Vilnius, the capital of Lithuania, is the largest city in the country and the second biggest city in the Baltic States. There are two rivers running through Vilnius, one of which metaphorically embodies the country's payments system.
The Neris River is centrally positioned, and divides the city into two sections, which many refer to as "Old Town" and "New Town." The two city centers have little in common, varying drastically in everything from their infrastructure to their selection of shops.
According to the Lithuania Tribute, the Bank of Lithuania reported that many Lithuanians have payment cards, but aren't using them. The unusually high financial illiteracy rate in the small country is partially to blame. However, the bigger issue is Lithuania's lack of merchant acceptance.
The bank stated that the development of shops that take card payments remains slow and untapped in both the private and public sector. This comes as a surprise, since Forbes indicated that Lithuania had the largest and strongest economy of the three Baltic States.
The small percentage of payment card opportunities bears a slight resemblance to the capital's Old Town sector. Historically, the decision to preserve this part of town was to remind the people of their resilience and history. However, the dilapidated buildings and poor infrastructure are begging to be rebuilt, much like the payments landscape. But are Lithuanians ready for change?
The Bank of Lithuania's results from the Survey on the Habits of the Population in Using Payment Services suggest that the answer is yes - consumers are more than ready.
Gediminas Å imkus, director of the financial stability department at the bank, reported, “As many as 70 per cent of respondents, having a payment card, lack opportunities to settle with payment cards. Most, one in three, respondents with a card would welcome the opportunity to settle with a payment card at markets, fairs, beauty and cosmetology salons, health care facilities, taxis, and public institutions that collect various fees."
In terms of account types, most Lithuanians have debit cards. The majority of respondents, 93.5 percent, said they have an account with a credit institution, and 90 percent of those respondents also have at least one type of payment card. Despite debit cards’ popularity, credit card use Is on the rise. The number of consumers who have registered for a credit card rose in the last year from 12.6 percent to 17 percent in 2013.
The Balitc States haven't embarked on the cashless journey that many of its European neighbors have taken on. The study cited that cash payments were still the most common method of payment in Lithuania, with 95 percent of participants admitting that they still pay in cash. In fact, on average one consumer will pay in cash twice a day. More than half of them even said they make fairly large purchases with cash. The average figure that consumers said they carry around in cash was about 88 euros.
In this case, the Neris River, which divides the old and new, represents the survey respondents who revealed they were still wary of new payment alternatives.
The disconnect between Lithuanian consumers and understanding new payment options represents a huge barrier for mass adoption. Two-thirds of respondents said using a mobile phone to make payments was "unattractive" or "completely unattractive."