the ninth project management meeting for reducing …...1 - atm cash withdrawals 5,136,022 6,155,640...

The ninth project management meeting for reducing cash transactions

in Kosovo

Project Management Group within the National Payments Council (NPC)

Prepared by: Payment Systems Department, CBK

23 November, 2012

CENTRAL BANK OF THE REPUBLIC OF KOSOVO 1.

Content

• Approval of minutes from the last meeting (September 19th 2012);

• Discussion about cooperation with MasterCard and VISA (companies which have made presentations in CBK): What do they offer, what are our benefits?

• Presentation of the “Analysis on the Use of Payment Instruments”, and “Kos-Giro Analysis”;

• Discussion about National Interbank Card Switch: – Unification of card usage in all ATMs and POS terminals;

– Discussion about Third Pillar of the National Payment Systems Development Strategy;

• To define objectives and action palan of the team and their completion time;



1. Approval of minutes from the last meeting

(September 19th 2012)

• To prepare a detailed analysis on the performance of Kos-GIRO payments for the next meeting

(CBK) (fulfilled)

• Detailed statistics on the number of ATMs and POS terminals (active and passive) and for the next meeting to prepare statistics and analysis for payment instruments (CBK) (fulfilled)

• In the next meeting, the team can discuss about their new projects that MasterCard can support them.(in process)


2. Presentation of the “Analysis on the Use of Payment Instruments”(1)

Terminals by function 2008 2009 2010 2011 Q2 2012

Automated Teller Machines (ATM ) 240 339 415 460 472

From which:

1 - ATM with cash withdrawals function N/A 339 415 460 472

2 - ATM with credit transfers function N/A 122 141 147 149

From which:

a - ATM with Kos-Giro payment N/A N/A 39 69 72

b- ATM with deposit cash function N/A 0 0 1 1

ATM terminals by regions* The data presented in the graph shows that the largest number of ATMs is concentrated in the Prishtina region, due to the large number of residents. Equipping these ATMs with barcode reader will enable customers to make payments for certain services directly from ATM without having to visit the bank facilities.

* Division of regions is made according to the following cities : Prishtina (Prishtinë, Podujevë, Obiliq, Novobërdë, Lipjan, Graçanicë, Gllogovc, Fushë-Kosovë) Prizren (Prizren, Dragash, Suharekë, Rahovec, Malishevë, Mamushë) Mitrovicë (Mitrovicë, Skenderaj, Vushtrri, Zubin Potok, Zveçan, Leposavië) Pejë (Pejë, Gjakovë, Deçan, Junik, Klinë, Istog) Ferizaj (Ferizaj, Kaçanik, Shtime, Han I Elezit, Shtërpcë) Gjilan (Gjilan, Kamenicë, Kllokot, Parteshë, Viti)

Second Point (2)



Terminals by function 2008 2009 2010 2011 Q2 2012

POS terminals ( Point of

Sale ) 3.426 5,251 6.194 7.534 7.713

From which:

1 – POS terminals with cash

withdrawal function N/A 212 212 1.376 222

2 – EFTPOS terminals N/A 5.223 5,930 6,320 7,620

POS terminals by regions Active and inactive POS terminals

The graphs above shows the distribution of POS terminals by regions of Kosovo, respectively POS active and inactive. The first

graph shows that in Prishtina region is focused half of POS terminals, and the other half in all regions of Kosovo. The second

chart shows that a large number of POS (18%) are inactive, so there needs higher commitment of banks in order to promote the

use of payment cards.



Cards by function 2008 2009 2010 2011 Q2 2012

Cards with cash

function N?A 516,847 504,174 612,388 665,350

Cards with payment

function 116,852 538,907 518,581 623,488 677,644

from which:

1 – Debit cards 105,713 507,399 480,659 548,253 589,871

2 – Credit cards 11,139 31,508 37,922 74,873 87,793

Cards with electronic

payment function 0 9,801 8,321 12,391 12,736

Total number of cards 116,852 548,708 529,525 637,519 690,400

Percentage of active cards

Card holders by age Card holders by gender



Description 2008 2009 2010 2011 Q2 2012

Number of transactions 5,882,919 7,571,790 9,004,293 10,666,205 5,758,323

from which:

1 - ATM cash withdrawals 5,136,022 6,155,640 6,960,469 7,958,448 4,116,754

2 - ATM deposit N/A 0 0 26 33

3 – Credit transfer through

ATMs N/A 111,083 194,851 188,018 79,433

4 – Cash withdrawals in POS

terminals N/A 17,923 35,574 90,127 8,406

5 – Payments with cards in

POS terminals 746,897 1,287,144 1,813,399 2,429,586 1,553,697

Number of card transactions

Description 2008 2009 2010 2011 Q2 2012

Number of transactions 539,535,697 662,115,998 758,437,983 965,501,131 464,458,077

from which:

1 - ATM cash withdrawals 485,109,074 578,132,778 636,934,701 790,036,796 378,183,322

2 - ATM deposit N/A 0 0 2,440 6,040

3 - Credit transfer through

ATMs N/A 764,111 1,304,436 1,280,784 559,112

4 - Cash withdrawals in POS

terminals N/A 14,793,115 25,885,027 31,810,579 8,540,501

5 - Payment with cards in

POS terminals 54,426,623 68,425,994 94,313,819 142,370,533 77,169,102

Value of card transactions

In the tables at the left is shown the number and value of card transactions. The data in the table shows clearly the increase in the number and value of card transactions each year. Problem is the fact that the largest number of card transactions consist of cash withdrawals at ATMs, so greater attention should be paid to promoting other functions except cards withdrawals in ATM.



