The pandemic and quarantine restrictions have accelerated the shift in households’ payment habits towards cashless settlements, including online payments. Ukrainians are more actively switching to cashless payments and are using electronic commerce services more and more often.
At the same time, there has been a sustainable trend in which contactless payment instruments and settlements involving their use are increasing in popularity.
Share of cashless transactions keeps growing
In the first nine months of 2020, the total number of transactions (cashless payments and cash withdrawals) involving payment cards issued by the Ukrainian banks was 4,310.2 million, with the value of these transactions totaling UAH 2,807.9 billion. These operations increased in number by 18.0%, and in value by 8.7% compared to the same period last year.
This trend has mainly resulted from an increase in the value and number of cashless transactions. They account for the largest share of the total value and number of payment card transactions. Thus, the value of cashless transactions stood at UAH 1,550.1 billion or 55.2% of the total value of all card transactions. In the nine months of 2019, it amounted to 49.7%.
By number of cashless transactions, the indicator is even higher: 86 of 100 card transactions were made in a cashless form during the first nine months of this year.
At the same time, withdrawals from payment cards decreased by 11.3% in number and by 3.3% in value in the first nine months of 2020.
This year, the breakdown of cashless transactions using payment cards has considerably changed by value. An analysis of transaction types shows that in January–September 2020, the share of online transactions increased almost to 30% by value of all cashless transactions made with payment cards. In the first nine months of 2019, it was 27%.
As before, card-to-card payments dominated cashless transactions in value, accounting for 42.4% of them (with the average transaction amounting to UAH 1,438 in size), while settlements through retail chains dominated in number, making up 50.2% of cashless transactions.
Over half of all settlements in terminals are cashless
The total number of payment cards issued in Ukraine as of 1 October 2020 stood at 73.4 million. This was 7.4% more than in January 2020*.
The number of payment cards used for debit transactions (cashless and withdrawals) increased by 5.7% (compared to January of this year) to 34.8 million (52.4% of all payment cards).
Almost 40% (14.9 million) of payment cards used for debit transactions in September 2020 were contactless and tokenized**.
More specifically, in September 2020, 11.5 million contactless cards were used for transactions. This is a 51% increase from January 2020. The number of tokenized cards the Ukrainian households used for transactions in September 2020 totaled almost 3.4 million. This was 50% more than in January 2020.
Such high popularity of contactless payment instruments resulted in a substantial increase in cashless transactions involving contactless and tokenized cards (using smartphones and other NFC devices). In the first nine months of 2020, over half (54%) of the total number and value of cashless transactions in retail chains were made in contactless mode. Meanwhile, in the market, only a third of cashless transactions were contactless.
Payment infrastructure steadily expands
The payment infrastructure continued to extend steadily during the first nine months of 2020. Over the period, the number of business entities accepting payment cards increased by a third (31.7%) to about 316,400.
In addition, since the start of 2020, the number of retail POS terminals also increased – by 7.9% (to 360,400 units). At the same time, over 85% of all retail POS terminals support contactless payments.
As of 1 October 2020, the ratio of the total number of POS terminals in retail networks (both contact and contactless) to the Ukrainian resident population*** was 9,000 units per 1,000,000 people (up from 8,400 units at the beginning of the year).
In terms of regions, the city of Kyiv, and Dnipropetrovsk and Odesa oblasts account for the largest number of payment cards and payment devices used in their servicing.
CB PrivatBank JSC, Oschadbank JSC, and Raiffeisen Bank Aval JSC remain the biggest payment card acquirers. CB PrivatBank JSC, Oschadbank JSC, and Universal Bank JSC are the biggest issuing banks.
As of 1 October 2020, 70 members of card payment systems were registered in Ukraine.
* In January 2020, the timeframe for banks to submit statistics on payment cards was changed. Now, banks report to the regulator monthly, while previously this was done quarterly. Respectively, the number of payment cards with at least one debit transaction is calculated on a monthly basis (instead of once in three months). This makes it impossible to compare it with the number of cards used for transactions last year (so-called active cards). This also applies to the comparison of the numbers of active contactless and tokenized payment cards.
** These were generated by replacing the details of payment cards with unique digital identifiers that are used in NFC-based transactions (in particular, payment services such as Apple Pay, Google Pay, Garmin Pay, etc.).
*** According to the State Statistics Service of Ukraine.