Destination Digital: From Southeast Europe to Central Asia, the Rapid Innovation Driving Growth
Across the region that stretches from Central Asia through the Caucasus, Ukraine, to Southeast Europe, formed by 17 markets, innovations in digital payments underpin prospects for growth. From tokenization and wallets, to fintechs, e-government services and urban mobility we explore the key developments that are shaping the region’s future – including Visa’s partnerships in Ukraine, with insights from Vira Platonova, Senior Vice President and Group Country Manager for Visa Ukraine, Georgia, CIS and SEE states.
Around the world, the challenges faced during the pandemic led to a digital payments and ecommerce boom, with businesses turning themselves into a testing ground for rapid innovation to adapt to dramatic changes in consumers’ behaviour This has been manifesting in country-specific ways, in a very diverse and unique region with more than 160 million population, but the headline trend remains consistent. As Vira Platonova, Senior Vice President and Group Country Manager for Visa, explains: “The COVID-19 pandemic became a catalyst for digitalization and the “techceleration” of the economy. Changes that would normally take several years have happened much faster – in a few months.”
Key trends for businesses to mark include the digital acceleration, with more than half of consumers expecting to shift their reliance on digital payments in 2022; the challenge of abandoned carts – where consumers will quickly give up on a purchase if a familiar, reliable payment method is not available; and their embrace of the global marketplace, as small businesses look to reach more consumers online.1 The SME (small and medium-sized enterprises) sector is ready to adapt: 50% of small businesses planned to increase cross-border sales in 2022.2 In turn, financial institutions and banks are more open to support SMEs more than ever before, contributing to 90 percent of SMEs feeling optimistic about their future.3
There is more still to be achieved: with the advances in digital payments and changes to consumers’ digital habits, Visa is more focused than ever on supporting financial literacy promoting financial inclusion.
Trends Across the Region
In this region, these trends are playing out across its 17 countries, where the combined population of around 160 million has rapidly embraced new technologies. As ecommerce has boomed, there has been a rise in Card-Not-Present (CNP) payments, which in Central Asia have grown their market share by 23 percentage points in two years.4
Separately, there has been a significant rise in tokenization, where a customer’s card number is replaced with a 16-digit equivalent, or token, to secure digital payments; this grew by 1.8 times in the last two years.5 This shift was spurred on by new methods of payments using digital wallets and gadgets that entered the market.
Against this background, overall payments volumes have been on the rise: growing 2.3 times in Central Asia in the last two years.6 To break down that headline figure, Face-To-Face (F2F) domestic payments doubled over that period, with supermarkets, restaurants, clothes, car dealers and service stations experiencing the highest levels of this type of spending. Meanwhile, as consumers moved increasingly online, Card-Not-Present payments grew by 5.6 times, concentrated on professional services, regional transport, airlines and cash services.7 As for Person-to-Person (P2P) payments, volumes have grown by 6.2 times – with Kazakhstan again leading this, contributing 99.6 per cent of this rise.8