ArmInfo.The Armenian Parliament held a discussion on the topical issue of banking tariffs. This problem becomes quite acute due to the transition to a significant growth of non-cash transactions in the country, associated with the adoption of a law regulating non-cash circulation a year ago and actually obliging economic entities to accept non-cash payments for goods and services.
Garegin Gevorgyan, Director of the Financial Stability Directorate of the Central Bank of Armenia (CBA), addressed the MPs and noted that over the past 2.5 years, the infrastructure of non-cash payments in the country has increased significantly. Thus, if in June 2022 there were 23 thousand POS terminals in the country, then in October 2023 their number reached 79 thousand. In total, the banking system has invested around 1.8 billion drams for the expansion of the terminal network. As a result, the cost of installing POS terminals for trade and service providers has decreased by 6 times. At the same time, he noted that the banks tried to provide this infrastructure not only to cities, but also to villages with a population of a thousand people.
And yet, about 20 thousand terminals, although they were installed, do not actually work and the Central Bank, together with the tax authorities, is trying to solve this problem, since it becomes clear that the refusal to use the infrastructure of non-cash payments in some retail outlets, especially in the villages of the country, is largely associated with an attempt to evade taxation.
According to Gevorgyan, an interesting picture is emerging in the field of banking tariff policy. According to him, Central Bank statistics show that commission rates have been reduced since June 2022. If in 2022 the average acquiring commission for small and medium-sized enterprises in the country for card transactions with cards of the National Payment System was 1.6%, which was paid by business owners, now this level has dropped to 1.1%. Tariffs for international cards issued by Armenian banks have decreased from 2.5% to the current 1.6-1.7%, for international cards of non-Armenian banks, an average of 2%. Tariffs for all cards decreased by 0.7% on average.
Meanwhile, parliamentarians did not agree with the Central Bank's assessments. The opinion was expressed that the Central Bank's statistics were too average, and on the contrary, after the adoption of the law, banks, taking advantage of the "right of citizens to non-cash transactions", began to increase payment fees. A number of MPs have personally witnessed a significant increase in commission fees by banks, even when transferring money between two card accounts of the same bank. Moreover, it was noted that the Central Bank cannot withstand the asymmetry in non-cash and cash payments, since not all people are able to master new technologies.
Meanwhile, according to the data of the CBA, if in 2022, a total amount of 81 billion drams was paid to pensioners in non-cash form as part of pension payments, then by the end of 2023 it amounted to 191 billion drams. According to the cash-back program for pensioners introduced by the government, 2.3 billion drams were transferred to the card accounts of the pensioners in 2023. This measure simulating non- cash payments made it possible to increase the volume of non-cash transactions on pension cards from 20% to 24%. As a rule, the main part of pension cards are NPS (National Payment System) Armenian Cards, which will be issued with chips from this year, which will make their use much easier.
Gevorgyan emphasized that a significant increase in non-cash payments is becoming a challenge for the growth of the infrastructure of both the card market and payment systems. He recalled that there are 5 processing centers in the country, 4 of which belong to specific commercial banks, but the main one is the processing center of the National Payment System (NPS)- Armenian Card National Payment System. It accounts for more than 90% of payments. For example, in the 4th quarter of last year alone, the NPS processed 436 million payments for a total amount of 5.3 trillion drams. To develop the payment infrastructure, Armenian Card invested about 2.5 billion drams in 2023 alone, and plans to increase capital investments to 3.4 billion drams in 2024. He noted that NPS Armenian Card is working today on a very important program for the development and implementation of the ArCaPay payment system, which could start operating this year.
At the same time, the CBA Director of the Financial Stability Directorate noted a number of problems in the non- cash payments market that have yet to be resolved. Among them, there are often differences in prices for goods and services in the case of cash and non-cash payments. At the same time, according to MPs, the difference is much greater than the amount of the acquiring tariff, which also indicates attempts by business entities to evade taxation.
As another market problem, Gevorgyan noted the need to adopt regulations that would eliminate the attempt of economic entities to shift acquiring costs from themselves to the buyer of goods and services, which sometimes happens in the market.
Another problem is related to the competition of payment systems, and its solution is seen in the need to organize a technical connection between them, since there are systems that "do not see each other," and thereby allow people to have the right to choose, and the systems to have competitive tariffs. To do this, it is also necessary to develop and adopt a number of national standards for the payment business, including API and QR payment standards for the national card infrastructure.
According to independent expert estimates, there was a significant increase in tariffs in Armenia back in 2022, first of all, for non-residents - immigrants, about 110 thousand of whom arrived in Armenia. Tariffs have also increased for residents. Thus, in 2022, the annual service fee for international cards issued by Armenian banks for residents has almost doubled, and for non-residents it increased 5-10-fold, remaining at this level throughout 2023. According to analysts, a significant increase in banking tariffs, mainly for non- residents, led to a significant increase in commission income, which, coupled with foreign exchange transactions, significantly compensated for the decrease in interest income due to stagnation of the credit market. In 2022 alone, banks' fee income increased 42.2% and fee expenses rose 28.8%. At the end of 9 months of 2023, the growth of card income and expenses increased by 77.7% and 96% year-on-year , respectively.
According to the Central Bank, by October 1, 2023, there were 3.6 million active bank cards in Armenia, of which 1.7 million were Visa cards, about 851 thousand were Mastercard and 838 thousand cards of the local ArCa system. Over the past year and a half, VTB Bank of Armenia has issued 188 thousand cards of the MIR Russian payment system .
