Filenews 22 August 2021 - byStelios Tsiartas
The use of cards during the pandemic has recorded a steady increase in 2020 compared to 2019, in all age groups without exception.
Most of our fellow citizens still choose cash for their daily transactions. In recent years, however, there has been an increasing trend in the use of plastic money, which according to studies shows an annual increase of 20%. The emergence of covid-19 last year has radically changed people's lives by affecting several of their habits, such as transactions. According to JCC's statistics, credit card purchases increased by 1200%, in fast food restaurants in the first quarter of 2021, compared to the same period in 2020, while rapid increases were observed in online betting by 194%, in electronics and computers by 72% and in delivery services by 194%.
The use of plastic money is something that is gaining ground globally and according to the indications we have so far, it will not be occasional, but it is here to lead the transactions of the digital age, as it seems that they are gaining the preference of the public and businesses.
Consumers are increasingly turning to online and remote purchases even for their daily needs, as the move to contactless transactions demonstrates how simple, convenient and easy it is to pay by card instead of cash. The new order of things requires businesses to digitize their sales processes and improve payment acceptance channels, as the new era in transactions guarantees greater security.
According to a survey by the Bank of Cyprus and KPMG on the use of cards during the pandemic, a steady increase has been recorded in 2020 compared to 2019, in all age groups without exception. Indicatively, in the over-65s - which recorded the lowest rates of card use - in April 2020 there was a significant increase of 13% compared to 2019. It is worth noting that a rapid increase in card use was also recorded by businesses with the percentage, in April 2020 compared to 2019, recording an increase of 26%. This research clearly shows that both consumers and businesses have made a shift to plastic money, and to a very large extent.
Taking the above into account, banks are constantly investing, both in innovative products and services to facilitate the better service of their customers (such as contactless transactions and digital wallets mentioned above), as well as in technologically developed safeguards that will ensure the protection of their transactions.
The main forms of plastic money in physical or electronic form are: credit and debit card, prepaid cards, contactless card transactions, digital wallet, electronic on-line payments.
In the strategy of banks, the strong identification of the customer, which constitutes regulatory compliance and derives from the European Payment Services Directive 2 – Strong Customer Authentication, has an important role. It essentially consists of a new set of rules, which change the way consumers are identified when making online purchases with a card, in order to protect themselves even more from fraud. More specifically, "strong customer identification" is considered to be the process of verifying the identity of the payment cardholder using two or more elements.
Steady rise for plastic money
But let the numbers speak. JCC's new report on plastic money for the second quarter of the year demonstrates in practice the steady rise of the new form of transactions that seem to be leading the digital age. Transactions with local cards used in Cyprus were €1,350,620,633, recording an increase of 16% compared to the same period in 2020. Regarding the transactions of local cards abroad, they reached €471,924,658 with the increase reaching 46%, while in the second quarter of 2021 foreign visitors spent €231,561,592 on cash purchases and withdrawals, which was an increase of 113% compared to last year in the same period.
In addition, according to JCC, the Greek Cypriots spent in the occupied areas the amount of €1,208,444, in plastic money, while for the same period the use of Turkish credit cards in the free areas reached €1,184,978. Of the money spent by Greek Cypriots in the occupied territories, 37% are hotels, restaurants and nightclubs, 20% are clothing stores, 14% petrol stations and supermarkets 13%.
Almost everywhere payments and with cards
The new data created in the transactions prompted the Government to forward to Parliament a relevant bill, which was approved a year ago and it is provided that 85 sectors of economic activity will be obliged by mid-September to place in their businesses a payment card acceptance terminal, e.g. wireless and wired POS terminal, mobile POS and virtual POS applications, so that they also accept payments with cards.
According to the government, the mandatory acceptance of cards by the vast majority of businesses will help to combat tax evasion, safeguard public revenues, strengthen citizen protection, as well as facilitate consumer service. Under the law, a public gift sweepstakes program will be implemented, in which those who make electronic payments can participate, as an incentive to use cards instead of cash.
Under the decree, payees will accept card-based payment instruments issued by a quadripartite payment system such as VISA, MASTER CARD, MAESTRO and UNION PAY. At the same time, businesses will have the obligation to contract with legally licensed payment service providers, while it is forbidden to contract with entities that are not legally authorised payment service providers.
