Yelena NESTERENOK All Cards In
Every fourth payment in Belarus is made using plastic cards
Cashless payments have permeated our lives. Even the toughest skeptics give in “under the pressure” of profitable loyalty programs, convenient payment applications and functional card products. The use of cashless payment instruments has been steadily growing. Bank cards remain the main payment instrument today. In an interview with the Economy of Belarus Magazine Director of the National Payment System Belkart Yelena NESTERENOK talks about the changes awaiting the cashless payment market and payment tools that can replace plastic cards.
According to the latest data, Belarus is among Europe’s leaders in terms of the number of noncash payments. According to statistics, Belarusians use cards more often than people in Germany, Poland, and Czechia. How can you explain this?
Indeed, Belarus is really ahead of Germans, Poles, Czechs, and Lithuanians in the use of payment cards. This is despite the fact that the market of cashless payments in Western Europe began to evolve much earlier than in Belarus. As of 1 April 2016 Belarus had approximately 12.4 million cards in circulation, i.e. more than 1 card per capita. As of the beginning of this year, every fourth payment in Belarus was made using cards.
I think these results were made possible primarily thanks to the active position of Belarus’ National Bank, great interest of all banks and close cooperation between all participants of the financial market. In 2013-2015 the country implemented the plan of joint actions between the government agencies and financial market participants to develop the retail payments system using modern electronic payment instruments and means of payment.
Currently, we are guided by Decree No. 478 on Digital Banking Technologies and the Digital Banking Development Strategy in the Republic of Belarus for 20162020. The goal is to increase the share of noncash payments to 40% of the total retail turnover by 2021. A national program to improve the financial literacy of the population is currently in progress. Our payment system and banks give financial literacy lessons and conduct a variety of promotional events and other activities.
How do things look for your company? It is obvious that Belkart has managed to fight off the stereotypes regarding the national payment system.
Over the past two years, Belarusians have drastically changed their attitude to Belkart products. Now we see positive trends both regarding the recognition of our trademark and the use of our products.
The number of Belkart cards in circulation is more than 5.1 million units. About 200,000 are co-badged Belkart-Maestro cards. The share of cashless payments in the total volume of operations with our products rose from 21.6% to 27.04% in 20142015. In 2014 cardholders made more than 360 million financial transactions. In 2015, the number of transactions reached almost 430 million, i.e. rose by 16.7%. Almost 1.2 million financial transactions were made per day, or 50,000 per hour.
Our payment system may boast good results in other areas. For example, only 15.6% of cardholders withdrew all the money on the day the money was credited to the account. In other cases our clients either kept the money on the card accounts and used it in virtual payments, or withdrew it partially. This shows that people’s financial literacy is really improving and that noncash payments are gaining popularity.
Today Belkart products are accepted at 99% of retail and service outlets, 98% of ATMs and 99% of self-service terminals. It is the highest penetration rate among all domestic payment systems in the CIS. Thanks to the national automated information system ERIP Belkart cardholders can carry out transactions in all online stores with . by and .bel domains.
How are things with the nationwide loyalty program Motsnaya Kartka launched in 2014?
Over 170,000 cards have already been issued. They provide discounts in more than 2,000 sales outlets across the country. Over 150 organizations have joined the initiative, and their number keeps growing.
Eight banks take part in the program, and this is only the beginning. Our ambitious goal is to turn every payroll card issued by any bank in the country into a discount card acceptable at all retail and service companies throughout the country.
Is Belarus ready to turn into a cashless society? Some countries have almost gone cash-free. Is this possible in our country?
Indeed, the share of noncash payments in Belgium, France, the UK, Canada, Sweden, and the Netherlands is approaching 100%. Such a result has been achieved in these countries first of all thanks to a variety of government programs such as the development of the modern payment infrastructure, availability of mobile payment terminals, the introduction of limits on cash payments and commission fees in cash transactions.
The majority of these practices are applied in Belarus as well. It pertains, first of all, to a wide use of payment terminals in retail and service organizations, including bank projects on promoting mobile terminals. The zero liability principle that obliges banks to return money to the cardholder in case of frauds is protected by the law. The Belarusian government has imposed a limit on cash
Belarus is really of Germans, Poles, Czechs, and Lithuanians in the use of payment cards
payments restricting it to 1,000 base amounts. Banks now offer more benefits to cardholders, including, for example, a cash-back option.
All these steps help boost the growth of noncash payments. If all the participants of the financial market stick to the strategy, Belarus will have all the chances of becoming a noncash society. In my opinion, the forthcoming redenomination of the Belarusian national currency will also encourage further increase in the share of noncash payments.
It looks quite promising. However, the variety of cards is so big that sometimes it is hard to choose. There is an opinion that we need a multipurpose card that combines debit, credit and discount cards and can also be used as an ID and a travel card. There are such examples abroad. Can we expect such cards in Belarus? Today there are technologies that can combine in one product
As of 1 April 2016 there were approximately 12.4 million cards in circulation in Belarus
several payroll cards, cards of different loyalty programs, a travel card and others. Products based on this technology are offered by some banks in Russia and also in Europe.
