What are the most popular payment methods and payment instruments in your jurisdiction?
The most popular payment methods and payment instruments still tend to be traditional, for example, utilising bank accounts for credit transfers, as well as debit and credit cards. However, more businesses in Bermuda are starting to accept cryptocurrency payments. As of the date of writing, amendments have been proposed to the Banks and Deposit Companies Act 1999 which will allow for the provision of banking services in relation to digital asset business or initial coin offerings.
There is no publicly available data on the popularity of payment methods used in the Cayman Islands.
In 2017, ACH (Cayman) Limited implemented the Cayman Islands Automated Clearing House (CIACH). CIACH is an electronic payment and cheque imaging system that is shared by participating banks in the Cayman Islands.
ACH (Cayman) Limited is jointly owned by the six class A retail banks: Butterfield Bank (Cayman) Limited, Cayman National Bank Ltd., CIBC FirstCaribbean International Bank (Cayman) Limited, Fidelity Bank (Cayman) Limited, RBC Royal Bank (Cayman) Limited and Scotiabank & Trust (Cayman) Limited.
The CIACH clears and settles electronic transactions and provide an exchange and settlement mechanism for domestic payments in KYD and USD currencies.
Based on number of payments sent, in order of priority:
- Cards payments with cards issued by resident payment services providers (PSPs): 50.4 million;
- Credit transfers, whether electronic or paper based: 17.8 million;
- Cheques (domestic market only): 14.5 million; and
- E-money payments with e-money issued by resident PSPs: 1.7 million.
Based on value of payments sent, in order of priority:
- Credit transfers, whether electronic or paper based: EUR222 billion;
- Cheques (domestic market only): EUR22.9 billion; and
- Card payments with cards issued by resident PSPs: EUR3.5 billion; and
- E-money payments with e-money issued by resident PSPs: EUR0.1 billion.
In general terms Cyprus has adopted the TARGET2 real time gross settlement system for the Eurozone, known as “TARGET2-CY”. As such credit transfers in Cyprus are facilitated through TARGET2-CY. The CBC operates TARGET2-CY according to the Directive of the Central Bank of Cyprus on TARGET2-CY System of 2017.
JCC Payment Systems Limited (JCC) is the principal card operating company in Cyprus. It was formed as a joint enterprise between the five principle credit institutions in Cyprus: Bank of Cyprus, Hellenic Bank, Alpha Bank, National Bank of Greece and Astro Bank. JCC acts as a card acquirer on its own behalf for Visa, MasterCard and Diners and as an acquiring processor for American Express cards.
Cheques in Cyprus are cleared through the Cyprus Clearing House (CCH). The CCH is operated by the CBC.
The most popular payment method in Denmark is by far the Danish national debit card "Dankort", though the use of international payment cards (such as VISA and MasterCard in particular) have seen significant growth in 2015-2017, where the use of payment cards in general have doubled. Within the EU, Denmark is ranked as number one when it comes to consumers using pay-ment cards.
New payment instruments, such as mobile payment and contactless pay-ment, have been introduced in recent years. In terms of contactless, nearly half of the payment card transactions in Denmark were made by way of con-tactless payments in 2017. Moreover, according to a recent market study, 25 percent of the Danish consumers had used the popular mobile payment so-lution "MobilePay" at least once a month during 2017.
By far the most popular payment methods in Finland are card payments and bank-transfers. While card payments dominate the payment scheme, and it is the most popular payment method if measured with the quantity of individual transactions, bank-transfers hold the first place if measured based on the value of the transactions.
Contactless payments are also increasingly popular, as the amount of contactless payments doubled in 2017 compared to the previous year.
According to the French Banking Federation survey, in France, bank cards dominate the payments landscape (MasterCard and Visa are the most represented). The orange line corresponds of payments by bank cards.
Source: Data from BCE https://www.banque-france.fr/sites/default/files/media/2017/04/05/bilan-cartographie-des-moyens-de-paiement-2016-donnees_2015.pdf
Although there are already quite a few of payment services provided by FinTechs in Germany, Germans still like to pay in cash rather than electronically. A breakthrough with regard to cashless payment has not been achieved yet.
SWIFT, BACS and FASTER PAYMENTS.