The 85 economic activities that will accept card payments, according to the decree, are divided into 5 categories.
In the retail sector, the following business activities will also be accepted by credit cards:
- Retail sale in non-specialised shops, mainly selling food, beverages or tobacco
- Other retail trade in non-specialized establishments
- Retail sale of motor vehicle parts and accessories
- Retail sale of fruit and vegetables, meat and meat products, fish, crustaceans and molluscs, bread, bakery products and other bakery and confectionery, beverages, tobacco products and transport fuels,
- Retail sale of computers, computer peripherals and software, telecommunications equipment, sound and image equipment, hardware, paints and glasses, carpets, rugs and floor and wall coverings in specialized stores, electrical household appliances, furniture, lighting and other household goods,
- Retail sale of books, sports equipment, toys of all kinds, clothing, shoes and leather goods
- Pharmacies and trade in medical and orthopaedic products
- Businesses with cosmetics and toiletries
- Retail sale of flowers, plants, seeds, fertilizers, pets and related animal feed, watches and jewellery,
- Other retail sale of new goods in specialized stores
Credit card payments will be accepted by hotel activities and catering, as follows:
- Hotels and similar accommodation, camping sites, facilities for recreational vehicles and trailers, as well as other accommodation establishments,
- Activities of restaurant services, mobile food canteens and beverage services
- Activities for the screening of films, amusement parks, other theme parks as well as entertainment and entertainment
The following economic activities related to services will be required to receive credit, debit and prepaid cards:
- Wired, wireless, satellite telecommunications activities
- Legal and accounting, bookkeeping and audit activities- tax advice
- Activities of architects, engineers and related technical consultancy activities, photographic and veterinary activities,
- renting and leasing of cars and light motor vehicles, as well as renting and leasing of lorries, pleasures and sporting goods,
- renting and hiring out other personal or household items,
- Activities of travel agencies and tour agencies
- primary education, general secondary education, technical and vocational secondary education, post-secondary non-tertiary education, sports and recreational education, other education and activities of crèches and kindergartens
- Driving school activities
- Hospital activities, exercise of general medical professions, special medical professions, dental practices, other human health activities;
- Activities of an exclusive nurse at home.
- Gambling and betting
- Fitness facilities
- Activities of hairdressers, barbershops and beauty salons
Bank cards should receive premises for repairs and maintenance:
- Repair of machinery, electronic and optical equipment, electrical equipment, computers and peripheral equipment, consumer goods, communication equipment,
- repair of furniture and household furnishings, watches and jewellery of other personal and household goods,
- Repair of shoes and leather goods
Sectors engaged in other activities will have the same obligation:
- Sale of cars and light motor vehicles
- Sale of other motor vehicles
- Maintenance and repair of motor vehicles
- Sale, maintenance and repair of motorcycles and parts and accessories the thefts thefts the thefts and their parts and accessories,
As specified in the decree, credit transfer or direct debit as well as payment through alternative service channels such as ebanking are not a card acceptance terminal.
Fine up to €2,000
Businesses that do not meet their obligations in relation to the acceptance of a credit card as a means of payment will face financial penalties. The law provides for the imposition of a fine on offenders, up to €2,000. In the event that an infringement is found by the company, the officer has the obligation within five working parties to submit a report to the Superintendent of Taxation, who within 15 days will have to decide whether to impose an administrative fine. In the event that the offender fails to pay the fine, the Superintendent of Taxation takes legal action and collects the amount due as a civil debt owed to the Republic. It is worth noting that offenders can submit an appeal to the Superintendent of Taxation within 30 days.
The decree that will be published in the Official Gazette of the Republic will specify the businesses that will be exempted from the obligation to accept payment by card. Such enterprises, according to an announcement by the Ministry of Finance, are enterprises active in the sectors of manufacturing, electricity supply, water, transport, and information and communication (publishing activities, film production, broadcasting, computer programmers).
Rewards from banks
Banks adopt rewarding tactics for their customers, who use credit cards for their transactions. By making partnerships with businesses, they enable credit card holders to receive a refund on every transaction they make to the partner companies. In addition, they offer cardholders significant discounts in hotels and restaurants, while there are also draws in big competitions that give the winners rich gifts such as travel, accommodation in hotels and cars.
