Based on exclusive Payments Cards & Mobile research, The Eurasian Digital & Card Payments Yearbook covers 10 countries, providing a snapshot of a region in epochal change and bringing to light food for positive thought.
As the war mongers on, certain updates from Russia’s payments landscape have been hard to trace in the last year but despite long-established relationships in Eurasian markets having been upended by the conflict, there have been surprising sparks of success.
The Eurasian Economic Union (EAEU) was formally launched on January 1 2015, creating a single market of 165 million people with the participation of Russia, Kazakhstan and Belarus.
The treaty bringing the EEU into effect was signed in Astana, the capital of Kazakhstan, on May 29 2014. The launch of this single economic space, in the words of Russia’s Vladimir Putin, was “the first real step…towards restoring natural economic and trade ties in the post-Soviet space.”
However, the biggest coup for the EEU would have been the inclusion of Ukraine, second only to Russia in the size of its population and now bitterly divided between its Russian-speaking east and its EU-leaning west among the former USSR.
Despite this, the region has shown potential for substantial growth with Armenia, Azerbaijan and Belarus the top three countries- Armenia the frontrunner by some way in terms of expected and forecasted growth by the end of 2024 in terms of percentage GDP.
The anomaly that is Ukraine for the year 2022 still doesn’t sit too far below second-place Azerbaijan for forecasted growth in 2023 and 2024.
Cards on the incline thanks to digital wallets
Card payments growing strongly in the region- showing a five-year CAGR of 28.6%. This is largely attributable to Government action to encourage electronic payments and digitalisation in order to improve tax collection and increase overall efficiency. In 2022, cards per capita in Eurasia averaged 2.09, up from 1.83 per capita in 2021.
Kazakhstan reported a 31.66% growth in card payments in 2022 (from 117.87% in 2021), driven by the rapid uptake of contactless usage and mobile payment wallets.
Azerbaijan, with the second-fastest growth rate in card payments, is another good example.
As early as 2005-2007, its ‘State Programme on Development of National Payment System in the Republic of Azerbaijan’ called for the replacement of cash with electronic payment and for the use of electronic payment systems by all businesses and individuals.
This original measure has been strengthened in the intervening period; most recently, official plans were announced for all retailers with monthly sales of more than $1,000 to install EFTPOS terminals.
In 2022, the total of card payments increased again by 89.51% over 2021, driven by significant growth of digital wallets.
Georgia requires a stand-out mention considering its small size, with the National Bank of Georgia, the country’s central bank, reporting more than 515.0 million card payments at merchants in 2022.
Despite the small population, there were more payments in Georgia than in Armenia, Azerbaijan, Kyrgyz Republic and Moldova combined.
In 2022 the total value of payments on cards- table 2.8 Value of Payments on Cards was $2215.33 billion, of which Russia accounted for $1826.79 billion, or 82.5%.
The total value of ATM withdrawals – table 2.9 was $625.06 billion (Russia: 73.8%) and combined total transactions with cards were valued at $2840.39 billion, which represents growth of 23.61% over 2021 and a CAGR of 18.09% between 2018 and 2022.
NB these values are expressed in dollars and are therefore significantly affected by the devaluation of local currencies.
The rise and fall of POS & cash
Over the five-year period to 2022, ATM transactions as a percentage of total transactions have fallen in all countries of Eurasia. Although it increased slightly to 26.67% in 2022 from 25.69% in 2021. Moreover, apart from the occasional blip, the year-on-year trend has been consistently downwards.
POS payments continued rising as a percentage of the total transactions. In the light of the COVID-19 pandemic, ATM usage figures for 2021 had unsurprisingly declining at a much deeper rate than in previous years.
In some countries, the trend has been uneven, but it is unmistakeable, nonetheless. Kazakhstan (3.0%), Russia (3.1%), and Ukraine (7.4%) show the biggest switch away from ATMs cash withdrawals to POS payments on cards.
On average, the dynamic trend from ATM withdrawal to POS payment has been a 20.27% shift in value in one year and a compound decline of 25.15% year-on-year between 2018 and 2022.