According to a survey conducted by the European Central Bank across the single currency area in July 2016, it was found that 92 per cent of the transactions in Malta involve coins and notes. To corroborate the popularity of cash as the favourite payment method in Malta, the latest statistics issued by the Central Bank of Malta in 2015 also show that cash was used for 88 per cent of the transactions. In this latest statistic it was also shown that credit cards and debit cards were each taking up only 4 per cent of the payments.
Debit cards, bank transfers, checks and cash (note recently legislation was enacted that will limit the amount of cash that can be used in transactions). In Israel the most common debit card used is a deferred debit card, with the merchant bearing the cost of delay in payment. In addition, there has been a recent increase in the use of payment applications (P2P) operated, inter alia, by banks and non-bank entities, which will reportedly expand into the merchant payments sector.
The most popular payment method is definitely cash. According to "Cashless Vision", a cashless payment related report issued by METI in April 2018, the rate of cashless settlements in Japan is 18.4% (which is very low compared to South Korea (89.1%) or the United States (45.0%)). Other than cash, the most popular payment methods are credit cards and prepaid instruments.
Cash is still the most common payment method in Mexico; primarily due to the limited awareness of payment cards, the novel development of e-money platforms and the limited access to banking infrastructure among the rural population and the informal economy.
Debit and credit cards have grown significantly since the earlies 2000´s following the introduction of electronic payroll services and mass media campaigns endorsed by financial institutions aimed to increase the banked population number in Mexico. Social welfare benefits and local governments social programmes funded through debit cards have also been relevant in fostering financial inclusion. Mexican e-commerce has also been developing rapidly in Mexico since 2010, following the entrance of major online retailers to Mexico.
British Virgin Islands
The most popular payment methods and payment instruments in the BVI are:
- bank drafts
- electronic funds transfers
- credit cards/debit cards
SSEK: Despite the introduction of the Cashless National Movement (Gerakan Nasional Non-Tunai) in 2014, hard cash remains the most popular payment method in Indonesia. Following hard cash are debit and ATM cards, making up more than half of all non-cash transactions. It is suspected that the relative lack of cashless transactions is the result of Indonesia’s large area and the lack of uniform cashless infrastructure.
Card-based payments, direct debits and bank transfers are the most popular and deeply-rooted payment methods in Portugal. Notwithstanding, we note that a recent surge in new payment apps has begun to gain traction (please refer to answer to question 19 below concerning the Mbway payment method introduced by SIBS consisting in real-time instant bank account transfers).
The use of checks in the U.S. has been steadily declining over the past 20 years, with the increased adoption of electronic payments. Credit and debit cards, as well as cash currency, remain the most popular payment instruments. E-payment systems, such as PayPal, Stripe, Square and Apple Pay are gaining in popularity.
Cash remains the most popular payment method in the UAE, many small establishments only accept cash. Credit cards and debit cards are a close second: VISA and MasterCard credit cards are widely accepted by businesses and government services, however American Express, Diners and Discover are less widely accepted.
Cheques are an important payment instrument in the UAE for transactions of large amounts. Online payments are also a common method of payment.
Various digital initiatives have emerged in the UAE but are not widely used yet. These include the government’s Mobile Wallet, Etisalat Wallet, NOL Cards, Apple Pay, Samsung Pay and Alipay. Payfort, an amazon-owned payments solutions company, conducted a survey suggesting a 21% increase in online payments in the UAE in 2016. Alipay, a large online and mobile payment platform, is also active in the UAE. The Dubai government introduced plans to launch its own wallet emCash which can be used as a digital currency and cryptocurrency as well.
As of the beginning of 2018 the positive tendency of non-cash payment growth and expansion of payment infrastructure still remains. Based on the results of 2017, the share of non-cash payments in Ukraine with the use of payment cards has increased to 39.3% (increase by 3.8% from the beginning of 2017). In general, this rate has increased more than three times as much for the last five years.
In general, in 2017 the Ukrainians made over 3 billion transactions with the use of the payment cards issued by the Ukrainian banks for the amount of UAH 2 125 billion (USD 75 billion).
Based on the results of 2017 the structure of the non-cash payments in Ukraine has divided in the following way:
money transfers between payment cards: in terms of volume – 26.4% and in terms of quantity – 6.1%;
payments online: in terms of volume – 38.8% and in terms of quantity – 41.0%;
payment in retail network: in terms of volume – 31.9% and in terms of quantity – 50.6%;
transactions in ATM: in terms of volume – 2.9% and in terms of quantity – 2.3%;
As of the beginning of 2018 the quantity of the payment cards was 59.9 million pcs, 34.9 of them are active.
