World cases of cashless payments growth and how they are applicable in Ukraine
The cashless segment confidently spreads around the world, even where seemingly there are more important problems than being able to pay with a card and phone in everyday life. I’ll say even more — the most tangible growth is observed especially in developing countries.
Why is that? Very simple — if everything is good in a «first world» country, where does the desire to do better come from? Clearly, not from comfort. Perhaps that’s why Kyiv metro was one of the first in the world to use contactless payments, that’s why Apple Pay in Ukraine breaks transaction records, and our first mobile bank reached the same level as the old traditional banks.
The main rule for a cashless payments growth is to find a “middle ground” between low-cost infrastructure and an active incentive to pay in cash.
There can be a lot of implementations of such a rule, and each path is a right one in its own way. I decided to write about a few of them.
China — QR payments: WeChat Pay, Alipay
China is a great example to understand how a particular payment method works. For obvious reasons, everything in the country is controlled by the Communist Party, and therefore services can get access to a huge user base, in which all electronic services are a closed system, tailored to China.
Alipay as a payment service by Alibaba marketplace, WeChat Pay as an extension of the capabilities to the main messenger of the country — WeChat. They all implemented payment functional with a QR code. It’s an cheap to deploy, simple and clear infrastructure. All merchant needs to receive a payments is a piece of paper with a QR code. But what is the incentive for the customer to use the application to pay with a QR code? Tencent solved this question beautifully: they offered the opportunity to give each other money presents during the Chinese New Year — traditionally this was a cash procedure. The process has begun, and the business picked up the initiative. Now you can pay almost anything with a QR code in China. This is a universal system that made WeChat a second passport.
How does it work in Ukraine?
Now it’s unpopular — there are few applications, no one interacts with retail, and therefore customers don’t see this as an option. Perhaps this will change soon, Masterpass has such a thing, it is very useful for fast payments.
Kenya — Mobile Money, M-PESA Wallet
Here the situation is different. Kenya, African country. Some stereotypes about it is still working: at the time of launch, M-PESA solved the problem of the almost complete lack of coverage of the country by ATMs and bank offices. How to withdraw money from the card, how to pay for services if there is no Internet banking, and cash can always be stolen because of crime situation.
M-PESA used the existing infrastructure — mobile network coverage. Payments for everything went through text messages, which were actively used for communication — this is a cheap infrastructure. «Mobile money» gave a payments guarantee and the fact that you were not be robbed — this is an active incentive to use.
How does it work in Ukraine?
Electronic wallets with mobile money in Ukraine is a non-banking alternative to financial services. We have mobile wallets enjoyed success — it is WebMoney, Qiwi, Yandex.Money and the quite successful Ukrainian project MoneXy. The first are prohibited by law, the second is now dead, as well as the bank-launcher. Now this niche or bypass the state ban, or empty. For now.
India: a bit of everything
India is a large, extended, diverse country at the crossroads of cultures. Accordingly, M-PESA and QR payments from Alipay and PayTM work for them. This is an cheap infrastructure. The incentive is a bit like Kenya: it’s difficult to develop bank offices, ATMs, etc. outside of big cities. It’s much easier to use the mobile Internet for money transfers between balances and pay offline using QR codes.
And what about Ukraine?
Our domestic market is very interesting in the issue of the cashless payments deployment. Even unique. We have a huge network of payment cash-in kiosks, which are the most important payment method.There is Privatbank, which managed to deploy a huge network of ATMs and POS-terminals throughout the country.Coverage of bank offices is also quite decent — at least among large banks.
The emergence of Apple Pay and Google Pay has forced banks to upgrade POS terminals — with the prospect of full implementation of NFC by the end of 2019. There are no such rates in Europe.Huge volumes of mobile commerce from telecom operators — mobile payment is about 30% of all digital goods. Yes, and electronic money is not opposed to return
All this means any way of the payment infrastructure development is suitable in Ukraine — everything is developed, the customers uses all the benefits. It’s difficult for business — because competition is unreal. Therefore, the only way to reach success is a constant experiments and the creation of new incentives — because your competitor already earns old ones.