Cosmin Vladimirescu, Mastercard: We Are Dedicated To Advancing Financial Inclusion and the Adoption of Electronic Payments

The digital payments market in Romania is undergoing digital transformation and growing steadily every year. Still, only about 70 percent of the population has a bank account and uses digital or electronic payments, so there is plenty of room for improvement in terms of Romanians’ access to financial services. Business Review talked to Cosmin Vladimirescu, General Manager at Mastercard Romania and Croatia, about the state of the financial system and where we are headed.

By Aurel Dragan

Briefly, what can you tell us about Mastercard in Romania?

Mastercard is a leading technology company in the global payments industry, operating a multi-rail network across more than 200 markets. This network encompasses integrated payment products and services, cybersecurity and intelligence solutions, proprietary data and insights. Our mission is to build an inclusive digital economy that empowers people, businesses of all sizes across all industries, and governments to make and receive payments, with flexibility and control.

Read more about

Mastercard Tuesday: A new program by Mastercard Romania that offers guaranteed cashback for cardholders

read more

In Romania, Mastercard is at the forefront of payment solutions, driven by our vision of a world beyond cash. We leverage innovative technologies, prioritise safety and security, and promote financial education and inclusion. Alongside my team of passionate professionals, through dedicated initiatives and strategic partners, we promote the advantages of electronic payments for individuals, businesses, and the overall economy.

How would you describe the digital payments market in Romania today?

The digital payments market in Romania sees constant annual growth amid technology adoption and rapid digital transformation across all sectors of society. Key factors include financial education initiatives, regulatory enhancements, diversification of payment options to meet consumer demands, and the evolution of new technologies.

According to National Bank of Romania data, at the end of last year there were around 20.8 million active cards, with this number continuing to grow year after year. And since I previously mentioned proprietary data and insights, we’ve developed a methodology that assesses the dynamics and the maturity of the payments ecosystem in Romania, called the Digital Payment Index. Its objective is to provide a valuable asset to a range of audiences, from industry players to companies, institutions, and administrative bodies in setting their goals and agendas. We launched the first edition of the index last year, analysing data from 2021, and now we have released the 2022 edition.

In 2022, the Digital Payment Index in Romania scored 56 on a scale of 100, compared to 54 in 2021. This result is calculated using the individual scores of three sub-indexes also rated on a scale of 1 to 100, each with equal share in the final score: 70 for Infrastructure, 55 for Knowledge, and 44 for Usage. The results reveal encouraging overall progress, indicating a growing openness among Romanian consumers towards adopting digital payment solutions. The share of the banked population in Romania has risen to 69%, up from 60% in 2021, while the level of knowledge in terms of digital payment solutions has registered the most significant growth. However, the use of cash remains the preferred option, primarily due to security concerns and limited access to infrastructure in rural areas. To further advance digitalization, efforts should focus on infrastructure development, financial education, and broader adoption of digital payment methods.

If you were to make a comparison between the Romanian market and the rest of the Central and Eastern European market, what would be your main observations?

Countries in the Central and Eastern European region have experienced significant growth rates and social progress in recent years. This progress includes the adoption of global trends and modern technologies. And we saw this in the findings of the 2022 Digital Payment Index, which was carried out in four markets from the region, namely Croatia, Hungary, Austria, and Romania, thus providing an overview and a comparative perspective of the performance of each country, fostering cross-border collaboration among stakeholders.

The global 2022 Digital Payment Index scores range from 56 to 64 points on a scale of 1 to 100, with an average of 61 points across the four countries. With 55 points, Romania trails behind Croatia (64 points), Austria (62 points), and Hungary (61 points). The variation in index scores is primarily driven by Infrastructure scores, the sub-index in which countries scored the highest, implying that all have a strong foundation for digital payments. Knowledge and Usage sub-indixes scored lower, with a slight increase in the knowledge scores reflected by countries’ current endeavour of educating consumers about digital payment solutions. These results underscore the importance of awareness campaigns and consumer education initiatives to drive digital payment adoption. Additionally, the maturity of new payment solutions plays a pivotal role in encouraging their adoption.

Briefly, what innovations has Mastercard introduced to the Romanian digital payments market?

Mastercard has always been dedicated to advancing financial inclusion  and the adoption of electronic payments, benefiting all generations.

