Third project management meeting for reducing cash transactions in Kosovo. June 15 th, 2011

Transcription

1 Third project management meeting for reducing cash transactions in Kosovo Project management group within the National Payments Council (NPC) June 15 th, 2011 CENTRAL BANK OF THE REPUBLIC OF KOSOVO 1. Content 1. Approval of minutes from the last meeting (January 26 nd 2011) 2. Presentation of Analyses and Results of the non cash payments research (customer and merchant research) 3. Questions, requests and proposals CENTRAL BANK OF THE REPUBLIC OF KOSOVO 2. 1

2 1. Approval of minutes from the last meeting (January 26 nd 2011) CENTRAL BANK OF THE REPUBLIC OF KOSOVO Presentation: Analyses and Results of the non cash payments research (customer and merchant research) Mr. Robert Wright Raiffeisen Bank CENTRAL BANK OF THE REPUBLIC OF KOSOVO 4. 2

3 Cash Reduction Research Consumer and Business Survey Analysis KOSOVO BANKERS ASSOCIATION 5. Agenda Project objectives Methodology and sampling Target groups Individual survey results Business survey results Initial conclusions KOSOVO BANKERS ASSOCIATION 6. 3

4 Project objectives Identify reasons for the wide usage of cash payments Quantify costs resulting from cash payments for businesses and consumers Propose regulatory/self regulatory measures Asses the impact of the proposed measures KOSOVO BANKERS ASSOCIATION 7. Methodology The survey was conducted through direct surveys: - Consumers Questionnaire: Requesting information on the current practices and preferences of conducting payments, purchasing power, type of expenses, etc., use of cards, use of alternative payment instruments (Kos-Giro, Direct Debit, E- banking, Mobile Banking) - Businesses Questionnaire: The businesses questionnaire was composed of two parts qualitative analysis and quantitative analysis. The first part attempted at getting impressions from businesses on advantages/disadvantages of using noncash payments, while the second part asked specific questions on the type of payments, costs associated with them, their clients preferences, etc., use of alternative payment instruments (Kos-Giro, Direct Debit, E-banking, Mobile Banking) KOSOVO BANKERS ASSOCIATION 8. 4

5 PART 1: CONSUMER SURVEY ANALYSIS KOSOVO BANKERS ASSOCIATION 9. Consumers Questionnaire The following types of questions were asked in the individual consumer survey: Do you have a bank account? Do you use bank cards? If not, why? What type of purchases do you make by cards? What amounts? How often and what problems occurred? Are you responsible for paying utilities? Where do you make your payments? Are you aware of other payment alternatives? Do you use any of the cash alternatives and how often? Reasons given for using and not using each alternative: Kos Giro, Direct Debit, E-banking Readiness to use these alternatives in the future KOSOVO BANKERS ASSOCIATION 10. 5

6 Consumer Sample 863 participants in the survey (based on a population of 400,000 (bank clients), with a confidence level of 90%) Divided in 5 regions: Prishtine 274 Prizren 160 Mitrovice 116 Gjilan 153 Peje 160 KOSOVO BANKERS ASSOCIATION 11. Key figures of the responding consumers: 99.6 % have bank accounts KOSOVO BANKERS ASSOCIATION 12. 6

7 Demographics Composition: KOSOVO BANKERS ASSOCIATION 13. Demographics KOSOVO BANKERS ASSOCIATION 14. 7

8 Demographics KOSOVO BANKERS ASSOCIATION 15. Purchasing Power, 37.3% income from Euro KOSOVO BANKERS ASSOCIATION 16. 8

9 Card possession and usage What cards do you have? 44.7% 33.1% 22.2% 6.1% Debit Card Credit Card Debit and Credit Card Card usage 22.2% regularly use cards 27.4% often use cards 41.7% seldom use cards 7.8% never use cards Don't know KOSOVO BANKERS ASSOCIATION 17. Non-users reasons: 24.7% consider full control over personal finances 23.7% declare there s no POS where they make purchases 18.3% do not have money in their accounts 16.1% declare that the vendor prefers to be paid in cash 5.4% declare that prices are more expensive if payment is made with cards 5.4% have other reasons for not using cards And 4.3% declare there are problems with POS where it either doesn t work or has delays in processing payments KOSOVO BANKERS ASSOCIATION 18. 9

