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1 “Retail payment costs” Demand Side- Albanian case. Torino, 22 Sept 2016
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“Retail payment costs” Demand Side- Albanian case.
Torino, 22 Sept 2016
ALBANIAN PAYMENT SERVICES ARCHITECTURE:
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BoA Banks Non-Banks Financial institutions
RTGSACHCSD
16 Banks~500 branches
• Payment institutions-Post Office and Pay &Go
• MTO-Western Union, MoneyGram• E- money institutions -M-Pesa and
Easy Pay.• Mobile Payment initiator- Mpay
Torino, 22 Sept 2016
RECENT POSITIVE TRENDS ON ELECTRONIC PAYMENTS:
3Torino, 22 Sept 2016
RETAIL PAYMENTS COST STUDY IMPLEMENTATION IN ALBANIA – DEMAND SIDE
MOTIVATION AND METHODOLOGY
4Torino, 22 Sept 2016
MOTIVATION
• Promotion of cost efficient retail payment instruments:
– Measure for the first time the cost of payment instruments in Albania
– Identify the most appropriate saving method/scenario regarding the efficiency of payment instruments usage.
– Create a database on costs that can serve.
for comparison purposes if/when the study is implemented again in the future;
as a measurable indicator to track the efficiency of the reforms.
– Serve as a base for regional expansion of the study.
5Torino, 22 Sept 2016
SHORT INFO ON METHODOLOGY
• The demand side
- Payment service users(PSU) :
Consumers, Businesses and Government agencies;
• The Supply side
– Payment service providers (PSP) and payment infrastructures.
6Torino, 22 Sept 2016
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Stakeholders PSU
Payment Instruments
Payment Transmission Methods
Payment Purposes
Payment Types
THE SCOPE OF THE METHODOLOGY INCLUDES*:
Torino, 22 Sept 2016
SURVEY
Questionnaires provided by WB PSDG
Customized by BoA
Stratified sample design (nationally representative)
Manuals for interviewers by BoA and INSTAT
Conducted by INSTAT
Data analyzed by WB PSDG*
*based on the WB PSDG methodology and findings
8Torino, 22 Sept 2016
DEMAND STAKEHOLDERS-GROUP (PSU)C
ON
SUM
ER •897 responds•Sample distribution: household, gender, age, education, occupation status, income level
•30min/1surv.•4 weeks
interview
BU
SIN
ESS • 462 responds
(716 sample)• 105,642
sampling frame by: geography, activity, size
• 40min/1
• 6 weeks interview
GO
VER
NM
ENT • Central gov /agn;
• Local gov/instit;
• Public utility Co;
• Social security agencies
9Torino, 22 Sept 2016
PMT PURPOSE for each PMT TYPE
Turin, 22 Sept 2016 10
Payee
Payer
Consumer (P) Business (B) Government Agency (G)
Consumer (P)
P2P
PMT:
remittances
for goods and/or
services sold
Withdrawals/Deposit
P2B
PMT: for retail goods, services for regular transport for utilities, periodic bills for consumer durables
P2G
PMT:
of taxes, fines, fees, and
other government
obligations
Business (B)
B2P
Payments of salaries
B2B
• for procurement of consumable and
capital goods, of supply chain products
and professional services for regular transport, for utilities Deposits of cash receipts and cheques
Supply of change, and transfer of funds
between own accounts
B2G
PMT:
of taxes, fines, fees,
and other government
obligations
Government
Agency (G)
G2P
PMT:
of salaries, pensions,
social assistance
Payments of tax
refunds
G2B
PMT
of corporate tax refunds
G2G
Deposits of cash receipts and cheques
Supply of change, and transfer of funds between own accounts
PMT to other government agencies
PAYMENT INSTRUMENTS INCLUDED IN THE STUDY
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Paper–Based:
- Cash
- Paper Credit Transfer
- Cheque
Electronic instrument:
- Debit/Credit Cards
- Transfer Direct Credit
-Transfer Direct Debit
- Online Money (i.e. PayPal, mobile)
• By Methodology:
Torino, 22 Sept 2016
DISTRIBUTION OF PMT FOR CONSUMERS BY:
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DISTRIBUTION OF PMT FOR BUSNESESS BY INSTRUMENT*
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CLASSIFICATIONS OF COSTS
PURPOSE is: *
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Accurate collection of comprehensive
Estimation of potential savings when
substituting payment instruments
Correct calculation of the total costs per stakeholder
and total costs for the economy
• Direct costs
• Indirect costs
• Fixed costs
• Variable
• Resource costs
• Transferred costs
Torino, 22 Sept 2016
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TOTAL ANNUAL COSTS FOR CONSUMERS BY PAYMENT INSTRUMENT*
Torino, 22 Sept 2016
Cash Paper-Based
Credit Transfer Debit Card Credit Card
Electronic Credit Transfer
Online Money
Time-Based Costs (travel time + waiting time + transaction time)
USD 63.3 million USD 1.6 million USD 0.04 million USD 0.03 million USD 0.06 million USD 0.007 million
Transportation Costs
USD 3.75 million
--- --- --- --- ---
Internet Costs --- ---
USD 0.008 million
USD 0.01 million USD 0.04 million USD 0.006 million
Transaction Fees
--- USD 8 million --- --- --- ---
ATM Withdrawal Fees
USD 1.9 million --- --- --- --- ---
Bank Account Maintenance Fees
USD 9.5 million USD 9.5 million USD 9.5 million --- USD 9.5 million ---
Card Maintenance Fees
--- ---
USD 2.8 million
USD 1.25 million --- ---
Losses/Theft USD 1.2 million --- --- --- --- ---
Other Costs --- --- USD 1 million
USD 1.2 million USD 0.4 million USD 0.15 million
Total Costs
USD 68.8 million
USD 18.4 million
USD 13.2
million
USD 2.5 million
USD 9.3 million
USD 0.2 million
Demand Side Outcomes*
Average cost per
-payment type, use case, and
- pmt instrument combination,
given a transmission method.
