According to the “Payment Cards Central and Eastern Europe 2010” provided by Retail Banking Research to the Ecommerce Journal during2008 the main growth in plastic cards usage was recorded in central and eastern European (CEE) countries while western Europe showed slower pace. The research indicates that Russia and Poland were the main drivers of the growth with Russia, the Ukraine and Poland accounting for 71% of all cards in the region. Here you can read the full study.
There were 264 million payment cards in issue at the end of 2008 in the 14 CEE markets surveyed. During 2008, 24 million new cards were issued in the region, a lower per annum increase than during each of the preceding four years. This slowdown in growth was primarily due to the onset of the global financial crisis and ensuing economic downturn, and the closure of inactive card accounts. Nevertheless, at 10%, growth in card numbers in CEE was still considerably higher than the 5% found in western Europe.
Russia and Poland drive growth
16 million of the new cards in CEE were issued in Russia, and a further four million in Poland. In Russia the growth in card numbers is largely attributable to salary projects whereby banks sign up businesses for corporate banking and open current accounts and issue debit cards to all employees, so that companies can pay salaries by credit transfer.
Number of Payment Cards in Central and Eastern Europe, 2004-2008 (million)
The three largest CEE cards markets – Russia, the Ukraine and Poland – account for 71% of all cards in the region. Romania and the Czech Republic were the only two other countries with more than 10 million cards in issue at the end of 2008.
Two countries, Croatia and the Ukraine, experienced a decline in card numbers in 2008. In the former, this was due to the closure of large numbers of inactive card accounts and in the latter as a result of bank bankruptcies and customers closing card accounts because of fees.
Debit cards continue to dominate
The debit card is still by far the most widely held type of payment card in CEE, representing 83% of all cards in issue. Although this share has fallen from 90% in 2004, it remains virtually unchanged since 2007. The popularity of debit cards in CEE contrasts with the situation in western Europe where 48% of cards are pay later (credit or charge card) products.
Credit and charge cards only make up 15% and 2% of payment cards respectively in CEE. Only in the Czech Republic, Poland, Slovakia and Slovenia do pay-later cards account for over 30% of the national total. In Kazakhstan and Russia they make up less than 10%.
Share of Payment Cards in Central and Eastern Europe by Type of Card, 2008
Average cardholding remains low
Although average cardholding for the region is increasing, it is still relatively low, with an average of 101 cards per 100 adults, compared to 214 in western Europe. This indicates that there is plenty of potential for further market expansion in the region.
By the end of 2008, the lowest figure of 0.6 cards per adult was found in Kazakhstan, where the market has only taken off in the last few years. Four other countries (Poland, Romania, Russia and the Ukraine) also had fewer cards than adults at the end of 2008.
Only in Croatia and Slovenia were there more than two cards per adult in issue. Bank account holding is high in these countries compared to the CEE region as a whole.
Usage grows faster than card numbers
A total of 2.3 billion card payments were made in CEE in 2008, an increase of 17% on the year before. As consumers are becoming accustomed to using cards more frequently for payment, and as card acceptance networks expand, transaction volumes are growing significantly faster than card numbers.
Volume of Card Payments in Central and Eastern Europe, 2004-2008 (million)
On average, adults in the 14 countries surveyed made just nine card payments each in 2008, which is significantly lower than the western European average of 81. Adults in three markets, Estonia, Latvia and Slovenia, averaged more than 50 card payments each. These countries all have higher levels of cardholding than the regional average, as well as a developed acceptance infrastructure. In contrast, Bulgaria, Kazakhstan, Romania, Russia and the Ukraine each saw fewer than five payments per adult. Cardholders in these countries still tend to use their debit cards to withdraw cash from ATMs rather than to pay for goods at retailers.
EFTPOS terminals pass one million milestone
POS acceptance networks have been expanding throughout central and eastern Europe. Saturation is approaching in certain merchant sectors (e.g. petrol stations and supermarkets) in the more mature markets such as Poland and Hungary.
At the end of 2008, there were more than 1.1 million EFTPOS terminals deployed in the region, up 26% on the previous year. Russia, Poland and the Ukraine, the only three markets with more than 100,000 units, account for 58% of all EFTPOS terminals in CEE.
When compared to the adult population, Estonia, Slovenia and Croatia are the only countries in CEE with over 20,000 EFTPOS terminals per million adults. These are also the three countries with the highest cardholding per adult, albeit in a different order. The three largest former-USSR states – Kazakhstan, Russia and the Ukraine – are the only countries with fewer than 3,000 EFTPOS terminals per million adults. The low penetration in these markets can be explained by their large populations coupled with the late development of merchant acceptance.
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