Cosmin Vladimirescu, MasterCard Europe’s account manager for Romania, told Business Review about the current state of the local card market and its future perspectives. He also spoke about Romanians’ consumer behavior and the differences between the local and international card markets.
How do you characterize the Romanian card market in 2010?
It still has the potential to grow if we compare it to other mature markets like France or Great Britain. If analysts’ forecasts of an improvement in the economic environment prove correct, I think that also the card market will increase. Credit cards will be among the most popular lending tools in 2010 because they offer quick access to financial resources and flexibility in managing them. An increased weight of payments to retailers is also a natural direction. As for lenders’ product portfolios, they will continue to migrate towards chip technology. They will focus on new technologies in order to respond better to consumer demand for comfort and speed. Premium products will be another area on which financial institutions
will focus. And they will continue the segmentation they started last year.
Which cards do Romanians respond best to?
In the last two or three years lenders have started to structure their product portfolios depending on the customers addressed. So there are now products for almost all categories of consumer. For example, customers who want to access additional money use credit cards, while those who don’t have a bank account choose prepaid cards. Moreover, premium cards such as Gold, Platinum or World Signia address those customers with high incomes; business cards target company managers and co-branded ones focus on those who prefer to buy frequently from a specific retailer and intend to benefit from discounts and bonuses. Busy people who want to use their time as efficiently as they can choose cards that allow quick payments through contactless technology – MasterCard PayPass. The range has became so diversified that customers can even customize their cards with their photo – like the “A la carte” card from BRD or the Avon one with the user’s favorite perfume from GarantiBank. It has been a long time since lenders offered a single product for all customers. Now consumers are focusing on the type of product that suits them and best meets their needs.
How has the current turmoil changed Romanians’ financial behavior in terms of cards?
The change is visible especially on the credit card segment. In the financial context of last year, credit cards were the tools that sustained lending activity. Through them, Romanians could supplement their money with those offered by financial institutions. The demand for credit cards increased compared with consumer credit which dropped. According to Credit Bureau data, the number of reports requested by financial institutions for credit cards increased by about 100,000 in October 2008-September 2009 on the previous year, to 515,000. In exchange, the demand for consumer credit almost halved, from 5 million during 2007-2008 to 2.8 million.
And how has the crisis influenced Romania’s card market?
The Romanian card market didn’t feel the difficult economic context as other fields did. Except for some necessary measures – such as the cleaning of inactive cards from portfolios – the marked evolution was a positive one. Neither the volume nor the value of transactions with cards decreased. The number of payment transactions made using debit cards rose from 14.33 million to 16.3 million in the last quarter on the first quarter of 2009, while the number of credit card payment transactions reached 4.22 million from 4.03 million in the same period. As for consumer behavior, Romanians have become more cautious over the tools they have in their wallets and keener to use them to their own advantage, which is a great step forward. Besides, financial institutions have adapted their offers to meet consumers’ needs. Many of them have increased the grace period while some have cut the interest for credit cards.
How did premium and super premium cards evolve in Romania last year?
The premium segment has also made its contribution to the local card market in 2009, which saw new launches of premium cards on the MasterCard platform. For example, Gold Miles&More credit card, launched by UniCredit Tiriac Bank, was especially created for frequently flyers. The Platinum version of CardAvantaj from Credit Europe Bank and MasterCard Gold with double functionality – debit and credit – from Intesa Sanpaolo Bank were also launched.
How do Romanians perceive cards at the moment?
I would say that many of them are starting to perceive the bank card as a payment tool and not only as an intermediary to access cash. The proverb “where needs must” is very true, and has been applicable to Romanians lately. When they got worse off, they looked for methods that allowed them to manage their money more efficiently. They started often to pay retailers directly by card because they became aware of the benefits of this approach. So, card users are making small savings because they’re avoiding the fee that many financial institutions charge for ATM withdrawals. Also, Romanians have become more cautious, especially with credit card functionality, so they have benefited from grace periods and bonuses and avoided paying penalties to the bank.
How big is the gap between the local card market and other foreign card markets?
As for the technologies available, there are no differences between Romania and other developed economies because our country has also adopted up-to-the-minute technologies like EMV or contactless payments. The only difference is in the coverage: we are at the beginning and we still have far to go. Elsewhere, there are differences in consumer behavior, with Romanians preferring to use cards to buy durable goods rather than for daily acquisitions. As for the development of the market, if we compare ourselves with Great Britain, there is plenty of room for growth: while in Romania there are 0.5-0.6 cards per capita, in Great Britain it is about 2.5.
What has MasterCard introduced on the Romanian market?
First, along with Romanian Post and Advanced Payment Solutions (APS), we brought prepaid cards for general use to Romania for the first time. Second, through the two MasterCard PayPass pilot programs that were rolled out from the end of 2008 to the middle of 2009, Romanians could make quick payments through contactless technology for the first time. GarantiBank and ING Bank were the two banks launched PayPass products. This year we have just launched along with BRD – Groupe Societe Generale a new PayPass project that is running in many fast food outlets, some clothes and cosmetics shops, news agents and two subway stations. Last but not least, MasterCard has launched in Romania EduCard, a personal finance management campaign.