Total costs borne by each
user, for a given payment
instrument.
Ratio of paper-based to
electronic payments
(annual, based on
volume).
Turin, 22 Sept 2016 16
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TOTAL COST CALCULATIONS FOR CONSUMERS*
Total annual costs for consumers by payment instrument/GDP
Torino, 22 Sept 2016
TOTAL COST CALCULATIONS FOR BUSINESSES*
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GOVERNMENT AGENCIES*
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Annual cost of government payments by payment instrument in % GDP
AGGREGATE DEMAND-SIDE COST*
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Resource Costs
(RC)
Transfer Costs
(TC)
Total Costs per
Stakeholder
Consumers 0.64% of GDP 0.36% of GDP 1% of GDP
Businesses 0.4% of GDP 0.2% of GDP 0.6% of GDP
Government
Agency
0.017% of GDP --- 0.017% of GDP
SAVING SCENARIOS*
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Figure 1: Savings from different substitution scenarios (highest to lowest) at three different conversion rates
PAPER-BASED CREDIT TRANSFER-->ONLINE
MONEY
PAPER-BASED CREDIT TRANSFER--
>ELECTRONIC CREDIT …
CASH-->DEBIT CARD
CASH-->CREDIT CARD
CASH-->ONLINE MONEY
CASH-->ELECTRONIC CREDIT TRANSFER
0.04%
0.05%
0.05%
0.05%
0.06%
0.07%
Savings (as % of 2014 GDP) at 35% Conversion Rate
PAPER-BASED CREDIT
TRANSFER--…
PAPER-BASED CREDIT
TRANSFER--…
CASH-->DEBIT CARD
CASH-->CREDIT CARD
CASH-->ONLINE MONEY
CASH-->ELECTRONIC
CREDIT TRANSFER
0.08%
0.10%
0.10%
0.10%
0.12%
0.14%
Savings (as % of 2014 GDP) at 70% Conversion Rate
PAPER-BASED CREDIT
TRANSFER--…
PAPER-BASED CREDIT
TRANSFER--…
CASH-->DEBIT CARD
CASH-->CREDIT CARD
CASH-->ONLINE MONEY
CASH-->ELECTRONIC
CREDIT …
0.15%
0.15%
0.15%
0.16%
0.17%
0.20%
Savings (as % of 2014) at 100% Conversion Rate
SAVING SCENARIOS
Turin, 22 Sept 2016 22
Saving Scenarios switching from the most costly to most efficient instrument
Consumers Businesses
NEXT PHASE Complete Study
Turin, 22 Sept 2016 23
Supply Side
• Total annual costs associated with each payment instrument.
• Average cost per payment processed, by payment instrument and transmission method.
• Total annual costs for payment service and payment infrastructure providers.
Total Economy
• Total resource costs and total transfer costs.
• Total annual costs to the economy associated with each payment instrument, in absolute terms, and in GDP terms.
• Savings that could occur from different substitution scenarios.
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Thank You!!!
Turin, 22 Sept 2016
CONSUMER SAMPLE DISTRIBUTION BY :
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20%
43%
23%
14%
Role of Respondent in the Household
Responsible for finances
Household head
Responsible for financesand household head
Other
37%
63%
Gender
Female
Male
9%
11%
21%
37%
22%
Age Category
18-29
30-39
40-49
50-64
65 and above
1%
34%
35%
8%
13%
2%
7% Education Level
None
Elementary school
High school
Vocational school
University
Post university
Other
CONCLUSIONS EXPECTED BENEFITS FROM THE STUDY
The final conclusions of the study is going to support: the process of )
– Familiarizing the demand side with the costs that each actor bears.
– Creating an institutional and inter-institutional strategy in the area of retail payments with focus on:
• Regulatory intervention and self-regulatory measure for payments market.
• Initiation of projects on enhancing efficiency and safty of payment instrument- interbank Direct Debit, Standardization of Payment Order-STP
• A proactive role as catalyst through: Promoting the private initiative in the area of payments system;
Supporting and promoting cost efficient payment instruments;
Understanding and handling the needs of unbanked population.
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