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In 2015, non-cash transactions constituted only about 35% of all consumer payments in Poland. Given Poland’s low share of non-cash transactions, it is surprising that this nation is a European leader in terms of utilisation of contactless cards. In fact, this country was one of the earliest adopters of contactless technology in Europe and consumers quickly became familiar with the convenience offered by these tap-and-go cards. How was this possible in a country that remained far from the forefront of technology for cashless trade? Is there a future for contactless cards, with mobile payments from smartphones expected to expand over the coming years?
The domestic market for contactless cards started in 2008 when Bank Zachodni WBK SA issued the first cards. At the end of 2015, contactless cards accounted for 80% of all financial cards in circulation in Poland. According to the latest data from the National Bank of Poland, the number of POS terminals supporting contactless payments reached about 388,000 at the end of 2015, as high as 83% of all in-person POS terminals, giving Poland the leading position in Europe. By the end of 2017, all Polish POS terminals will support this proximity technology.
Poland has been one of the leading European countries in terms of contactless transactions. This is confirmed by the most recent MasterCard data, published in February 2016, which showed that 55% of card payment volume with the MasterCard or Maestro logo were already proximity transactions in the last quarter of 2015. This represented an increase of 84% over the last year in the number of transactions and even stronger 100% growth in transactions value. Visa reported similar results in May 2016, when it said more than 55% of all Visa payments in the country were contactless payments.
Proximity payments are driving the cashless flow in Poland, especially in the segment of low-value payments. Shoppers can buy bus tickets, newspapers or other small items by simply tapping their proximity card on a scanner at a till, without having to type in a PIN. A PIN needs to be entered to approve transactions over PLN50 (US$12.8). Poles are open to new forms of payment and the focus is on making payments easier, faster and in a modern way.
The advantages of contactless cards are appreciated by some Polish municipalities, which, together with partner banks, introduced city payment cards. Such payment tools work as regular debit cards and furthermore enable the encoding of long-term tickets for public transportation or payment for parking spaces at parking ticket vending machines. The card user can also benefit from various discounts provided for the city card or use the card as an electronic entry ticket to public facilities such as the zoo or the aqua park. For example, the Warsaw Payment Card introduced by PKO Bank Polski SA in cooperation with the Warsaw and City Transport Authority in March 2015.
The widespread acceptance network and long-standing campaigns towards contactless payments are propelling contactless transactions. This includes the important “Pay everywhere with a Visa card” programme financed by Visa Europe member banks. Over 2010-2015, the programme contributed to the expansion in the number of POS terminals accepting this technology. Within the framework of a programme at a cost of more than €30 million, over 202,000 new POS terminals were set up in Poland. Simultaneously, the acceptance network was modernised to support contactless payments, making Poland a leader in Europe. However, the cash environment remains strong, particularly in the areas of government administration, small retail and foodservice points as well as marketplaces, where cash is often the only possible payment tool.
There are still some security concerns on the part of cardholders, but, along with the increased usage, a majority of consumers believe that contactless transactions offer a safer alternative to other forms of payment. This is due to a growing awareness of security measures in the area of contactless payments. In general, the scale of fraud on financial cards is low compared to overall card transactions in Poland, accounting for 0.01% of the total value of card transactions in 2015. Furthermore, cardholders are obliged to notify the bank about the loss of a card and are then liable for any unauthorised transactions up to the amount of the equivalent of €150 in PLN (above this amount, the responsibility is taken by the bank). In addition, the National Bank of Poland recommends that the lower value of responsibility for fraudulent contactless transactions should be limited to the equivalent of up to €50, although the banks are not obliged to comply with this recommendation.
Euromonitor International estimates that there will be as many as 59 million financial cards in Polish hands in 2020. The significant surge in contactless payments with cards is anticipated to continue over the coming years in Poland. However, openness to technological innovations could mean that contactless cards will face competition as a rising number of Poles are likely to use mobile applications for everyday commerce in the coming years. Applications, which allow payment by a smartphone or a wearable device, are expected to successfully enter payment areas and capture share from financial cards. In an interview with Euromonitor International, Sandra Alzetta, senior vice-president at Visa, pointed to Poland, Czech Republic and Slovakia as the European markets to watch for proximity payments. “Contactless is so engrained,” Alzetta said of those markets. “There is the infrastructure, consumer confidence and appetite to tap. It would be a very easy transition to see consumers doing that with their smart devices in time”.
For the time being, only a small percentage of Polish people are using smartphones for contactless payments. Euromonitor International estimates US$58 million was made in proximity payments in 2015, of which NFC payments are a component. Despite the existing safety concerns around such transactions, the awareness of mobile contactless payments remains quite high with many Poles having a positive attitude towards this kind of transaction. Consumers just need to break through the psychological barrier to replace their contactless cards with a smartphone and use only one tool to purchase goods and services both in digital and physical stores.