Transactions via cards of Armenian banks grew by 25% over the year,  and their total volume is approaching $ 4 billion a year

ArmInfo.The volume of transactions on plastic cards of Armenian banks increased by 25% over the year, a special increase was recorded on non-cash Internet  payments, which increased by more than 66% y-o-y. The total amount of  plastic transactions is approaching $ 4 billion a year.

As noted in the 18th "Armenian Banks in the Card Business" bulletin,  prepared by analysts of ArmInfo Information Company, 2018 was marked  by both quantitative and qualitative growth of the country's card  market.

In fact, the analysts note that the number of active cards on the  market increased by 17-18%, which resulted in adjustment of previous   forecasts about the stagnation of quantitative growth due to a  reduction in overall economic activity and uncertainty against the  background of serious internal political changes.

The experts note that the market showed a different - a noticeable  positive trend associated with the gradual recovery of domestic  demand and the significant development of the retail credit market.  However, in their opinion, the question of the duration of a positive  trend becomes debatable, since the growth of the consumer economy  against the background of stagnation of real incomes of the  population can create a threat of a market downfall and is not safe  from the point of view of both the borrowers and the lenders.  The  problem, according to ArmInfo analysts, is that the volume of  non-performing (NPL) loans in the retail segment continues to grow,  and in some banks - the largest in terms of the number of cards  issued - even far exceed the internationally recognized safe  minimum   - 15% of the loan portfolio.

Nevertheless, in conditions of declining interest rates with the hope  of compensating for the decline in the profitability of current  banking operations by economic activity, banks continue to strengthen  their positions through the expansion and search for new  technological niches in a low-income limited market.  It is in this  vein that the goal is set to increase interest-free income through  effective technological solutions, products and innovations, most of  which, one way or another, are connected with the card market  segment, virtual technologies and the expansion of non-cash payments.  However, this market in the country will still have certain user  restrictions until economic activity and the growth of incomes of the  population support this trend.

Analysts note the successful work of the Armenian Card National  Payment System in the implementation of the project of intersystem  interaction of national payment systems ArCa and Russian , which  not only strongly supported the growth dynamics of local ArCa cards,  the attitude towards which was more than restrained and vague even by  some representatives of the country's financial authorities, but it  also gave it an international character, as evidenced by the recovery  in the number of national cards that was a record in the recent 10  years.  At the same time, Armenian Card has completed certification  of the processing system to provide card services for the Japanese  JCB  payment system and has started a certification project for the  Chinese Union Pay International system together with the UPI partner  bank. The implementation of these projects, as noted, will expand the  internationalization of the Armenian card market, expanding the  functionality of its infrastructure. Soon, Armenian Card will  introduce to the general public the Arca.am interface with numerous  additional features and capabilities.

As a result of substantial qualitative growth of the card segment of  the banking market of Armenia, for the first time in 2018  non-interest income from card servicing accelerated y-o-y growth from  17% to 34% on average, breaking ahead significantly compared with  non-interest spending growth rates - from 15% to 24%.  Meanwhile,  analysts have recorded a noticeable decline in the number of premium  cards on the market, which may indicate a redistribution of consumer  optimism in favor of the middle and lower segment against the  background of political events in the country. The reduction in the  number and volume of payroll banking projects in the niche is  justified by significant difficulties and restrictions on the work of  banks in the corporate market.

The further activation of the market is quite tangible and real not  only in connection with optimistic expectations for economic growth  and investment activity, but also in connection with three possible  and important regulatory decisions and factors: concrete measures to  combat the shadow economy and shadow incomes (new cash registers and  tax reform), new regulatory requirements for the expansion of  non-cash transactions in the retail and service industries, as well  as through the further natural development of Internet commerce.

It should be noted that according to the Armenian Card NPS, there are  1,784 thousand cards issued in Armenia, 9,110 POS-terminals are  located and 1,032 ATMs operate.