10 Users reasons: Reasons for using cards Buy when no cash is available (have no cash) 49.8% Reduce theft risk 33.3% Don t want coins to carry around 18.3% Want to pay the exact amount 1.5% Other reasons 1.5% KOSOVO BANKERS ASSOCIATION 19. Cards mostly used for withdrawals! User frequency 15.7% use cards over 10 times a month 24.4% use cards from 5-10times a month 59.5% use cards 1-5 times a month User purposes ATM withdrawals 78.4% POS purchases 40.1% (118.5% is depicted here as a result of respondents answering both options, ATM withdrawals and POS purchases) KOSOVO BANKERS ASSOCIATION

11 Types of purchases Card payments Groceries 56.4% Clothes 31.1% Fuel 11.0% Restaurants and coffee shops 6.6% Payment amounts 10-50Euro payments 55.9% Over 50Euro payments 28.3% Below 10Euro payments 12.5% N/A 3.3% KOSOVO BANKERS ASSOCIATION 21. Agree to surrender cards? 95% of individuals surveyed would not agree to give up cards and not use them anymore, while 5% of individuals surveyed would give up their cards and agree not to use them anymore KOSOVO BANKERS ASSOCIATION

12 Consumer statements KOSOVO BANKERS ASSOCIATION 23. Payment with cash alternatives Utility payments 51% are responsible for paying utilities 49% are not responsible for paying utilities Payment method 56.9% pay utilities at the utility cashier 7.1% pay utilities at the bank And 0.2% use other payment methods The other 35.8% did not respond to this question (among the group who are not responsible for paying utilities) KOSOVO BANKERS ASSOCIATION

13 Cash alternatives knowledge/awareness KOSOVO BANKERS ASSOCIATION 25. User frequency Do you use cash alternatives? Yes No Mobile banking E-banking Direct Debit Kos Giro KOSOVO BANKERS ASSOCIATION

14 Direct Debit User reasons 66.3% believe it is convenient 11.6% think DD allows to pay the bill as released 8.1% use DD because it s free and 5.8% believe it allows them to pay the bills on time Non-user reasons 40.5% don t use DD since they pay the bills when they have money 25% are afraid to authorize others to debit their accounts 24.3% don t have regular income and 10.2% are afraid they pay more than they spend KOSOVO BANKERS ASSOCIATION 27. Kos Giro User reasons 51.1% of individuals prefer to pay bills at the bank rather than at the utility company 48.9% use KG because they can pay in every bank branch Non-user reasons 60.4% do not know how it works 24.8% prefer to pay other sum than the one stated on the bill and 14.4% don t use KG because there s a queue in bank branches and it s too long KOSOVO BANKERS ASSOCIATION

15 E-banking User reasons 50% use EB because think it s convenient and can pay wherever they have internet access 25% use EB because they can control their account at anytime and 19.7% believe it s a modern method of payment Non-user reasons 77.2% do not use EB because they do not make money transfers 14.7% don t use EB since they have doubts in the security systems and 7.2% do not use EB because they do not have internet access KOSOVO BANKERS ASSOCIATION 29. PART 2: BUSINESS SURVEY ANALYSIS KOSOVO BANKERS ASSOCIATION

