By Svetlana Sokolova
Costly affair
In a recent meeting of the board of the National Bank of Belarus, specialists suggested that the disinterest of tradesmen and service providers in offering non-cash payments is one of the problems of non-cash payment development.
According to some experts, the main cause of the existence of this factor is the prevalence of the ‘cash in hand’ trade and the ability to hide ‘illegal’ takings with cash payments. At the same time business owners complain about the high cost of both the equipment and of acquiring the services which allow their businesses to accept payments from clients using bank cards. For example, last year, the cost of running the services considerably exceeded those for payments received. Because of this, the Ministry of Trade created a tariff revision proposal regarding the acquiring and abolition of payment for encashment in those retail outlets where the share of non-cash payment exceeds 20 percent.
“Today, taking into account the cost of acquiring equipment and communication services, the encashment of cash money is much cheaper,” said Violetta Brezovskaya, the Head of Management of the Ministry of Trade of Belarus. “Besides, there are also other factors which restrict the fitting out of trading enterprises with payment terminals. For example, new retail outlets face a number of problems. It is impossible to install a terminal in the cash desk immediately. One has to wait their turn for some time, or pay a large sum for the equipment.”
The average cost of a payment terminal in the Belarus market is around Br7-8 million (about $900). However, for retail and service outlets with a low turnover, the problem of expensive terminals can be cheaply solved. In April of this year, the first ‘mobile buying’ scheme was launched in Belarus. To accept payment by card a trader needs to have only a smartphone and a small reading device, the cost of which is lower than the cost of a standard terminal. So now, small-scale businesses do not have any excuses for non-acceptance of cards. “The initiative should come from both the clients and the organisations themselves; they should be interested in the development of the infrastructure of non-cash payments. Today, not only young generation, but also older people prefer non-cash payments,” Ilya Shalanki, Deputy Chairman of board of Belarusbank said on the presentation of the project.
Discount for non-cash payment
Buyers themselves should push the retail outlets to adopt terminal installation. Their basic motivation — discounts and bonuses for payments made by card. Such experience is widespread in western countries where the share of non-cash operations with cards use frequently exceeds 60-70 percent of the sum.
Slowly but surely, bank products that provide bonuses for clients who pay by cards, are coming to Belarus. For example, some retail outlets provide discounts for cardholders of some Belarusian issuing banks if they pay by card. In Belarusbank alone, the list of such trading-service organisations runs to more than six hundred names across the country. Special privileges and offers for holders of international cards are offered by payment systems both in Belarus and abroad. For example, partners of the program of special offers from Visa Card total more than 20 thousand trade enterprises in sixteen countries across the world.
In Belarus it is possible to find such bank products as ‘cash-back’. It is a simple scheme. A client pays the retail cost of the goods or service purchased, then the bank returns a part of purchase cost to the customer. The bonus is paid out of commission which the trader pays to the financial establishment for each transaction. However, the size of cash-back is insignificant — approximately 0.5-1.5 percent of the purchase price. Currently cards offering cash-back can be found in BNB-BANK, MTBank and Idea Bank.
Another useful tool is the co-branding card; the joint product of a bank and a company. The advantages for the consumer of using such a card include bonuses, discounts for goods and services, gifts and other offers from the bank’s partner company. Today Belarusian banks offer a wide choice of such cards.
Legislative aspect
Work on the promotion of non-cash payments is conducted at a legislative level. In particular, the cut off point of annual receipts, according to which shops are obliged to install payment terminals, has been reduced by half and the list of retail outlets which are affected is therefore expanded. This list now includes the majority of roadside services, retail trading outlets and public catering facilities — thirteen names in all.
In the next five months, those retail outlets which have payment terminals, will accept the cards of three payment systems — Visa, MasterCard and Belcard.
It is also planned to update the law of Belarus to include ‘The Protection of Consumers’ Rights’ — the right of the purchaser to choose what form — cash or non-cash — to use as their preferred payment option. “In order to make such choices as free as possible, measures to increase the quantity of payment terminals used for payment by bank cards will be taken,” informed the Ministry of Trade.
In general, the results of the activity of both the state and the financial markets on non-cash payment development can be clearly seen. Figures are indicative: As of 1st July of this year, the share of non-cash monetary turnover in retail trade turnover of the country has now reached 15.7 percent and, although the National Bank notes low activity of people using the non-cash options where the equipment is installed, the indications are there to believe that, by 2015, the situation will improve and the desired 50 percent target will be achieved.
