Payments Landscape in Romania: Opportunities and Risks to 2022

Payments Landscape in Romania: Opportunities and Risks to 2022

Summary

Cash remains the dominant payment instrument in Romania, accounting for 85.1% of total payment transaction volume in 2018. While high-value transactions are shifting to electronic platforms, low-value transactions are mostly carried out with cash. Although the use of payment cards (primarily debit cards) is gradually rising, they are mostly used for cash withdrawals at ATMs rather than making payments at merchant outlets. But the government has taken steps to promote electronic payments, including the introduction of the cashback law in 2017 to push merchants to accept card-based payments.

Although debit cards are the dominant card type, penetration remains lowest in Romania in comparison to its peers due to the country’s large unbanked population, lack of trust in the financial system, and limited knowledge of financial products. However, the central bank and banks in Romania are taking steps to improve financial literacy and build consumer faith in the banking system. In addition, banks are offering low-cost basic accounts for a nominal fee or no fee, along with complimentary debit cards.

Credit and charge cards are not popular in Romania, with a penetration rate of 14.9 cards per 100 inhabitants in 2018. The availability of overdraft facilities on bank accounts further reduces the need for credit cards. But the market registered strong growth in terms of card payment volume and value, supported by convenient repayment options such as installment facilities, long repayment tenures, and banks offering various incentives in the form of reward points, discounts, and cashback.

The Romanian e-commerce market registered robust growth, increasing from RON5.4bn ($1.3bn) in 2014 to RON10.9bn ($2.7bn) in 2018 at a review-period compound annual growth rate (CAGR) of 19.3%. This was supported by increasing consumer confidence, growing internet penetration, and a rising number of online retailers. The availability of alternative payment solutions such as PayPal, Masterpass, paysafecard, and Skrill is expected to further support e-commerce growth in the coming years.

The report “Payments Landscape in Romania: Opportunities and Risks to 2022” provides detailed analysis of market trends in the Romanian cards and payments industry. It provides values and volumes for a number of key performance indicators in the industry, including cash, cards, credit transfers, direct debits, 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 the 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 details of regulatory policy and recent changes in the regulatory structure.

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

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


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


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


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

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

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


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


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


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


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

Companies Mentioned: Banca Transilvania, Societe Generale Group, Erste Bank, Raiffeisen Bank, CEC Bank, ING Bank, Eurobank, UniCredit Bank, OTP Bank, BNP Paribas, Credit Europe Bank, Mastercard, Visa, American Express, PayPal, Masterpass, paysafecard, Skrill, Banca Naţională a României

Scope

• To remain on a par with its European peers and promote electronic payments in the country, Romania adopted instant payments. On December 10, 2018, Transfond (the Romanian electronic payment system operator) launched an instant payment service in the country. The system enables Romanian individuals to transfer up to €15,000 ($17,183.22) or RON50,000 ($12,309.55) between banks instantly 24 hours a day, seven days a week, 365 days a year.


• The government introduced the cashback law in November 2016, which became effective from January 1, 2017, mandating merchants with annual business turnover of over €10,000 ($11,455.48) to accept debit and credit cards as a method of payment. The cap was increased to €50,000 ($57,277.39) in June 2018. This means merchants must install at least one POS terminal in each of their stores. Failure to do so carries a fine of RON5,000-7,500 ($1,230.95- 1,846.43). The law also mandates that public utility providers and public institutions must accept payments via cards, or risk a fine of RON20,000-50,000 ($4,923.82- 12,309.55).


• The emergence of contactless technology will help boost electronic payments in Romania. According to a study conducted by Mastercard, the number of contactless transactions increased by 139% between January and August 2018, in comparison to the same period of 2017. To capitalize on this trend, major banks including Raiffeisen Bank, Banca Transilvania, and BRD (part of Société Générale Group) offer contactless payment cards. Meanwhile, stickers and wearables can also be used for contactless payments. In February 2019, Credit Europe Bank launched the AVANTAJ2go Sticker and Bracelet linked to CardAvantaj Mastercard credit cards, enabling users to make contactless payments at merchants.

Reasons to buy

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


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


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


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


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