Poland has one of the largest number of NFC payment terminals in Europe, but the majority of consumers are paying in cash.
Card payments and the number of non-cash transactions are increasing every year in Poland, but Polish consumers still lack trust in debit cards and newer payment instruments.
According to a recent academic study published by Jakub Gorka, a professor at the University of Warsaw, cash payments still overpower alternative payment methods in Poland. The Polish market ranks 17th out of the 27 EU members in the average number of electronic transactions per capita. Additionally, cash-on-delivery and credit transfers are popular. However, these statistics may become a thing of the past as Polish consumers are starting to show greater enthusiasm for innovation and lower costs.
Poland Compared To Other EU Members
Research indicates Polish consumers have good reason to be reluctant to forgo cash payments in exchange for more modern payments technology.
Established EU countries, such as the UK, see significantly fewer cash payments. On the other end of the spectrum, less mature markets, such as Poland, are still highly dominated by cash transactions. There are still a large number of Poles who remain unbanked, and consumers still question the use of debit cards.
Despite financial insecurities, there has still been improvement towards a cashless society, and other forms of payment are gaining popularity amongst Poles. The number of credit transfers increased by 27 percent between 2000 and 2010, and cash transactions decreased from 87 percent to 63 percent in the same period.
Polish consumers are beginning to grow more confident with card payments. According to a Euromonitor report, the volume and value of non-cash transactions have shown annual double-digit growth in the last few years.
NFC Payments
Poland remains traditional in the way its payment system operates, and financial institutions still primarily control the market. The question, then, becomes how to encourage new payment methods in a country that lacks frequency of use of card and mobile payments.
In the last year, a few mobile operators introduced contactless pilots in the Polish market that have since gained traction.
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Gorka reported that Polish consumers prefer to pay for bills using cash or by credit card. This would mean that, although Poles hesitate when it comes to electronic and debit card use, there is a trust in credit card use. The mobile network operators communicated new services in association with their credit cards, which gave consumers the reassurance they needed. Just like a credit cards, when using the NFC systems, shoppers were not required to enter a PIN number, and only needed to tap or swipe the phone or contactless card over the reader.
In just three years, 13.4 million contactless cards were implemented across Poland. This accounted for 40 percent of all bankcards existing in the Polish market.
There were roughly 70,000 contactless payment-based point of sale terminals by 2012, which accounted for 30 percent of all payment terminals in Poland. Poland now has one of the highest contactless terminal percentages in the EU, which makes the country a leader in contactless payments terminals.
But not so fast: these figures don’t mean Poland is leading contactless transactions. Polish consumers are still hesitant to adopt the new payment method, which stands as the last piece to the payment puzzle.
Barriers To Adoption
Polish consumers are still getting used to financial services being provided by firms other than banks. Cash circulation in Poland is still very high, and so are the costs from card payments. The research reported that interchange fees on non-cash card payments in Poland are some of the highest in Europe.
Additionally, Polish consumers are convinced paying in cash is the cheapest way to go. The cost of cash circulation is not well communicated to the public, thus more than 90 percent of Poles admitted they believe cash payments are more convenient and 92 percent think it is the cheapest method.
Interestingly, merchants are serving as another roadblock to alternative payments acceptance in Poland. Many merchants in Poland also think cash is the best form of payment, and their opinions have inevitably impacted the rest of the community.
Polish consumers have the appropriate tools to match the number of terminals with payment transactions. However, it may take more than an impressive number of installments to convince them to switch.
To read the full Euromonitor report and the SSRN click here and here.
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