Description Number %

Individual’s Accounts 80,390 79.90%

a - individual (resident) 76,807

b - individual (non-resident) 3,583

Business Accounts 20,129 20.10%

a - business (resident) 19,743

b - business (non-resident) 386

Total 100,519 100.00%

Number of e-banking accounts by type

Number of e-banking transactions (in thousand) Value of e-banking transactions (in billion)

The table presents the number of e-banking accounts by holders, from

which it is clear that the majority of e-banking account holders are

private persons (about 80%) while only 20% of them are legal. Banks

should promote the use of e-banking services especially to businesses

since large amount of cash circulates through them.

The two graphs below presents the number and value of transactions

conducted through e-banking service in recent years. The data

presented in the graphs show the increase of the number and value of e-

banking transactions each year, continuing with upward trend.



Conclusion

• ATM terminals mostly are used for cash withdrawals, banks should

also promote their other functions besides Cash withdrawals;

• POS terminals network is extended to all centers of Kosovo, but there

is high number of inactive POS, thus raising campaign for payments at

POS terminals;

• Cards number is constantly increasing, but their use in payment

terminals should be promoted, especially their use in POS terminals,

as the number of cards used in the terminal is low;

• The use of e-banking services remains low although upward trends.

Banks should promote this service to increase use of it either through

tariffs or other forms from banks.


2. Kos Gyro Analysis

Type of transaction Giro payment in Cash ( through EICS) % Giro payment from the account

%

(through ICS)

Number Value Number Value

2007 87,511 203,625,449.22 30,805 160,783,620.07

2008 136,847 56.38 125,706,145.06 -38.27 108,812 253.23 406,472,555.25 152.81

2009 163,496 19.47 78,748,589.23 -37.36 205,259 88.64 578,300,941.81 42.27

2010 299,360 83.10 107,627,591.00 36.67 177,091 -13.72 610,038,088.00 5.49

2011 291,648 -2.58 132,138,679.00 22.77 205,244 15.90 775,414,392.00 27.11

Q2 2012 146,061 -49.92 57,341,689.00 -56.60 108,467 -47.15 325,518,041.00 -58.02

Type of transaction Giro payment in Cash ( through EICS) % Giro payment from the account

% within the bank /INTRA

Number Value Number Value

2007 10,197 40,848,767.14 18,019 8,827,130.43

2008 29,528 189.58 8,967,735.92 -78.05 29,273 62.46 103,801,821.17 1,075.94

2009 74,619 152.71 12,087,887.32 34.79 30,444 4.00 76,014,418.96 -26.77

2010 109,442 46.67 35,314,429.00 192.15 99,562 227.03 85,154,228.00 12.02

2011 114,368 4.50 20,566,916.00 -41.76 89,027 -10.58 222,255,236.00 161.00

Q2 2012 49,233 -56.95 7,418,571.00 -63.93 34,886 -60.81 120,058,704.00 -45.98

Number and value of Kos Giro payments in cash and from the account through EICS for the year 2007-2012

Number and value of Kos Giro payments in cash and from the account in the bank (INTRA) for the year

2007-2012

The number and value of payments that belong to the KOS GRIO scheme is growing constantly. The main purpose of this form of payment is to reduce cash payments, and therefore should be promoted Giro payments through accounts, discouraging Giro payments through Cash.


3. Discussion regarding the way of cooperation with VISA

– Financial support by VISA, as discussed in other meetings.

“Visa has promised the budget of US$ 10,000 to be used next year. ..to invest the funds in developing a local web site by local resources and also Visa can help with providing the content"

Third Point (3)


3. Discussion regarding the way of cooperation with MasterCard (1)

Regarding the CBK objective of reducing volumes of cash transactions within the banking system, Master Card Advisors prepared a proposal to help:

1. Design framework for establishing national card processing center;

2. Bring worldwide legal and marketing practices to increase share of electronic payments.

Third Point (3)


3. Discussion regarding the way of cooperation with MasterCard (2)

MasterCard built a custom approach for CBK with three main work streams:

1. Market Assessment and Target Setting;

2. Benchmark Analysis and NPC Op Model Options;

3. Legal and Marketing Practices Benchmarking

Third Point (3)


3. Discussion regarding the way of cooperation with MasterCard and

VISA, and other sources required for project management

Proposal:

Each participant in Payment System to contribute at least with 2 000 Euro including CBK, to support the development of awareness campaigns on the use of electronic payments;

Third Point (3)


4. Discussion about National Interbank Card Switch

• To analyze the possibility of using reciprocal the bank cards at all ATMs and POS terminals. - Bilateral or multilateral agreements between banks. - Standardization – (how to be done?, what to do and when?)

• Third Pillar. Within National Payment Systems Development Strategy, leaded by CBK, there have been undertaken questionnaires, analysis and assessing practices from other countries.

• Support requested from World Bank and in contact with MasterCard (through this team).

Fourth Point (4)


5. To define objectives of the team and their completion time

Conclusions and objectives decided together with the project management team within the NPC.

• ______________________

• ______________________

• ______________________

• ______________________

• ______________________

• ______________________

Fifth Point (5)

Thank you


National Payments Council http://www.bqk-kos.org/?cid=1,59,55

the ninth project management meeting for reducing …...1 - atm cash withdrawals 5,136,022 6,155,640...

Documents