An independent expert in the payments market, former head of the bank family and management board of UPU FlashPay
Even before the Coronavirus crisis, Ukraine did not lag behind in the number of cashless and fintech projects and in the pace of their development. Consumers of financial services have already received and repaid loans remotely, paid non-cash and online regular payments, received payment cards without visiting a bank, and used cashbacks in settlements.
The coronovirus crisis has intensified and led to the transfer of payments to cashless, almost forcing customers to consult in messenger and video applications. Then, to achieve the balance of financial interests of the payer and service provider – a bank or a non-banking financial institution?
To answer this question, consider what these payment market participants are trying to do. Payers, based on their core transactional qualities, want to get payment services as simple and convenient as possible, managing them online from their smartphones, and preferably free of charge. In addition, they are already used to receive bonuses (cashbacks) for settlements with payment cards. Service providers – banks and non-banking financial institutions – not only seek income from cross-selling while providing payment services, but also make this business profitable.
It seems that simultaneously meeting the interests of all market participants is impossible. But you can try to reduce costs and optimize the processes of payment service providers, not only creating ecosystems based on collaboration and outsourcing between banks, payment systems, non-banking financial institutions and logistics companies, But also include vendors of goods / services. State Pension and Social Fund.
The National Bank of Ukraine determined to a large extent that cheap cashless banking is their priority and that they are working with banks to review the cost of paying customers’ accounts. But already, thanks to the manufacturing and pricing policy of SEP NBU at the moment, the transfer of funds between small amounts of customer accounts is inexpensive. The question here is more about the financial literacy of the customer and the motivation of bank managers to explain the benefits of various options for transferring funds to the customer. Today, the cost of non-cash transactions for individuals varies depending on the type of operation and methods of transfer:
- Within a bank, transfers between individuals’ accounts in almost all banks are free;
- Small interbank non-online transfers from individuals’ accounts of leading banks also provide an opportunity to do freebies;
- Transfers using the MISA mechanism VISA and MasterCard, so-called card-to-card transfers that are made online, cost the customer about 1-2 UAH levels plus 5 UAH. However, market leaders of some banks also make them independent for individuals.
In order to provide simultaneous interbank transfer service online and cheaply or even free of charge to the consumer, it would be appropriate for transfer market leaders to implement each other’s APIs for instant money transfers, where payment The identifier will be somewhat simpler than IBAN (phone number, email). . Or to agree on a single standard protocol of negotiation, which will significantly save the IT resources of all market participants in the future.
Another part of regular consumer demand for payment services is monthly payments for utilities, mobile communications, Internet, television and debt repayment. In this section, the situation is generally awkward with procedures and tariffs. For example, local settlement centers “cover” almost all housing and communal services utilities at the local level with the banks and other financial institutions in the process of organizing the collection of payments for their services. Provide interaction. The intentions sound good – to standardize and optimize the IT function in utilities. But, as a rule, these settlement centers also take out the full commission of utilities provided in their budget to pay the collection of payments. And banks and other financial institutions that accept these payments directly are forced to either charge the payer, or, in the struggle for the customer, at the expense of other services (mainly credit limits) To subsidize this service. Anyway – the end user of the service pays for everything!
The National Bank of Ukraine, as part of the optimization of settlement procedures in the state, began a discussion on the standardization of payment receipts, and, accordingly, the billing system (interface) of enterprises in the housing sector. But the efforts of NBU and payment market participants alone are not enough here. To optimize these processes, and therefore reduce the cost of services for the final payer, negotiate with the Ministry of Development of Communities and Regions of Ukraine and develop and implement uniform technical and tariff standards for utilities and disposal centers The Ministry of Digital Transformation is required for.
Another very important part of non-cash payments by individuals is payment card payments for products, goods, and services, the quantities of which are increasing from quarter to quarter, including the history of cashbacks. It is no secret to anyone that a trader’s acquisition commission is a source of cashback (that is, merchants now pay 1.5–2% to banks to obtain services) and / or, again, the cost of income from other services. But this customer loyalty is subsidized by the banking customer. . But legislative preparations have still begun on the Ukrainian market with the aim of reducing the interbank commission rate with payment cards in today’s trading networks from 1.6–1.7% to 0.5%, according to which, traders ’commissions should be reduced 1 %.
This is a debatable issue that takes up different perspectives in the professional environment. But there is no silver layer, and these changes also require someone to look for opportunities. Now, merchants feel that they are sponsors of loyalty to customers providing cashback to banks, and cashless and NFC settlements are moving so fast in Ukraine, at the expense of merchants. If merchants pay the “fair” value of the acquisition, they will be even more willing to participate in co-branded stock-cashback programs for various target groups of customers. And finally, with the direct interaction of merchants with banks and the application of individual offers to certain groups of customers (pensioners, students, schoolchildren, athletes, doctors), the cashback is even greater for customers as calculated by payment cards. Can.
Thus, there are two options for further development: continue to subsidize the paid business at the expense of other functions, as well as transfer all inefficiencies to the payer, increase commissions for payments, or reintegrate from competition to cooperation And thus making the processes on the payment sector of Ukraine as optimal as possible. I hope that the current crisis will push us to another option.