Overall growth in CEE cards market masks contraction in several countries

The number of payment cards in central and eastern Europe grew by 10% between 2008 and 2010 – this is one of the main findings in “Payment Cards Central and Eastern Europe 2012”, the latest edition of RBR’s highly respected report on 14 key payment cards markets in the region.

Breaking the region down into countries showed, however, that in four markets – Bulgaria, Estonia, Poland and Romania – the number of cards actually fell over the same period. In most cases this was due to the withdrawal of cards as a result of the global financial crisis, particularly in the credit card sector.

Russia dominates growth once again
As we have become accustomed to seeing in recent years, Russia accounted for the vast majority of the growth in the number of cards in the region between 2008 and 2010. Out of the 27 million new cards issued over that period, 25 million were in Russia. Most of these Russian cards were issued in 2010 when domestic banks had mostly resolved problems with their consumer lending businesses – which had performed poorly in 2008 and 2009.

Russia also accounts for nine out of ten prepaid cards issued in the region. One reason why so many prepaid cards have been issued in Russia is that they are not reloadable – the cardholder must use all funds stored on the card before it expires, and then take out a new card. Prepaid cards are mainly used for payments over the internet and mobile phone top-ups. The vast majority of prepaid card products are managed by non-bank organisations, although these cards are issued under bank sponsorship.

Domestic payment cards accounted for just 9% of the CEE total at the end of 2010. Visa (including Visa Electron and V PAY cards) and MasterCard (including Maestro and MasterCard Electronic products) accounted for 99% of international cards in the region, with American Express cards accounting for most of the remainder. Visa products are the most numerous in CEE with 52% of the total, followed by MasterCard with 38%.

Card payment value in CEE surpasses EUR 110 billion
The volume of card payments grew at a much quicker rate than the number of cards between 2008 and 2010 – 49% compared to 10%. Once again, Russia was responsible for the largest share of growth in the volume of payments, but Poland also made a significant contribution. Polish cardholders are becoming increasingly confident about using cards, while the acceptance network has also been growing.

A total of EUR 111 billion was spent on cards in the CEE region in 2010, up from EUR 90 billion in 2008. For a number of years, Slovenia has had by far the highest average card spending per adult, followed by Estonia. Bank account holding is extremely prevalent among Slovenian adults and salaries are rarely paid by any means other than credit transfer. Furthermore, Slovenia’s infrastructure is advanced, with most outlets accepting cards, and the pay later sector (specifically charge cards) is better established in Slovenia than in most other countries in the region.

Over 90% of EFTPOS terminals are EMV-compliant
There has been considerable growth in acceptance networks throughout CEE. Even more developed markets such as Poland, where certain merchant sectors (e.g. petrol stations and supermarkets) are approaching saturation, have seen considerable growth. There remain many markets where there is room for further advances, even under existing pricing and acquiring conditions.

The number of EFTPOS terminals grew considerably between 2008 and 2010 – by 20% to 1.3 million. The vast majority of units are in Russia and Poland. These two countries account for 680,000 terminals, while no other country has more than 100,000. Russia accounted for the largest share of new installations, while the Czech Republic, Hungary and Kazakhstan also witnessed significant growth.

When the number of terminals is compared to the size of the population, Croatia, Estonia and Slovenia are the largest markets. The first two were also the only markets in the region with less than 100 payment cards per EFTPOS terminal, compared with the CEE average of 224. Kazakhstan, Russia and the Ukraine hold vast potential for the deployment of new terminals as the ratio is well over 300 in each of these markets.

CEE banks have generally made more progress in upgrading EFTPOS terminals than in reissuing cards. Overall, the most advanced countries are the Baltic markets (Estonia, Latvia and Lithuania), and the Czech Republic. Some countries, such as Russia and the Ukraine, continue to lag behind.