16 Sampling 526 participants (based on a population of 97,000 businesses with a confidence level of 80%) Divided in 5 regions Prishtine 158 Prizren 85 Mitrovice 85 Gjilan 101 Peje 97 Categorized in 9 groups Agriculture Production Gas stations Construction Retail Service Real estate Administration Health care NOTE: RETAIL category - included merchandise/retail, minimarkets and supermarkets KOSOVO BANKERS ASSOCIATION 31. Business Questionnaire Questions asked to businesses included information regarding: Costs and benefits in using cash vs. cash alternatives (noncash payments) Awareness and usage of cash alternatives and POS Utility payments Cash alternatives usage why they use any of the alternatives and why not Readiness to use any of the alternatives in the future KOSOVO BANKERS ASSOCIATION

17 Business sample-56.7% Retail Business Activity 6.9% 1.8% Retail 7.5% Hotelerie Real Estate 6.1% Administration 3.0% 0.4% 56.7% Ambulance Construction 2.6% 15.2% Fuel Stations Production Agriculture 36.5 junior employee Interview partner 3.2 senior employee manager owner other KOSOVO BANKERS ASSOCIATION 33. Key Figures Number of employees more than 50 Annual Turnover (in euro) 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% below over no answer KOSOVO BANKERS ASSOCIATION

18 Business statements Statements Card payments bring more benefits than costs Noncash means faster payment processing Less cash means higher bank account Client has higher chances to buy if they have alternative payment methods Provisions from card usage increase prices Card usage increases bank provisions Card usage increases sales If client has no cash, they can pay with card Less cash transactions means decreasing losses (theft, fraud, etc.) If business is not overliquid, I don't go to the bank for depositing Less cash transactions means money is sent directly to my bank account Less cash transactions means less cash management Less cash transactions decrease risk of theft Less cash transactions means less cash in box POS increases provision costs Staff training is needed if company adds POS lower cash management costs bring higher benefits for the company Cash management costs decrease with increasing noncash payments Noncash payments increase if cash payments decrease 56.9% 62.2% 80.5% 80.0% 79.4% 88.6% 86.9% 80.2% 85.8% 81.5% 86.8% 85.2% 86.0% 86.3% 75.9% 82.4% 78.7% 78.5% 86.4% KOSOVO BANKERS ASSOCIATION 35. Business - POS 15.3% of businesses possess POS 84.7% of businesses do not possess POS User reasons Convenient payment method 23.2% Additional services for my clients 21.7% Clients demand POS 21% Reduces risk of theft 12.3% Bank has proposed it to me 10.9% Helps in cash management 8.7% Have many foreign clients 1.4% Other 0.7% KOSOVO BANKERS ASSOCIATION

19 Businesses use of alternatives POS and other payment alternatives to cash... have no benefits reduce theft risk facilitate cash management agree somewhat agree somewhat disagree disagree are convenient for the clients 0.0% 25.0% 50.0% 75.0% 100.0% KOSOVO BANKERS ASSOCIATION 37. Cash alternatives awareness The percentages presented below represent all those respondents who answered to the questions regarding this section Are aware Kos Giro 55.4% 44.6% Direct Debit 49.3% 50.7% E-banking 49.8% 50.2% Mobile Banking 41.7% 58.3% Are NOT aware KOSOVO BANKERS ASSOCIATION

20 Usage of alternatives Frequency of usage during 6 months period: Kos Giro Direct Debit E-Banking M-Banking 1-3 times 3-5 times 5-7 times 7-9 times KOSOVO BANKERS ASSOCIATION 39. Usage of alternatives Do you use % 88.3% 93.1% 97.7% Yes No 9.2% 11.7% 6.9% 2.3% Kos Giro Direct Debit E-Banking M-Banking KOSOVO BANKERS ASSOCIATION

21 Utility payment-54.4% don t pay utilities Where do you pay your utility bills? 60.0% 54.4% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 37.5% At utility cashier 4.2% in bank through e- banking 1.5% 2.3% 0.2% with Direct Debit Other don't pay Note: In bank supposed to mean kos-giro Note: don t pay is for those who did not respond to the question KOSOVO BANKERS ASSOCIATION 41. Utility payment-54.4% don t pay utilities 82.2% Where do you pay your utility bills? 9.1% 3.3% 5.0% 0.4% At utility cashier in bank through e-banking with Direct Debit Other KOSOVO BANKERS ASSOCIATION

