Armenian Banking Card Market Decreasing in Dynamics, Migrating and Consolidating

The continued signs of crisis in the Armenian economy have already had their adverse impact on banking card market indicators. According to the July 2015 # 11 informational-analytical bulletin "Armenian Banks in Card Business", prepared by Agency of Rating Marketing Information (ArmInfo), the crisis developments have affected both the qualitative and quantitative figures.

According to analysts, the decrease in the growth of issues and the number of active banking cards available in the circulation, as well as the low volume of card transactions draws the sector closer to stagnation. 

Acquiring is facing hardships, too: over the past year the country's terminal network has become shorter, while withdrawals from ATMs have again been registered at 90% conditioned by the decrease in retail turnover in Armenia, as well as mercantile establishments' earnings dilution. 

The experts believe that within a year or so there would be changes in the market structures in the light of this tangled situation. They forecast significant rotations among the five leading banks, which have increased their market share by 15% over the past year.

Given the Central Bank's requirement on the minimum total capital (30 bln AMD) it may happen that the consolidation process of the banking system will have had its impact on the placement of forces and the quality growth of offered products and services by 2017.

The latter is related to the fact that most small and medium-sized banks have adopted a "wait-and-see" stance in respect of the "costly" business of developing innovative card products. It is noteworthy that bigger banks keep investing in innovations and the infrastructure.

To note, by ArmInfo's data, the annual growth in the number of plastic cards totaled 25-28% in 2011-2013, the growth rate slowed down to 5% in 2014. As of April 1, 2015 the rate made 3%. In 2011-2013 the volume of plastic transactions decreased from 32,4% down to 11,2%, while in 2014 there was a fall down to 8.9% and to 7,2% in 2015.