionally deducted from his or her card account. UniCredit Bulbank reports bigger growth compared to the market average. The bank has a 25% increase in POS terminals and 10% increase in ATMs for one year, servicing more than 650 ATMs at the end of November They can be used not only for cash withdrawal, but also for regular payments to a growing number of traders and utility companies such as Toplofikatsia (central heating), Vodosnabdiavane (water supply), Elektrosnabdiavane (power supply), telecom operators, etc. In 2012 the bank started a gradual installation of ATMs which further to the cash withdrawal give opportunity for depositing money on debit or credit

4 cards. There are already such in Sofia, Plovdiv, Stara Zagora, Sliven, Burgas, Varna, Veliko Tarnovo, Pleven, Gabrovo, Blagoevgrad and Kyustendil. In December 2012, UniCredit Bulbank became the first bank in Bulgaria to provide Bulgarian cardholders the opportunity to make purchases at self-service terminals. These are automatic payment stations for issue of tickets and cards related to the various services offered by merchants. They can be installed on parking management systems for payment of fees or can be used as automatic stations (unstaffed) for sale of tickets for access to ski facilities, sports halls and stadiums, exhibition centers, theme parks, galleries, museums, etc. The first installation of this kind is in Pamporovo resort and its main purpose is to reduce the queues in front of the pay desks for the ski facilities, as well as for tourists to avoid the need to carry large amounts of cash. On the European market self-service terminals are used by cardholders for purchase of subway tickets (for example in Milan, Italy), for payment of utility bills (Zagreb, Croatia), for purchase of packed foods and drinks (the International Airports Schönefeld and Tegel in Berlin, Germany), tickets for access to museums and galleries (Vienna, Austria), parking lots (Dundrum Town Centre Mall, Ireland), etc. The service has great development potential and it has already been established in Europe as a standard model of card payments without the presence of a merchant to serve the cardholder at the time of payment. Promotions The achieved volumes, transactions and number of cards were as usual supported by various initiatives throughout the year. All banks in Bulgaria by themselves or together with the international card organizations held diverse campaigns in order to stimulate the issuing of cards, as well as to motivate cardholders to make payments with them. Some of the most important promotional campaigns of the bank were MasterCard UEFA, Visa/V PAY Donna, V PAY and V PAY Lukoil. MasterCard UEFA

5 For more than 3 years UniCredit has been official sponsor of UEFA Champions League and a strategic partner to the other big sponsor of the championship - MasterCard. UniCredit Bulbank as part of the Group is proud to share the passion of fans. This year the bank cheered football fans with the credit card MasterCard Standard with the logo of UEFA Champions League. Each new cardholder received as a gift a special glass with the logo of UniCredit and UEFA Champions League. The campaign will continue with a second stage in the first quarter of Visa/V PAY Donna The Visa Donna credit card and V PAY Donna debit card specially developed for ladies are cards of unique design which give the bank s cardholders year-round discounts in almost 400 merchant outlets all over Bulgaria. The credit card Visa Classic Donna has preferential monthly interest rate of 1.33%. Besides 0.3% of the purchase amounts are set aside to support the causes published on the website V PAY and V PAY Lukoil Back in 2008 for the first time in Bulgaria UniCredit Bulbank started issuing debit cards with the V PAY logo the most secure card on the market. Its main advantages are the maximum protection of payments by means of a chip and a PIN (the magnetic strip does not store any payment information, which eliminates the possibility for copying the data recorded on the card) and its European coverage. Furthermore, UniCredit Bulbank started issuing a co-branded V PAY card in partnership with LUKOIL, which gives a year-round 2% discount upon payment of fuel, motor oils and consumer goods in the LUKOIL gas stations all over the country. Such cards can be issued in the LUKOIL gas stations as well. Security of card payments

6 Banks in Bulgaria work actively with the competent government authorities to fight the acts of vandalism and criminal deeds related to ATMs and card fraud. Financial institutions have an ongoing policy of enhancing the security of card payments and building sustainable consumer trust in the use of cards. There are modern card products and services on the market with maximum level of security, such as the VPAY card and the Secure Online Payments service. The main advantage of the VPAY card is that card information is recorded entirely and only on the card chip, which makes it immune to skimming at ATMs. UniCredit Bulbank is a main issuer of these cards in Bulgaria (with more than 500,000 pcs) and constantly stimulates the culture of their use. The Secure Online Payments service gives a higher level of security in online shopping, because the cardholder is able to identify himself/herself to the online merchant by entering an additional secret password. Advice on card use: The card has to be stored with due care and attention; The card and the card data always have to be used personally by the cardholder; The PIN code has to be changed at an ATM immediately after the card is received, and be memorized by the client; The client should cover with hand the entering of his/her PIN upon ATM withdrawal; The card should be subscribed for the Secure Online Payments service; The card should be subscribed for the SMS notification service. Trends for 2013 We expect a further growth of the card market both as number of cards and as activity on the part of cardholders. A growing number of cardholders prefer bank cards as their main payment instrument.

7 The other main trend that we foresee is the emerging of additional card products and services for different consumer segments, as well as market enlivening in terms of card innovations, especially the contactless payments that are spreading more and more widely. They allow making of payments without entering the card in the POS terminal. If it has the logo of PayPass or paywave (the respective contactless payment programmes of MasterCard and Visa), it is enough to just place the card near the terminal. When the purchase amount is under BGN 50, the payment is performed immediately without the need to enter PIN. This type of card payment is very suitable for shops with big customer flow and a relatively small amount per payment fast food chains, supermarkets, gas stations, etc. For example, as a major sponsor of the London Olympics Visa Europe was able to see the boom of contactless card payments in Europe real-time. About the end of the Olympics the results showed that more than 40 million contactless cards and an infrastructure of almost 400,000 contactless terminals in Europe, as well as a surge of 600% in number of transactions compared to So far another 2 million contactless credit, debit and prepaid Visa cards have been issued in Europe (after the Olympics). Issuers are a total of 81 banks. The service is offered on 15 European markets, including Bulgaria. At the same time 22 banks issue contactless cards MasterCard, which are already 1 million. The main issuers of contactless cards are in the UK, France, Turkey, Poland, Italy and Germany. Currently Poland is the most developed country in terms of MasterCard PayPass cards (the organization s line of contactless cards) with more than 10% of all transactions. According to the international card organizations by 2015 it is expected that 50% of cards and terminals will have a contactless functionality. The Bulgarian card market is still very young in terms of contactless payments but we expect that in 2013 this technology will become more commonly used in Bulgaria as well. Other directions in which we envisage a considerable development in 2013 are:

8 - First steps in card mobile payments (through a mobile phone); - Expansion of the products and services offered to the high-class clients of banks; - Adding products and services for young cardholders (school and university students); - Offering products tailored for women; - Development of online trade by increasing the virtual terminals and the number of cardholders using the service; - Developing the POS terminal network in smaller towns and smaller merchant outlets; - Developing the network of self-service terminals for card payments; - Programs for rewarding the loyalty of cardholders and strengthening the partnerships with key merchants; - Additional innovative methods for protecting the cards and the security of card payments. UniCredit Bulbank has a history of leadership in these trends and in 2013 will offer more added value to its cardholders.