However, the pace of dissemination of such products in any country depends on the demand, and Belarus is no exception. Given this, it is evident that banks introduce cost-intensive technological solutions for imagebuilding purposes rather than commercial reasons.
In 2014 the Belarusian payment system launched an integrated product combining the functions of payroll and discount cards. We will continue developing similar products.
The advent of online-only banks and expansion of mobile banking services are actively discussed in Belarus today. How will the development of digital banking affect the domestic market of plastic cards? What will happen to cards? Will they look differently from what we are used to?
Implementation of innovative payment technologies, no doubt, is a major success factor for the leading cashless countries. Online banking, mobile banking services and other means of remote servicing of cardholders are no longer novel concepts.
Plastic cards will soon stop being the main payment instrument. Belarusian banks are working hard to introduce technology to emulate cards with the help of mobile phones, watches and other portable devices. With the implementation of this technology, the issue of plastic cards in the form we know today will be minimized, but not stopped completely.
We keep up with the current trends and will soon offer new services to our cardholders. This is envisaged in the strategy for the development of our payment system in the coming years.
The use of biometric identification is an important trend in online banking. Experts say it considerably enhances the security of transactions. Do you share their opinion? Do you believe online payments are secure enough today?
Biometric identification will certainly boost the security of noncash payments, especially those conducted via the Internet. Besides, it will make such transactions more convenient.
Two- and three-factor authentication used in payment systems today also ensures the necessary level of security. It is worth noting that since its implementation, there has been a steep decline in online payment fraud.
Overall, the number of online payment scams in Belarus is close to zero.
Let us go back to the company’s activities. What new services and products can we expect in the near future?
Not long ago, we launched a premium product. Its users will soon be invited to test new features. We also have plans to market a new loan product and launch a technology for swift transfer of money between cards of the Belkart system issued by any Belarusian bank.
We attach much importance to the development of our cooperation with the international payment system MasterCard. First of all, I am referring to co-badged cards Belkart-Maestro enabling their holders to make payments in Belarus and abroad.
Besides, the Resolution of the Board of the National Bank “Concerning some matters of security” will become operational soon. The resolution provides for the transition to EMV chip cards. At present, we are facing a challenging task to choose a chip for Belarusian cards.
In general, I can say that we are open to clients and partners. Due to the territorial proximity, we can get feedback from banks participating in the payment system, hold meetings, organize trainings and participate in programs conducted in cooperation with the banks.
What is the progress in cooperation with Russia’s National System of Payment Cards (NSPC)? The integration of Belarusian and Russian systems was on the agenda some time ago.
We have set up a working group of representatives of our payment system, the National Bank of the Republic of Belarus, and a big team of experts on behalf of Russia, including representatives of the Central Bank. The working group should analyze cooperation prospects and explore the future of Belkart’s integration with the NSPC Mir.
We are monitoring the achievements of Russian colleagues and are always ready to engage in a dialogue to share our best practices. Belarus’ national payment system experience extends back over 20 years, and our magnetic stripe cards emerged more than five years ago, while the first cards of the Russian payment system were issued only at the end of 2015.
Speaking about the development of the NSPC Mir, they are currently implementing projects similar to the earlier projects of Belkart. In particular, to obtain an international status, they introduced MasterCard co-badged cards. Russian colleagues have already implemented various pilot projects, started issuing payroll cards, and are developing the technological infrastructure.
Social projects of your company like tours to Belarusian museums and financial literacy promotion are very popular with Belarusians. What else do you have in store for us?
Belarus is set to increase the share of noncash payments to 40% of the total retail turnover by 2021
Indeed, there are two big socially oriented projects. We organize tours to Belarusian museums and improve the financial literacy of people. Two websites, namely museums.by and gramota. belkart.by, have been created for these purposes.
As far as the first project is concerned, we help people learn more about our cultural legacy using photo reports from museums. It turned out that there are over 250 museums in our small country! And many Belarusians want to see them at least virtually. As a result, the popularity of the project is booming, now we even have followers - banks and large companies launch similar projects.
Of course, we will continue our work. At least, we must keep our promise to make photo reports from all museums of Belarus. To develop the project, we are now working out excursion routes, for example, one-day trips to Belarusian regions with visits to one or two museums. The information on these routes is available on our website.
Within the framework of the financial literacy project Be Closer we are holding campaigns for various population groups. For example, the Lesson of Finance project is meant for school students. Besides, we offer different programs for junior and senior students. As part of the Magic Card campaign, we visit enterprises together with the banks implementing payroll programs at those enterprises. Moreover, it is not just a financial literacy curriculum but a fascinating event for the whole family. The campaign Help Your Parents is meant for pensioners whom we teach to use online banking services and explain how to pay electricity, rental, mobile and home phone bills.
Speaking about charity projects, last year we held the campaign Listening With Your Heart. As part of this program, we provided targeted aid and, of course, organized small feasts for residents of care homes and disabled people.
As for our future plans, I can say that we will work to devise new programs and promote our socially oriented projects. Apart from that, we want to work out a charity program, for example, to take an organization under patronage and provide support on a regular basis.