Country reports for Greece, Slovakia and South Africa

Cash displacement gathers pace
Although cash remains the preferred method of payment in Greece – accounting for 78.3% of the country’s total transaction volume in 2020 – Greeks are increasingly adopting payment cards, which registered strong growth during the period 2016–20.

The government has taken various initiatives in the form of regulatory and operational measures to boost electronic payments in the country, including mandatory basic bank accounts and electronic payment of salaries. In terms of transaction volume and value, debit cards are expected to continue to dominate the payment card market.

Debit cards are the most popular card type and are also increasingly being used for payments, as consumers are gradually using debit cards for low-value transactions. The growing adoption of contactless payments and strong growth in the ecommerce market are expected to further drive electronic payments in the country.

The coronavirus pandemic has affected Greek payment industry growth in in short term due to a decline in consumer spending. But with the country now easing lockdown measures and the vaccination program gathering pace, the cards and payments industry will gradually recover to pre-COVID-19 levels.

Debit cards are the preferred card type
Debit cards remain the most popular payment card type in Greece, accounting for 77.6% of total payment transaction value in 2020. High banking penetration and the combined efforts of banks and government bodies to promote electronic payments and financial inclusion have led to strong adoption and usage. Government regulations to promote electronic payments have also boosted this space, while banks encourage usage by offering reward points. Consequently, debit card payment transaction volume, value, and frequency of use recorded 2016-2020 compound annual growth rates (CAGRs) of 33.9%, 19.3%, and 27.2% respectively.

Credit cards are yet to gain traction
Credit and charge cards are not very popular in Greece. Due to uncertain economic conditions and growing unemployment, banks have been forced to adopt a cautious approach to issuing credit cards, while the availability of overdrafts limits consumer demand.

Credit and charge cards accounted for only 15.1% and 22.4% of overall card payment transaction volume and value in 2020. However, credit and charge cards recorded strong growth in terms of payment volume at a 2016-20CAGR of 12.2%. Benefits such as rewards programmes, discounts, cashback, and installments payment facilities were the key drivers of this growth.

Covid-19 is supporting ecommerce growth
Amid the Covid-19 pandemic, the Greek ecommerce market registered strong growth of 12.4% in 2020, rising from €7.5bn ($9.1bn) in 2019 to $10.3bn in 2020. Covid-19 has caused a shift in consumer buying behaviour, pushing individuals towards online channels for their purchases –a trend that is likely to continue even beyond the pandemic. Growth over the review period was also driven by the rising number of online retailers as well as improved online and mobile penetration. Payment solutions such as Apple Pay, PayPal, and Google Pay are expected to benefit from this trend.

Issuers offer a range of prepaid cards to increase uptake
The number of prepaid cards in circulation grew at a robust pace, rising from 0.8 million in 2016 to 1.9 million in 2020 at a CAGR of 25.8%. This trend is anticipated to continue over the next few years. Growth in the number of prepaid cards in circulation can be attributed to several factors. These include the growing popularity of prepaid cards among the unbanked population and their value in helping consumers control spending. Prepaid cards are also widely used in Greece in a bid to avoid online fraud and for secure transactions.

Greece’s payment acceptance infrastructure is well developed
The number of POS terminals recorded a 2016-20 CAGR of 17.7%, rising from 422,008 in 2016 to 809,183 in 2020. POS terminal penetration is high in Greece, with one POS terminal per 13 individuals. In response to issues with tax evasion, the government identified over 85 business categories that were required to install POS terminals by July 2017. This move significantly boosted POS adoption in the country. To capitalise on the growing popularity of POS terminals, providers are offering mobile POS terminals targeted at SMEs. UK-based payment solutions provider myPOS offers the myPOS Go mobile POS terminal for $35.46, which enables merchants to accept payments via chip and PIN, contactless, and mobile phone.

