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Numerous countries have already started a transition to a cashless economy. For example, cash has almost come out of use in the Nordic countries; there are even trade outlets where only non-cash payments are available. In African countries, because of undeveloped banking infrastructure and criminogenic situation, the refusal of cash is due to mobile wallets, for example, M-Pesa. The local population is afraid to carry cash with them, therefore the role of banks was assumed by operators.
In the developed world, cash, especially large amounts, has become synonymous with corruption and crime. It is difficult to follow the cash flow, which means that such transactions can potentially be committed for an illegal purpose - buying prohibited goods or giving bribes. In addition, cash is not the most convenient payment tool. It can be stolen, you cannot use it to pay on the Internet (we do not count purchases with postpay, as in Ukraine or, for example, in Latin America).
Banks, shops and other organizations, whose activities are somehow connected with finance, on the contrary, are interested in user’s spending money at any time. Accordingly, at first glance, the course on the cashless economy, is beneficial to everyone.
In some countries, banks are the driver of the fintech - these are, for example, the states of Old Europe, the northern countries. Banks unite to create a product that is user-friendly. For example, in China, the technology giants are drivers of changes. For example, Alibaba (belongs to the popular in the Middle Kingdom payment system Alipay) or Tencent (the owner of WeChat - the most popular instant messenger in China, which is actively used by the population of the country for any purpose).
The course on the cashless economy does not mean that one day Ukraine will completely abandon the cash. This is a long and complicated process, which aims to gradually reduce the available mass of cash on the market. There is not a single country in the world where physical money is not used in the everyday life. In Sweden, according to Bloomberg, 1.8% of GDP is accounted for cash transactions. Scandinavian countries, as well as South Korea, announced plans to abandon the physical money, but this will happen in the next 10 years. In these countries, a small share of payments could be transferred for cash.
The idea of transition to the cashless economy has both supporters and opponents. The supporters advocate for convenience, a speed of funds transfers, a disappearance of shadow operations, filling the treasury with taxes and full financial transparency. The opponents remind that refusal from the cache will lead to restriction of human rights and freedoms, whose money will be in the hands of fintech companies, banks, states, and not under a mattress or at least in a bank safe.
In addition, if physical money is vulnerable to intruders, then the means in the electronic world are an attractive target for hackers. Hacker attacks of the last time (take, for example, Petya virus) show how large is the threat and its consequences. In addition, the hackers themselves have already mastered fintech, and the tool for illegal operations is increasingly becoming crypto-currencies.
In the countries of Old Europe (Sweden, Germany, for example), which are characterized not by inflation, but by deflation, deposits with a negative rate appear. This means that it is not the bank that pays the client for the ability to store and use his funds, but the client pays the bank. According to The Wall Street Journal, in recent years the popularity of home safes in Germany has grown: people do not want to pay bank fees and prefer to hide their funds safely at home. The market leader Burg-Waechter sales increased by 25% in the first half of 2016. In a fully digital economy, this will simply be impossible: since money cannot be cashed, it will be necessary to pay someone for a safety guarantee.
The concept of the cashless economy project from the National Bank of Ukraine is available on its website. According to the concept, refusing from cash would be stimulated by an appreciation for the population (that is, the introduction of fees for withdrawing money and the refusal of commissions for crediting), the reduction of the border settlement amount, the development of international payment systems, electronic money, other non-banking payment systems.
If we think about specific instruments, in the near future we would talk about legislative changes, including the implementation of the PSD 2 directive, which was previously adopted in the European Union and now extends beyond it, the development of payments b2b, b2c, b2g, the introduction of remote identification (that is, opening accounts via remote channels).
According to the NBU, for the first nine months of 2017, the number of enterprises that began to accept payment cards increased by 13.1% or 19,112 in quantitative terms and reached 165 thousand units. The network of payment terminals grew by 10.2% and reached 241.6 thousand units.
