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.