Debit card usage rises sharply
Cash remains the preferred method of payment in Slovakia, accounting for 59.8% of total payment transaction volume in 2020. It is mainly used for day-to-day low-value transactions. However, government steps to improve banking penetration, increasing financial knowledge among citizens, and efforts by banks to promote electronic payments have supported the growth of the payment card market.

Consequently, the frequency of card use increased during the period 2016–20, rising from 81.9 times per card per year in 2016 to 114.4 in 2020. This figure is set to rise to 144.5 by 2024. Debit cards are the most popular card type and are increasingly being used for payments as consumers are gradually switching to debit cards for low-value transactions.

The credit and charge card market is relatively small in Slovakia, mostly due to the debt-averse nature of consumers. With the increasing adoption of contactless technology, growth in online payments, the emergence of alternative payment solutions, and the introduction of digital-only banks, the payment card market is anticipated to grow further over the period 2020–24.

The pandemic is likely to affect overall growth in the Slovakian payment space due to a decline in consumer spending. But as the country has now entered the recovery phase and with economic activities gaining momentum, the cards and payments industry will gradually recover.

The Covid-19 pandemic has also triggered a fear of infection through the handling of cash, pushing consumers to favour electronic payments – particularly contactless.

The credit card market is gradually growing
Debit cards remain the preferred card type with penetration of 93 debit cards per 100 individuals in 2020. This is mainly supported by the government’s financial inclusion initiatives. Debit cards accounted for 89.3% of total card payment value in 2020.

Debit card payment frequency registered significant growth, increasing from 70.1 times per card per year as of 2016 to 104.3 in 2020. This growth was mainly supported by banks encouraging customers to use debit cards by offering reward points, discounts, and cashback as well as rising use of contactless debit cards.

Credit and charge cards are not very popular in Slovakia, with penetration standing at 11.4 cards per 100 individuals in 2020. To drive credit card usage, banks offer reward programmes and benefits such as interest-free instalments, fee waivers, and value-added services including cashback and discounts. Consequently, the credit and charge card market registered strong review-period growth in terms of payment transaction volume and value. However, the pandemic-related economic slowdown has forced consumers to spend prudently, thereby slowing market growth.

Ecommerce has registered robust growth
Slovakia’s ecommerce market registered robust growth, increasing from €1.0bn ($1.3bn) in 2016 to $2.3bn in 2020 at a 2016-20 CAGR of 15.5%. Growing internet and smartphone penetration, a rise in online shoppers, and the increased purchasing power of Slovak consumers have supported this growth. Online shopping events such as Black Friday and Cyber Monday are also playing their part in the growth of ecommerce. Alternative payment solutions such as Apple Pay, Google Pay, PayPal, and Masterpass are expected to benefit from this trend.

Prepaid card uptake remains low among Slovak consumers
Slovakia’s prepaid card market observed a significant decline in terms of number of cards over the review period. This is partially due to the exit of non-bank lender Provident Financial in 2016, which previously offered loan disbursals in the form of prepaid cards.

A new central bank regulation in 2016 mandated that non-bank lenders would need a license to issue such loans. To obtain a license, applicants needed to fulfil various conditions such as being either a joint stock or limited liability company, registered capital of at least $611,405.61, and a supervisory board. These changes resulted in Provident Financial’s immediate exit from the loan disbursal and prepaid card space.

Banks are working to increase POS installations across the country
The number of POS terminals in Slovakia recorded a 2016-20 CAGR of 4.6%, rising from 58,984 in 2016 to 70,548 in 2020. The rising number of POS terminals at retail outlets boosts the potential for card-based payments. Overall, the number of card payments rose from 363.5 million in 2016 to 576.4 million in 2020 at a CAGR of 12.2%.

In addition to conventional POS terminals, mobile POS terminals are also offered. CSOB offers a mobile POS terminal that can be used to accept card payments via wifi or mobile data.

Cash usage on decline, albeit from a high base
While South Africa remains a cash-driven society, with consumers preferring to use cash for day-to-day transactions, the country’s payments market is steadily shifting towards electronic payments.

