FROM PAPER MINEY TO PLASTIC MONEY

EKA LOMIDZE

Plastic cards market is not broad in Georgia, which is caused by the low social-economic level of our country.

American visa outrode European “Mastercard”. There are more visa cards in the world now than “Mastercards”, but specialists think that both companies are on the same level of development in the plastic cards market. According to “Mastercard” representatives, if more than 1 or 2 million visa cards are issued, this will not mean that “Mastercard” gave up its positions.
There are 60% mastercards and 40% visa cards in the Georgian market, and vice verse in the world.
David Bejiashvili, director of payments means management of the Georgian Bank:
Georgian Bank has been principal member of “Mastercard” since 1997. Its associate members are: “Post Bank”, “United Georgian Bank” and “TBC”. There is no law on plastic cards in Georgia, it is regulated by international provisions.
The culture of using plastic cards is low in Georgia. 80% of market is left undeveloped.
– Who are your main customers?
– There are a great number of customers in state programmes, i.e. these are customers who receive salary in plastic cards. It is a more civilised and acceptable form. Both foreign and Georgian organisations co-operate with us in this manner. Issue of salaries in this manner is more profitable for an organisation: personnel units and premium costs are reduced. At the same time, 24% is charged to an account in case of transfer of money to the card. There are business cards when an employee is sent on leave and there is no sum available. Bank covers the costs and organisation repays them later. They are our main customers. I would also like to remind you that it is not comfortable to carry money in hand. Thus, plastic cards service is a more civilised and acceptable form.
– There are more mastercards in Georgia than visas. Demand for visa abroad is comparatively greater. How would you explain this trend?
– I can not say with certainty, but Mastercard was the first to come on our market. License process with Visa is more difficult. Perhaps, it is one of the reasons, though it does not bear vital importance. The main thing is that plastic cards growth trend is observed in Georgia. Nowadays, 80% of the market is left undeveloped, but all banks already feel it is necessary to develop markets.
– George Sulamanidze, director of plastic cards department of the United Georgian Bank.
– Proceeding from the situation in Georgia, plastic cards do not have a great market, but it grew more than it was three years ago. Market consumers are, mainly, large companies: “Magticom”, “Geocell”, etc. These organisations use plastic salary project. Plastic cards business has developed a little at the expense of these companies. It is not a small number. There are also many people who travel abroad and wish to have a plastic card. We cannot yet offer our customers a broader trade network inside the country. There are several trade objects in Tbilisi where payment is effected by plastic cards. For instance, when a customer who has money on plastic cards, wishes to buy something, he should first cash it. It costs him much as he has to pay a commission tax for encashment. Thus, he loses time and money whereas he can buy something by plastic card without paying a commission tax. This payments form is suitable to him. However, it mainly concerns foreign customers. For instance, a Georgian citizen with 14 laris pension will not, certainly, be able to pay by plastic card.
– Do you have both visa and mastercard?
– In fact, we are associate members of Mastercard. As for Visa, we have finished certification and passed to the second phase. We will soon offer our clients visa services. At the same time, we work on the programme that will make it possible for citizens to effect payments operations with AES, Geocell and Magti via Internet and telephone. Despite this situation, we can easility say that plastic cards business is a successful one in Georgia.
Eka Verulashvili. Head of plastic cards services and development, TBC bank.
We have no law on plastic cards. Information on issued plastic cards and their circulation is supervised by the National Bank. Different services of UFC Internet site make it possible to purchase mono cards of Magti”, pay indebtedness to “AES TELASI”, “Aeti TV” and purchase lai-lai card of Geocel. TBC bank is an associate member of Master card and a principal member of visa. From the structural point of view, business relations with Visa are more simple and effective ones. Perhaps, this is the reason of why Visa has more customers in the world than Mastercard.
TBC bank has four different kinds of visas, f.e. “visa elections” by which a customer uses sums on his account in Georgia as well as in any corner of the world.
The sum can be cashed in both TBC bank and bankers. There is also “visa classic”, “visa business” and “visa gold”. Our main customers are still international organisations. The main accent is made on salary programme. For instance, a leading bank in Moldova issues approximately 10 000 cards in a month, whereas all Georgian banks taken together cannot even issue half of the amount. This is, certainly, caused by a number of factors. The first is the low level of population’ social-economic life. For another thing, there are many organisations that do not use plastic card services, which indicates at a low culture of service. At the same time, relations with banks require transparency. This does not suit everyone.
Today, there is no law on plastic cards in Georgia, only 80% of the market is developed. These data will not, certainly, change at the expense of population. Main customers (institutions) refrain from introducing this civilised form of cash. Perhaps, transparency does not suit them. Yet, this process was undergone by America and Europe. Plastic cards market in post-Soviet area has been expanding till present. A bill was introduced in Russia’s Duma. It envisages for changes in the Tax Code with regards to payment by plastic card. There will be a plastic cards boom in Russia in case this bill is passed. In Georgia only banks try to expand plastic cards market. There is no talk yet about stimulation and regulation of their business by the law.