One such initiative was the introduction of card payment in agri-food markets across the country. We initially tested this concept in 2015 by installing point-of-sale (POS) terminals at the Hala Traian market in Bucharest. This experiment received positive feedback, especially in a time when electronic payments had not yet gained widespread acceptance. Subsequently, we started to expand acceptance nationwide to traditionally cash-only spaces. Since 2019, consumers have been able to use their cards for payments at agri-food markets in cities such as Bucharest, Sibiu, Iasi, and Galati and we have been working to further expand the infrastructure to 9 other markets across the country. This initiative has two main goals: on one hand, integrating local producers into the digital economy, helping them increase their customer base and sales, and on the other hand, making it easier for consumers to access local products by offering them the safest, most modern, and simplest method of payment. Basically, you no longer need to make sure you have cash in your wallet before you go to the market; you can pay directly by card.

Another example is our involvement in national social support programmes, which contribute to increasing the level of education and financial inclusion among Romanians, especially for people in rural areas, and support merchants to attract these volumes. Mastercard introduced the notion of prepaid cards for social benefits in Romania back in 2016 and has since partnered up with the biggest social programme, run exclusively under the Mastercard brand, including the “Hot Meals” Programme for the elderly, the “Educational Support” Programme to support children from disadvantaged backgrounds from school dropout, the “Support for Romania” Programme for the most disadvantaged Romanian citizens who need support for the purchase of food and hot meals, and the ”Newborn Support” Programme to assist low-income mothers with child care in the first months of life. “Support for Romania” marked a national first, as the largest electronic social vouchers programme in South-East Europe, with 2.5 million cards issued to as many beneficiaries.

Through the products and services you offer, you cover both the public and private sectors. Can you briefly describe what Mastercard offers to business customers from a payment methods perspective?

At Mastercard, our mission is to build an inclusive, sustainable digital economy for everyone, everywhere. And we do this through commercially relevant products and services that promote long-term sustainable growth for individuals and small businesses. Digital financial services contribute to economic opportunities and help reduce social inequality while fostering global economic growth.

Through our commercial solutions and initiatives, we empower businesses of all sizes to securely make and receive payments, access capital, and digitalize their operations, thus strengthening their business ecosystems. One such solution is “Tap on Phone,” which turns mobile phones into contactless payments acceptance devices. This cost-effective solution empowers small businesses to meet the needs of customers, helping them increase sales and take their business to the next level.

All our initiatives subscribe to our global commitment of bringing 1 billion people and 50 million micro, small, and medium enterprises (MSMEs) into the digital economy by 2025, with a direct focus on providing 25 million women entrepreneurs with solutions to help them grow their businesses.

How does payment technology influence Romania’s systemic development, both economically and socially?

Technology is a vehicle for resilient and sustainable growth of individual business, national economies, and ultimately, for us as a global society. The digital acceleration has changed our way of life—from digital interactions of all kinds to the way we pay for goods and services.

Digital payments reduce friction and contribute to a healthier economy by providing consumers a simple, fast, and secure payment method, along with convenient access to their funds. Simultaneously, they reduce the need for cash and check handling among merchants while expanding their customer bases. Digital payments also offer benefits in terms of transparency and traceability, which is advantageous for society. Furthermore, they serve as the foundation for emerging sectors in the economy, such is e-commerce.

In your opinion, how is Romania doing in terms of digitalization and how does Mastercard contribute to this goal?

Digitalization is a top priority on the public agenda, as evidenced by national strategies and the National Recovery and Resilience Plan. According to data provided by the European Commission, the digitalization of public services and the level of digital human capital are the areas where Romania ranks lowest of the EU27, but we are maintaining high rankings in the share of female ICT specialists in employment and ICT graduates. The level of digitalization among Romanian businesses and individuals also differs between regions: unsurprisingly, for the most part, the level is greater in cities than in more rural areas, and highest in Bucharest, Cluj, and the North-West.

A digital society harnesses information and communication technologies to interact with citizens, businesses, and government, offering advantages such as better access to information, decision-making, convenience, connectivity, and opportunities.