As reported on the website of the National Bank, according to the results of the third quarter of 2017, part of non-cash payments in the total volume of transactions with payment cards in Ukraine increased by 3.1% since the beginning of the year and amounted to 38.6%. In total, 2.22 billion transactions were made using payment cards issued by Ukrainian banks for the amount of UAH 1458 billion. Compared to the same period last year, these indicators increased by 22.2% and 29% respectively.
At the same time, Ukrainians spend the largest non-cash amounts on the Internet (39% of all operations by volume, according to data for the third quarter of 2017), and most often use cashless payments in trade networks (52.4%, respectively). The top three banks by the number of issued payment cards and the development of payment infrastructure included state-owned PrivatBank and Oschadbank, as well as Raiffeisen Bank Aval.
According to Ukrainian Interbank Association of Payment System Members (UIAPSM), about 27% of all transactions with cards account for p2p-transfers via the Internet (simply transfers of funds between cards). By the third quarter of 2017, the share of e-commerce in Ukraine increased by 11% compared to the previous year, when the indicator was 28%.
In general, experts note the imbalance of the market and talk about the decline in the number of payments in retail chains for five quarters, namely, they were the development drivers of non-cash payments in Europe. It is interesting that if the NBU says that retail accounts for more than half of the transactions, then the UIAPSM refers to the figure of 31.5% as of the third quarter of 2017.
According to experts, Ukraine suffers from a shortage of payment terminals: 60-85% less than in other European countries, comparable in terms of area and the number of residents.
Mastercard also notes an increase in the number of non-cash payments in Ukraine in 2017. Among the drivers is the introduction of contactless payment in public transport. "Since the launch of contactless payments with Mastercard in Kyiv metro, almost 17 million trips have been paid at the turnstiles with the help of a bank payment card, including visitors from 55 countries.
In 2017, Ukrainians have enjoyed paying with the help of NFC (technology for short-range wireless data transmission) in their mobile devices and use it more actively. There are several reasons for this. Firstly, the emergence of mobile wallets from several large banks of the country, which became possible due to the launch of own platforms for tokenization in the payment systems Mastercard (MDES) and VISA (VTS) in Ukraine. Secondly, contactless payment in public transport and leisure facilities become more common. Thirdly, the launch of a mobile wallet from Google - Android Pay (the other day Google combined it with the Google Wallet service and renamed Google Pay). At present, PrivatBank, Oschadbank, Ukrsibbank, FUIB are working with Android Pay, and the list will be replenished, the press service of Google assures. The number of users in Google is not called. The system itself is supported by hundreds of companies across the country, including Silpo network, Le Silpo delicatessen shops, Fozzy hypermarkets, Fora chain stores, ringoo chain stores, Bila Romashka pharmaceutical supermarkets, Kyiv subway, a network of fast food establishments McDonald's supply, the network of WOG and OKKO refueling complexes.
According to the US financial company Rambus, tokenization (that is, encryption of payment information, which, in particular, is used for TAC payments) and mobile wallets will be the main trend of the coming year. Over the past year, the number of transactions with the Mastercard tokenization platform, based on which NFC-wallets work in dozens of countries, including Ukraine, has grown for more than a hundred times in the world.
Also, Mastercard notes the popularity of the Masterpass digital wallet platform in Ukraine. The company says that our country is among the top three in Europe by the number of transactions, at the moment it is integrated into online stores of more than 2 thousand outlets and online services.
Portmone states about the positive dynamics in the segment of online payments and transfers. "According to our estimates, the market for payments and transfers continues to grow, Portmone has now reached the level of about 5 million transactions per month, with the most recent growth of relatively new categories: payment for insurance companies, buying e-tickets, buying online stores," says Serhiy Khrulev, a company representative. According to him, the remaining segments of the service are also growing. Among the most popular ones are mobile phone replenishment, transfer of money from card to card, payment for utilities, and payment for telephone/internet/television. And the main driver is the growth of the client base.