An increase in POS terminals is always pleasing and in the four-year period from end-2018 to end-2022, the rise was quite substantial in regional POS terminals, growing by 13.98% to 5.93 million.
Russia accounts for 64.19% of the total POS terminal estate. Kazakhstan, Armenia, and Azerbaijan showed the strongest rates of growth on a five-year basis.
There are much lower levels of acceptance networks in Eurasia compared to Europe without the inclusion of Russia. However, in 2022, ATMs per million inhabitants were 684.4 in Eurasia compared with 677.7 for the EU Member States in 2021.
Based on the period between 2018 and 2022, the region’s ATM base is in a consolidation process.
It is likely that both the bank sector consolidation in most Eurasian countries, higher card use, and cash-advance services at POS terminals in retail outlets are the main reasons for declining ATM numbers from their peak in 2013.
Nonetheless, the Kyrgyz Republic and Uzbekistan have shown significant growth rates since 2011. The implementation process of card business in both countries seems still to be at an early stage.
Russia, accounting for 60.04% of the ATMs, led the way: between end-2010 and end-2015, the Russian network grew by 34.9%, compared with growth of 23.8% for the region excluding Russia.
Among the other countries of the Eurasian region, only Ukraine has a substantial ATM network. In 2022, Russia and Ukraine together accounted for 74.89% of the region’s ATM base.
Russian banks have been on a competitive mission to increase ATM services available to their customers, both by installing their own hardware and initiating ATM-sharing agreements with competitors.
Sberbank reported 45,200 ATMs and self-service terminals at end-2022.
VTB Bank, which has the second-biggest network, reported 2,124 ATMs at end-2008; by end-2022, the figure had risen to 15,000 ATMs and self-service machines after including the ATM networks of its acquisitions and the merged VTB24 Bank.
Alfa-Bank, Russia’s biggest private bank, reported around 3,800 ATMs and self-service machines at end-2022.
In addition, ATM sharing has become widespread in Russia. The total integrated ATM network available to Alfa-Bank cardholders, taking into account partnerships with Promsvyazbank, MDM Bank, Rosbank and Universal Bank for Development and Partnership, amounted to nearly 20,000 machines in 2,500 communities in Russia.
Russian Standard Bank had an estimated 6,000 ATMs and instant payment terminals by end-2022, up from 1,885 in 2012. The RSB ATM total includes arrangements with B&N Bank which enables RSB cardholders to access an additional 9,400 cash-dispensing ATMs.
In 2018, these kinds of ATM agreements gave B&N customers access to a network of more than 15,000 ATMs. No updates for any of these figures were provided in 2022.
On the ATM side, the gap between Eurasia and Europe is less wide than with POS terminals. Among individual countries, some less developed European countries reported 2022 figures for ATMs per million inhabitants which were well below the best of those reporting from the Eurasian region.
Russia and Georgia headed the list, with 780.7 and 776.7 ATMs per million inhabitants in 2022, respectively.
By contrast, the respective figures for Romania and Turkey were 492.9 and 631.4 ATMs per million in 2021.
Acquirers issue and vice versa in Eurasia
Historically, the Eurasian banks consider both acquiring and card issuing as core bank business. Many banks issuing cards also have their own acquirer licences granted by the card schemes. They run their own acquirer operations in-house or use the services of third-party acquirer processors. As in the European countries, the acquiring business in Eurasia has started on a domestic level.
From 2009, Eurasian acquirers compete in their home markets, cross-border in the CIS region, and cross-channel at POS terminals, and service online merchants. From 2016, innovative acquirers started to offer omni-channel and multi-payment acceptance.
By mid-2023, this omni-channel acceptance includes the ability to service all channels (i.e. POS/MPOS terminals, mobile in-store, online shops, in-app) and to accept multiple payment means in all of those channels. Multi-payment services demanded by merchants include cards, bank payments, online wallets, digital wallets, and prepaid products.
The Payments Cards & Mobile Eurasian Digital & Card Payments Yearbook is a comprehensive review of ten countries (EA10) and was published for the first time in 2009. It had become apparent that there were many unique and divergent trends in the region coming from very different market dynamics in a less mature and constantly evolving landscape.
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