Payments Landscape in Venezuela: Opportunities and Risks to 2022

Payments Landscape in Venezuela: Opportunities and Risks to 2022

Summary

Venezuela is currently undergoing an economic crisis, with the country on the brink of collapse. This is due to declining global oil prices, the government’s restricted fiscal policy, and an over-reliance on oil exports. Hyperinflation and the depreciating local currency have made it inconvenient for Venezuelan consumers to conduct cash payments, as doing so requires carrying cash in bulk. Subsequently, consumers have been forced to migrate from cash-based transactions to card payments, thereby resulting in a significant rise in payment card usage in the country. In terms of overall transaction volume and value, the payment card market recorded respective review-period compound annual growth rates (CAGRs) of 25.1% and 399.3%.

The government has taken various steps to reduce dependence on cash and promote electronic payments, such as the introduction of bitcoin currency petro, an increase to the credit card limit, and the launch of the Billetera Móvil app for the purchase of subsidized products. In addition, rising investment in point of sale (POS) infrastructure and growing adoption of mobile wallets will also support payment card market growth in Venezuela.

Debit cards remain the largest market, accounting for 94.4% of overall payment card transaction value in 2018. This was supported by the increasing banked population and the combined efforts of banks and government bodies to promote electronic payments and financial inclusion in the country. Subsequently, the frequency of debit card payments was 93.3 transactions per card per year in 2018 (compared to 7.4 for ATM cash withdrawals).

The credit and charge card market accounted for just 5.6% of total payment card value in 2018. However, the number of credit cards in circulation recorded a review-period CAGR of 5.1%. This was driven by the growing need for credit - especially among the middle class - due to the economic crisis and hyperinflation. The availability of instant credit (separate from the lines of credit attached to cards) and access to discount programs have also driven demand for credit cards in Venezuela.

Amid the growing financial turmoil and hyperinflation in the country, virtual currency bitcoin is gradually gaining acceptance. In February 2018 the government introduced its own digital currency, called petro, which is based on Venezuela’s petroleum reserves. Using the virtual currency, individuals can pay for purchases including fuel, air transport, and tourism services. The use of petro will further be extended to paying for public services and taxes.

The report “Payments Landscape in Venezuela: Opportunities and Risks to 2022” provides detailed analysis of market trends in the Venezuelan cards and payments industry. It provides values and volumes for a number of key performance indicators in the industry, including cards, credit transfers, direct debit, and cheques during the review-period (2014-18e). The report also analyzes various payment card markets operating in the industry and provides detailed information on the number of cards in circulation, transaction values and volumes during the review-period and over the forecast-period (2018e-22f). It also offers information on the country's competitive landscape, including market shares of issuers and schemes.

The report brings together research, modeling, and analysis expertise to allow banks and card issuers to identify segment dynamics and competitive advantages. The report also covers detailed regulatory policies and recent changes in regulatory structure.

The report “Payments Landscape in Venezuela: Opportunities and Risks to 2022” provides:

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


• Detailed insights into payment instruments including cards, credit transfers, direct debit, and cheques. It also, includes an overview of the country's key alternative payment instruments


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


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

The report “Payments Landscape in Venezuela: Opportunities and Risks to 2022” enables the user to:

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


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


• Assess the competitive dynamics in the Venezuelan cards and payments industry


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


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

Companies mentioend: Banesco Banco Universal, Banco de Venezuela, BBVA Provincial, Mercantil Banco Universal, Banco Fondo Comun, Banco Occidental de Descuento, Mastercard, and Visa

Scope

• To tackle the cash shortage in the country and prevent consumers from having to handle large volumes of cash to conduct purchases, in January 2018 the government introduced a mobile app called Billetera Móvil. The app enables individuals to pay for subsidized food products purchased from local supply and production committees using their Carnet de la Patria identification card. Venezuelan citizens can download the app and register using their ID number or by scanning the QR code on their identification card. To start making purchases via the app, users are required to deposit up to VEF300,000 to their ID card at any bank branch. As of February 2019 over 3.4 million consumers had registered for the service.


• To promote credit cards, in March 2019 the Superintendencia de las Instituciones del Sector Bancario de Venezuela (SUDEBAN) increased the maximum credit card consumption limit, enabling card issuers to approve a maximum credit limit of up to VEF775,000. In December 2018, Banco Central de Venezuela (the country’s central bank) capped the annual interest rate on credit cards at a minimum of 17% and a maximum of 29%.


• In January 2019 the central bank introduced new charges for different banking transactions, such as VEF128 for cash advances at POS terminals; 3% of amount withdrawn at own banks’ ATMs, and 5% at other banks’ ATMs; and VEF3,186 for the issuance of chequebooks associated with unpaid current accounts of natural persons. The charges on cash transactions are expected to encourage electronic payments.

Reasons to buy

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


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


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


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


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