Mastercard Romania has consistently championed digitalization, developing initiatives to increase the level of financial inclusion, the digital economy, and the adoption of new payment methods, such digital payments in public transport. Moreover, Mastercard is a trusted partner that helps governments develop and grow a safe, prosperous digital economy that can benefit all stakeholders by activating the power of public-private partnerships to advance financial inclusion, sustainable economic growth and citizen wellbeing. Examples include the development of the Ghiseul.ro platform and the national social programmes for people from disadvantaged backgrounds.

What should be improved in this area and how could the digitalization of the local economy be accelerated?

In today’s digital world, the absence of universal digital standards hinders innovation and obstructs the potential for a more robust and inclusive global economy. To cultivate a connected digital economy that benefits everyone, it is imperative to enhance international collaboration and agreement on digital governance matters. New regulatory efforts should prioritise the development of interoperable systems that instil trust, stimulate scalable investments, and facilitate digital trade for businesses of all scales. This encompasses effortless transactions, seamless commerce, and secure cross-border data sharing.

Reaching that potential requires closer collaboration and deeper engagement between the public and private sectors. It is only through a collective effort that we are able to achieve common standards, create technology that is inclusive by design, and make our global digital economy work for everyone, everywhere. Mastercard is committed to working with public and private partners to establish common standards, improve trade and commerce, fortify trust, and build a global economy that works for everyone.

Are there best practices from other countries that Romania could adopt and adapt to the local context to improve and accelerate the digitalization process?

Digitalizing the economy has become a priority for many governments around Europe. In terms of best practices, according to the The Digital Economy and Society Index (DESI), which monitors Europe’s overall digital performance and tracks the progress of EU countries in their digital competitiveness, Finland, Denmark, the Netherlands, and Sweden are the EU frontrunners in terms of digitalization. But progress is uneven. To streamline digital transformation, the European Commission has proposed a plan to achieve the targets set for the digital transformation of the continent by 2030: the Digital Decade. The programme tracks four main points: a digitally skilled population and highly skilled digital professionals; secure and sustainable digital infrastructures; the digital transformation of businesses; and the digitalization of public services. Public-private sector collaboration can aid policymakers in delivering on these goals. Specifically, digital transactions combined with the effective use of data supports inclusive, sustainable, and digital-driven economic development. And we, at Mastercard, are here to help throughout this process.

What is the added value of the Ghiseul.ro platform?

Ghiseul.ro is a successful example of long-term public-private partnership, initiated in 2011, and supported by Mastercard since its inception. The project promotes the digitalization and modernisation of public services, fosters inclusion and financial education, and optimises public revenue collection.

Currently, there are more than 1.9 million citizens registered on Ghiseul.ro, and this number has increased especially in the last 3 years. Based on the insight that over 70% of users access Ghiseul.ro from their phones, Mastercard took a leading role in developing the Ghiseul.ro mobile app, which since earlier this year has allowed Romanian citizens to pay their taxes and public services in a secure and easy way, using their phones. The app offers all the features of the Ghiseul.ro web platform, integrating the latest security standards, compliance measures, technologies, and user-friendly options such as biometrics, transaction history, notifications, and real-time debt and payment status updates for taxes, services, and fines.

We will continue to enhance the app’s functionality, making sure it adheres to the highest standards.

Can you tell us about the evolution of fringe benefits payroll cards in Romania and the benefits they bring to the local economy?

From basic health insurance to gym memberships, the popularity and diversity of fringe benefits has soared over the past decade. If you operate in a highly competitive industry where a skilled workforce is in high demand, offering an innovative and useful fringe benefits package can be the key to attracting top talent.

Fringe benefits offer multiple advantages for employees, employers, and the broader economy. For employees, they boost purchasing power and living standard by providing additional income beyond salaries. For companies, fringe benefits reduce labour costs, as many are exempt from taxation, increase employee motivation, loyalty, and retention, increase social responsibility towards the employee, and contribute to improving the social climate in the company. Moreover, the usage of fringe benefits attracts volumes and stimulates many other economic sectors, such as hospitality, retail, culture or health, among others.

Since February 1, 2022, vouchers previously issued on paper (e.g. meal, gift, holiday, culture vouchers) are exclusively granted via electronic means (cards). This measure has further promoted digital payments, financial inclusion and education, and the reduction of the shadow economy, as these payments can be tracked and taxed.

Mastercard takes pride in being the exclusive partner of the three companies operating on the employee benefits market. In this role, we can contribute to improving the efficiency of organisations and increasing the purchasing power of employees.