22 Direct Debit User reasons 52.6% believe it is convenient, no need to go to the institution 34.6% use DD since they avoid having debt by paying instantly 6.4% use DD because it s free and 6.4% use DD because they have regular income Non-user reasons 47.9% don t use DD because they pay the bills when they have the money 23.6% have no regular income 14.5% are afraid they pay more than they spend and 13.9% are afraid to allow others to debit their account KOSOVO BANKERS ASSOCIATION 43. Kos Giro User reasons 65.1% use KG because they prefer to go at the bank rather than the utility company 35% use KG because they can make their payments in any bank branch Non-user reasons 44.3% don t use KG because they prefer a different amount to be paid than the one noted in the bill 31.9% want to avoid the queuing problem at the banks and don t want to wait and 23.8% do not know how KG works KOSOVO BANKERS ASSOCIATION

23 E-banking User reasons 30.1% use EB because they think it s convenient and they can pay wherever they have internet access 27.2% use EB as they have full control over their accounts and 42.7% use EB because it s considered as a modern payment method Non-user reasons 47.6% don t use EB since they don t trust the security systems 31.3% have no internet access and another 21.1% do not use e-banking since they do not make money transfers or payment transactions KOSOVO BANKERS ASSOCIATION 45. Future consideration for usage of payment alternatives Note that 82.4% of respondents in this survey did not give any feedback as to whether they will use any payment alternatives in the future or answered with maybe Would you use following instruments in the future? 82.4% 5.7% 7.2% 3.4% 1.3% Kos Giro Direct Debit E-Banking M-Banking none KOSOVO BANKERS ASSOCIATION

24 Initial Conclusions Fear of technology, bank processes, lack of control Lack of awareness of other means of payment The need for banks and public companies to educate and incentivize their customers Business sector education and awareness of costs and benefits to their business KOSOVO BANKERS ASSOCIATION 47. Initial Conclusions Economic environment effects behavior insufficient funds for full payment, pay when they can not when they should Big potential high agreement that non cash facilities are useful Larger network of POS required 24

25 Discussions, Conclusions and Next Steps? KOSOVO BANKERS ASSOCIATION Questions, requests and proposals CENTRAL BANK OF THE REPUBLIC OF KOSOVO

26 Proposals from CBK (from previous meetings) 1. There is a need for concrete initiatives and activities for the reduction of cash payments from all institutions (this includes commercial banks, public companies, private companies, governmental agencies, etc). 2. Utility companies should expand their network where Direct Debit services are offered to their customers, because currently this service is very limited and provided only at the headquarters of the companies. Utility companies should also develop operational plans for the reduction / closure of their tellers (cash counters) that accept cash. (Setting timeframes should be required). 3. Commercial banks should reduce the fees for electronic payment services, such as Direct Debit, E-Banking, Kos-Giro, etc. We believe that revenue lost from fee reduction will be more than compensated by the increase in the volume of payments. Commercial banks should also organize awareness campaigns aimed at clients as well as merchants (business community). 4. Analyze practices in other countries of setting maximum limits on the value of cash payments at the counters of commercial banks, and come up with recommendations to government institutions (MEF), banks, etc. CENTRAL BANK OF THE REPUBLIC OF KOSOVO 51. Other proposals Please make written proposals with ideas, concrete initiatives and activities for the reduction of cash payments in the following address: paymentsystems@bqk-kos.org These proposals can affect any of the involved stakeholders: Kosovar businesses, commercial banks, consumers, government authorities, etc. These proposals will be analyzed and discussed in the next meeting. CENTRAL BANK OF THE REPUBLIC OF KOSOVO

27 Thank you National Payments Council CENTRAL BANK OF THE REPUBLIC OF KOSOVO