Increased Card Usage will be Increased if Consumer Habits are changed

Payment cards are used far less frequently in CEE than western Europe but research from RBR indicates usage will grow

Consumers still prefer cash for low-value payments

According to RBR’s report Payment Cards Issuing and Acquiring Europe 2016, central and eastern Europe (CEE) has significant potential for an increase in card usage, as consumers begin to follow their western European counterparts in moving from cash to cards for making low-value payments. Card usage remains low in CEE with western European payment cards used on average twice as often as those in CEE. It is still common for consumers in CEE to use cards exclusively for cash withdrawals. Payment cards in the region have other uses too. For example, in Kazakhstan, which has the lowest usage in the region, credit cards are more commonly used for withdrawals of cash loans, than as a payment instrument. Habits are changing, however, and awareness of the benefits of card usage is increasing across the region.

A relatively new driver is contactless cards, which are particularly aimed at displacing cash for low-value purchases. At present this is more of a factor in western Europe, particularly in the UK, where retailers have widely embraced the technology. A smaller proportion of cards in CEE have contactless functionality, although it is well established in certain markets including the Czech Republic, Poland and Slovakia.

Charge card usage per card higher than debit cards

Discussion of payment card types often focuses on credit and debit cards, but it is actually charge cards that have the highest usage. Often issued as commercial cards, charge cards are popular with businesses, which generate higher transaction volumes than consumers. RBR’s report reveals that charge cards have the highest average volume, both in Europe overall, and also in CEE – in western Europe, debit cards are used the most frequently.

Debit cards are popular with consumers and tend to be used for everyday purchases. Daniel Dawson, who led the RBR research project, said: “Debit cards are where we forecast the most growth in card usage, with a growing share of consumers owning at least one debit card, and an increasing likelihood that they will use these cards at the point of sale”.

Average Volume of Payments per Card in Europe, by Type, 2014

Source: Payment Cards Issuing and Acquiring Europe 2016 (RBR)

Acceptance at smaller retailers will drive down the average payment value

RBR’s study shows that the two European regions differ widely in terms of the value of card purchases; in 2014, a card transaction in western Europe amounted to €51 on average – around twice the equivalent figure in CEE. In many parts of western Europe, pay-later cards, in particular T&E cards, are still seen as a tool for infrequent, high-value transactions. Although changing, this behaviour significantly increases average transaction values in markets such as Greece, Switzerland and Italy. With an increasing number of smaller retailers accepting payment cards, however, average payment values will continue to fall.

The average value of a credit card payment is also much lower in CEE than in western Europe, partly due to the different cost of living in the two regions, and also because CEE consumers have been encouraged to use credit cards for more everyday payments as a result of reward and loyalty programmes, a trend which we can expect to continue and become more commonplace.

Despite deep rooted preferences for cash, debit cards and contactless payments will drive ongoing migration to electronic payments

Consumers in a number of markets continue to show a preference for cash, particularly for low-value payments; however, RBR’s report suggests that habits are changing, albeit gradually in some cases, and it is clear that with ever increasing debit card holding and the growing popularity of contactless, payment card usage will continue to grow for the foreseeable future.