Central Eastern Europe: the realm of contactless
January 15,2018 09:00 AM GMT
A latecomer to the payments market, the Central Eastern Europe (CEE) – Poland, the Czech Republic and Slovakia – has leapfrogged the rest of the region in contactless development and is well on the way to consolidating its lead with advances in all things mobile.
Following the launch of the subregion’s first Visa contactless card less than ten years ago – by Poland’s Bank Zachodni WBK – this payment method has been embraced with passionate enthusiasm by all the stakeholders: merchants, consumers and issuers alike. Contactless now accounts for 76%* of Visa payments at POS throughout CEE, including 90%* in the Czech Republic.
The turning point came when PKO Bank Polski – Poland’s largest retail bank, ranked among the Top 10 Visa debit card issuers in Europe – migrated more than 6 million of its Visa debit cards to contactless, thus setting the trend for market development throughout the area.
And on the acceptance front, a tremendous boost was provided by a 2010–2016 programme under which Visa issuers in Poland spent more than €30m to support POS terminal installation and the acquirers were incentivised to deploy the latest state of the art technology, including contactless.
With the adoption effort equally strong in other CEE countries, contactless now accounts for 80%* of all Visa cards in the subregion and in Czech Republic the share is as high as 98%*.
The benefits brought by the new technology were not lost on merchants who joined in with massive promotions. As a result contactless now makes up the bulk of low value transactions and is growing in high value payments verified by PIN (33% share* throughout CEE).
A graphic illustration of CEE’s strength is offered by a comparison with the UK (the largest contactless market in Europe) and Australia (a global frontrunner) in terms of contactless share – it is 76%* vs. respectively, 49%* and 92%*.
Another major driver of the trend is diversity of acceptance: Poles, Czechs and Slovaks can make contactless payments for everyday shopping, as well as for services, too, such as car parking or public transport. In Warsaw, this payment form is accepted at 2,500 ticket machines – installed on buses and trams and at bus/tram stops – and also at parking meters. It can even be used to pay for a penalty fare (at a hefty discount compared to cash payment). Prague also recently installed 100s of parking devices and the expansion continues.
Earlier this year two smaller Polish cities, Jaworzno and Rybnik, switched their transport systems to smart payments, modelled on London’s arrangements, where the ticket validator on a bus or tram doubles as POS terminal, making contactless payments possible. A similar system operates in the Czech Republic’s Ostrava, Děčín and 10 other cities.
A boost to cashless economy
With benefits from increased use of digital payments estimated at up to $470bn a year (or 3% of GDP) for 100 major cities across the world – as demonstrated in a recent Visa-commissioned study on cashless cities1 – the CEE region is well on the way to reaping its share quickly.
Next step: mobile
The widespread contactless penetration and robust infrastructure make the CEE markets ripe for quick adoption of mobile payments. Banks are growing more and more confident about deploying solutions that support Visa mobile contactless services. In addition to issuers leveraging HCE technology, banks in Poland and the Czech Republic have brought Android Pay services to their clients, which was made possible after implementation of Visa tokenisation.
Just as contactless payments did 10 years ago, tokenisation is today taking centre stage in Visa’s future of payments vision. Surely in this respect, too, the CEE region is en route to taking its place in the global vanguard. Just one example: Europe’s first issuer wallet was deployed last year by Bank Millennium in Poland, followed by the Czech Republic and soon to be launched in Slovakia (see the Visa Vision post by Ricardo Campos, Director of Electronic Banking at Bank Millennium.
As shown by a Visa-commissioned Digital Payments Study2, most Polish consumers (69%) have already made use of digital payments – whether digital wallets, card-on-file services, or mobile payments. Their zest for novelty, coupled with the vibrancy and creative spirit of the market, definitely position the country – and the region – within the ongoing global process of migration from analogue to digital, where the future of commerce is being shaped drawing on innovation, technology and top specialist expertise.
* - source: Visa, as of September 30, 2017
1 an independent study conducted by Roubini ThoughtLab on 3,000 consumers and 900 businesses in 2016 across six cities (Tokyo, Chicago, Stockholm, Sao Paolo, Bangkok and Lagos) – www.visa.com/cashlesscities
2 Visa commissioned the Digital Payments Study with Populus. The research was conducted between June and July 2017 in 22 European countries: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Israel, Italy, Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, Turkey and the UK. The total sample size was 42,308 consumers, with approximately 2,000 respondents per country.