Preferring cash withdrawals to using cards

The number of issued bank cards already exceeds the number of residents but do we need to shift from quantity to quality?

By Roman Anisimov

The Government and the National Bank have been encouraging the use of bank cards, with most Belarusians now receiving their salary directly into accounts which are accessible via card. This promotes non-cash payments, reducing administrative costs and allowing shops to serve customers more quickly (expanding their turnover). Banks receive additional resources at their disposal while citizens are saved from the necessity of carrying large sums of cash, which can be lost or stolen.

Moreover, there’s no need to queue at the accounts department on pay day. Card holders can make some payments without even leaving home, since Internet banking (and SMS) makes life much easier.

World experience shows most people tend to have several cards; in 2007, the average in Germany was 1.4, 1.6 in France and 2.7 in the UK. Of course, infrastructure needs to be further developed and improved in Belarus. Over 3,000 ATMs are currently operating in the country, enabling card holders to withdraw cash and perform non-cash transactions. There are also around 3,100 info-kiosks. Over 23,000 trade and service outlets are equipped with almost 37,000 payment terminals.

Meanwhile, more shops and services need to offer card payments. According to the Trade Ministry, over 37,000 stores exist countrywide, alongside around 12,000 catering outlets, yet only 23,000 of these were accepting cards in October 2011. Naturally, this is a big improvement on five years ago, when the situation was very different. Seven years ago, around 90 percent of bank card transactions were purely connected with receiving cash (compared to less than 55 percent now).

The state is encouraging businesses to accept bank cards but many shop owners are wary, explains Victor Margelov, who owns a chain of shops and catering outlets, “Previously, it was too expensive to install, repair and service payment terminals. Moreover, due to competition, recent prices have dropped, so it’s more profitable to work with cash than with card payments.”

“We can’t say that the major problem concerning bank cards is lack of infrastructure,” notes Oleg Veremeichik, the Head of the National Bank’s IT Department. “Compared to our neighbours, Belarus is doing quite well in this area. In my opinion, it’s more important that card holders understand where they can use bank cards, and how. Many citizens are still surprised to learn that there’s no commission on using your card in shops.”

Vladimir Basko, Chairman of the Infopark’s Board of Directors, believes that some banks need to extend their card services. “I have a wife and three children,” he notes. “Therefore, we have around ten bank cards in our family. We sometimes need to withdraw cash just to transfer money from one card to another,” he explains.

With such annoyances, Belarusian residents prefer to receive around 85 percent of their ‘card’ money in the form of cash. However, the National Bank hopes to reduce this figure to 75-80 percent by 2016. Three years ago, cash transactions accounted for around 66 percent of bank card transactions in Germany, while this figure stood at around 25 percent in France and less than 35 percent in the UK.

The best way to encourage non-cash payments may be to offer interest payments (equal to the refinancing rate) on deposits on card accounts. Coupled with better explanation of services and the installation of payment terminals in more shops, we should see cards used for a wider range of purposes.

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