Payments Landscape in Ukraine: Opportunities and Risks to 2022

Payments Landscape in Ukraine: Opportunities and Risks to 2022

Summary

Ukraine’s economy was severely affected by the global financial crisis of 2008 and the political crisis of 2013-14, which had a significant impact on the country’s banking industry. As a result, over 90 banks were declared insolvent between 2014 and 2017. To improve this situation, the Ukrainian government has undertaken several initiatives, such as financial inclusion, enhancing and modernizing banking access through the digital channel and the deposit insurance program to foster consumer confidence in the banking sector.

The government also introduced restrictions on cash use for both individuals and businesses, in order to reduce the dependence on cash and to promote electronic payments. Banks are also encouraging card use through reward programs, discounts and cashback offers. Meanwhile, the rising adoption of contactless payments and emergence of the e-commerce market, coupled with the emergence of alternative payments, is expected to further drive the overall payment market growth over the forecast period. These efforts led to a rise in the overall banked population, with the Ukrainian population aged 15 or above with a bank account standing at 65.6% in 2018 - up from 52.7% in 2014.

The Ukrainian payment cards market is entirely driven by debit cards, which accounted for 96.6% of transaction value of the total payment cards market in 2018. In Ukraine, payroll and social programs are a major way of issuing cards, and have led to the widespread issuance of debit cards. Debit cards were also the most preferred card type for payments, with the frequency of debit card use for payments (per card per year) accounting for 96 times in 2018 - more than six times that of credit cards.

Rising preference for contactless payments for low-value transactions is also driving the overall payments. Major banks in Ukraine such as PrivatBank and Oschad Bank now offer cards with contactless features. There were 3.6 million contactless cards in circulation as of September 2018, increasing by 31.4% in January 2018, while 78.8% of POS terminals are enabled with contactless.

E-commerce transactions registered a review-period growth of 30.9%, supported by rising consumer confidence, coupled with the availability of affordable internet and smartphones. The growing e-commerce market also attracted Ukraine’s largest bank - PrivatBank - to launch its own market place, PrivatMarket, in April 2016. Major banks such as Oschad Bank and PrivatBank are also offering payment cards exclusively for online shopping to drive consumer confidence in e-commerce transactions.

The report "Payments Landscape in Ukraine: Opportunities and Risks to 2022", provides a top-level market analysis, information and insights into the Ukrainian cards and payments industry, including -

• Current and forecast values for each market in the Ukrainian cards and payments industry, including debit and credit cards


• An overview of the country's key alternative payment instruments


• E-commerce market analysis


• Analysis of various market drivers and regulations governing the Ukrainian cards and payments industry


• Detailed analysis of strategies adopted by banks and other institutions to market debit and credit cards

Companies mentioned: Privatbank, Oschad bank, Raiffeisen Bank, Ukrsotsbank, BNP Paribas, Visa, Mastercard, PROSTIR, UkrKart

Scope

• In December 2018, the central bank announced to introduce International Bank Account Number (IBAN) to harmonize the Ukrainian payment area with that of Europe. Following this, from April 1, 2019, all banks in Ukraine are mandated to open accounts with the IBAN standard. The use of IBAN will become mandatory for customers of all Ukrainian banks when making funds transfers both in national and foreign currencies, including during cross-border transfers.


• In order to promote electronic payments in the country, the National Bank of Ukraine (NBU) imposed restrictions on cash transactions between individuals and businesses. Effective from September 2013, cash transactions were restricted to UAH150,000 ($5,410.45) per day between individuals and businesses; in January 2017 this limit was reduced to UAH50,000 ($ 1,803.48). Ukrainian law also mandates that merchants must support non-cash transactions. At the time of the announcement, over 140,000 trade and service enterprises were equipped with POS terminals.


• To capitalize on payment card market growth, international companies are also moving into the Ukrainian market. American Express does not have a presence in terms of card issuance, although scheme providers offer accept its card services, in exclusive partnership with Ukreximbank, which is the sole acquirer of American Express cards in Ukraine. Most recently in July 2018, China UnionPay collaborated with PrivatBank. With this agreement, UnionPay cards will be accepted at 60% of POS terminals and 40% of ATM terminals in Ukraine from 2019.

Reasons to Buy

• Make strategic business decisions, using top-level historic and forecast market data, related to the Ukrainian cards and payments industry and each market within it.


• Understand the key market trends and growth opportunities in the Ukrainian cards and payments industry.


• Assess the competitive dynamics in the Ukrainian cards and payments industry.


• Gain insights into marketing strategies used for various card types in Ukraine.


• Gain insights into key regulations governing the Ukrainian cards and payments industry.