There has been significant progress in the adoption of card-based payments, recording a 2016–20 compound annual growth rate (CAGR) of 8.5% in terms of transaction volume. This can be attributed to the combined efforts of the government and financial institutions to boost financial awareness through the launch of financial literacy programmes, the provision of basic bank accounts, and the expansion of payment card acceptance among retailers. Consequently, overall card payment transaction value recorded a review-period CAGR of 8.7% – a trend that is anticipated to continue over the coming years.

The proliferation of digital-only banks, alternative payment methods, the rising preference for contactless payments, and growth in the ecommerce market are all anticipated to support electronic payment growth over the period 2020–24. Although the Covid-19 pandemic has impacted consumer spending, it has also highlighted the importance of non-cash payment methods, pushing the use of electronic payments in the country.

Debit cards remain dominant in card sector
Debit card penetration stood at 63.8 cards per 100 individuals in 2020. This was supported by a rising banked population, which grew from 79.0% in 2016 to 82.1% in 2020. Government support via financial inclusion initiatives and awareness programmes such as basic bank accounts for low-income individuals and the availability of the social security payment scheme have positively contributed to growth in this space. Meanwhile, the proliferation of challenger banks will drive competition in the banking space, thus helping to boost debit card holding. The availability of contactless debit cards will also drive debit card usage.

Credit cards are gaining prominence in the country
South Africa’s credit card market is one of the region’s fastest growing, following decades of limited access to credit facilities. Consequently, millions of people – especially among the middle class – have become an available and attractive market for financial institutions. Reward programmes, cashback, discounts, and installment facilities are all driving usage. The growing market is encouraging fintechs to enter the credit card space. Digital lending fintech FASTA partnered with Mastercard to launch a virtual credit card in July 2020. Issued by Standard Bank, FASTACard can be used for in-store and online purchases.

Covid-19 is aiding ecommerce growth
South Africa’s ecommerce market registered healthy growth, rising from ZAR24.2bn ($1.6bn) in 2016 to an estimated $3.7bn in 2020 at a 2016-20 CAGR of 22.0%. This was due to rising internet and smartphone penetration coupled with increasing consumer confidence in online transactions.

Online shopping events such as Black Friday and Cyber Monday are also popular, which is aiding growth. Meanwhile, the outbreak of Covid-19 has boosted the consumer preference for online shopping Payment solutions such as PayPal, Zapper, and SnapScan are likely to benefit from this trend.

Awareness and usage of contactless cards are gradually improving
Contactless card holding is high in South Africa, with all major banks now offering contactless cards. Amid the Covid-19 pandemic, South African consumers are increasingly using contactless cards. As per Mastercard data, the number of contactless transactions grew by 13 times in March 2020 compared to March 2019. The study also revealed that since the outbreak of COVID-19, 89% of South African consumers have been using contactless to pay for groceries, 60% for pharmaceutical items, 39% for other retail items, 15% for fast food, and 8% for transport.

According to the same study, 44% of South African respondents said they have reduced their use of cash while 20% say they have not used cash at all since the pandemic began. 87% of South African respondents are concerned about the cleanliness of signature or touch pads, while 88% view contactless as the cleaner way to pay.

Improved payment infrastructure is driving electronic payments in the country
The number of POS terminals grew from 402,670 in 2016 to 610,236 in 2020 at a CAGR of 11.0%. The figure will reach 870,886 in 2024 at a CAGR of 9.3%. In line with growth in the number of POS terminals, card payment volumes have also seen robust growth.

To benefit from this trend, new mobile POS terminals are being introduced. In March 2021, South Africa-based payment facilitator Hellopay partnered with Mastercard to launch a mobile POS solution, enabling payment acceptance for NFC-enabled Android devices. The Tap on Phone solution accepts contactless payments, mobile wallets, and wearables.