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Navigating the new normal
Future of money
Security
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Economic insights
Visa views

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Visa Navigate

September 2020

 

2 - 4 Minutes

How Poland’s great leap forward will inform the future of contactless

In many of the largest countries in Europe, the share of Visa face-to-face transactions that are contactless has increased by at least 20% in the past year. Some of that gain can be attributed to the outbreak of the pandemic.

As the crisis deepened in March, guidance from the European Banking Authority, following advice from the World Health Organization, made it clear the spread of the virus could be limited by making it easier to make payments without physical contact. In the space of just a few months, 29 governments raised transaction limits and 22 countries took the decision to make those limit increases permanent, including Poland. In several EU markets, the average purchase amount for contactless transactions has climbed almost 20% (June 2020 vs April 2020) including Belgium, Switzerland, and Germany.

It is becoming increasingly clear that seismic events in history can advance the adoption of new technology, and few events have spurred change like this pandemic.

A key question for the future is: how much of this recent technological change will stick?

We can glean insight from countries that have experienced a seismic shift in consumer behavior due to historical events.

Take Poland and the wider Central Eastern Europe region that includes Czech Republic, Slovakia and Hungary. The revolutionary wave in the late 1980s and early 1990s that resulted in the end of communism in those countries had a profound impact on consumer behaviour. What followed was a successful transformation to market economies in the '90s and a desire to modernise and embrace new technologies.

In the early 2000s, banks in Eastern Europe started to invest in digital capabilities. Issuers and acquirers implemented state of the art technology that paved the way for the region to become one of the most advanced banking and payments markets in Europe:

  • Santander Bank Polska (previously Bank Zachodni WBK) was the first in the region to issue contactless cards more than 10 years ago. The new technology was embraced by merchants, consumers and issuers alike.
  • In 2010, PKO Bank Polski took a strategic decision to migrate more than 6 million of its Visa debit cards to contactless, thus setting the trend for market development throughout the area. Moreover, through its subsidiary eService, the largest acquirer in Poland, contactless capable POS terminals started to be installed across the country.

That decision “changed the Polish market forever”, says Szymon Walach, Head of Strategy and Digital Transformation at PKO Bank Polski. “That was when banks in Poland stopped asking why they should implement contactless, and started asking how they could do it quickly.”

That desire, combined with a 2010–2016 programme under which Visa issuers in Poland spent more than €30m to support POS terminal installation and the acquirers were incentivised to deploy the latest state of the art technology, including contactless, set the scene for the adoption rates seen at the beginning of the pandemic.

“Polish customers are generally very open to all innovations and are early adopters when it comes to testing new technologies,” said Mr Walach. “Of course, this was not a revolution but an evolution, and it took around ten years to bring the market to the current level.”

Despite the high adoption rate, the COVID-19 pandemic has continued to fuel growth in digital payments in Poland, from contactless to e-commerce. The share of Visa transactions that are contactless has climbed more than 10% in the twelve months to April, and the average purchase price has also climbed more than 10%. E-commerce also soared more than 30% year-on-year in June as consumers in Poland opted to have goods delivered following restrictions on movement imposed in March. Furthermore, just over one in 20 Visa cardholders who did not traditionally shop online started to make e-commerce transactions after March 2020 – a shift in behaviour that the data suggests will in many cases become permanent.

These trends are being borne out across the continent, and Poland’s history in digital payments highlights that adoption of new technologies and the habits that underpin them tend to stick when consumers are given the right supporting infrastructure.

Click here for more insights from Charlotte Hogg, CEO Visa Europe, on how the pandemic has been a pivotal moment for contactless payments.

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