The quantity of the active magnetic stripe and micro-chip payment cards is 7.4 million pcs. At the same time there is a general decrease of the payment cards with the magnetic stripe card exclusively. Also there is an increase of using the contactless payment cards – by 37.8% for the year (from 2 million to 2.7 million pcs).
The payment systems that use their own e-money are not very popular in Ukraine. In particular, the operation of WebMoney payment system in Ukraine was prohibited based on the entry into the sanction list in connection with the military aggression of the Russian Federation.
In 2018 Android Pay and Apple Pay payment systems have started officially operating in Ukraine.
A study made in 2017 by the SNB showed that the most popular means of payment of private persons in Switzerland continues to be cash (70% of transactions, 45% of value). Of electronic means of payment, the most often used is the debit card (ec card, Postfinance), followed by credit cards. Professional payments of finance companies are dominated by the Swiss Interbank Clearing (SIC). Payment aps are not yet widely used, due to competition between different schemes offered. Only recently, a uniform solution was offered by all major banks, under the brand of TWINT. Apple pay and paypal are often used for online purchases.
Cash or fiat currency is the most preferred mode of payments in India. Currency circulation accounts for 18 percent of gross domestic product (GDP) as against 3.5-8 percent in developed nations. Approximately, 78 percent of all consumer payments and 97 percent of all retail payments are made in cash as of April 2018. Other than cash, paper and non-paper payment methods and payment instruments are also commonly used in India. Paper-based instruments include cheque and paper based national electronic fund transfer (NEFT) instructions. NEFT can also be used via internet banking facilities offered by banks to their customers. Primary non-paper based modes for retail payments include, immediate payments service (IMPS), Unified Payments Interface (UPI) enabled apps, credit cards, debit cards, prepaid payment instruments (PPIs) such as e-wallets and gift cards, and national automated clearing house (NACH).
The most popular payment method by far is the debit card, which overtook cash as the most frequently used payment method in the UK in the last quarter of 2017. Around 98 per cent of the population holds a debit card, using these to make 13.2 billion payments in 2017. This represents an increase of 14 per cent over 2016. The use of debit cards is forecast to continue to increase.
The use of credit cards also increased in 2017, by 13 per cent over 2016, to account for 3.1 billion payments. Around 64 per cent of adults in the UK hold a credit card. As with debit cards, the use of credit cards is forecast to continue to increase.
In terms of payment method, the number of contactless payments in the UK has increased significantly, rising a staggering 97 per cent during 2017 to hit 5.6 billion payments. These payments are made by the 119 million contactless-enabled cards in circulation, with 78 per cent of debit cards and 62 per cent of credit cards capable of making contactless payments.
In contrast to credit and debit cards, the use of cash as a payment method has continued to decline. While 61 per cent of payments made in 2007 were made in cash, only 34 per cent of payments made in 2017 were. This decline is forecast to continue, although predictions do not indicate that cash will become extinct as a means of payment.
In terms of payment methods used for credit transfers, direct debit, standing orders, Bacs Direct Credit and CHAPS are all used. Of these, the use of direct debit is widespread, with 90 per cent of UK consumers using direct debit to pay some or all bills. This amounts to 4.2 billion payments for a value of £1.305 billion. The payment method most frequently used by businesses and government remained Bacs Direct Credit. CHAPS is used principally by financial institutions for (large) corporate treasury payments. The result is that a mere 0.1 per cent of the total volume of UK payments made via CHAPS accounts for 91 per cent of the total value of all payments made: 41.7 million payments for a value of £84 trillion.
Last and least, the use of cheques to make payments continued to decline, with only 401 million cheques used in 2017 in contrast to 1,581 million in 2007. With the increase in the use of card and other newer methods of payment, this decline is forecast to continue.
Looking forward, the use of newer payment methods such as PayPal, Google Pay, Samsung Pay and ApplePay is projected to increase in the coming years, as is the use of payment initiation services to make credit transfers at an online (or potentially in-person) checkout. Source: UK Payment Markets Summary 2018, available at https://www.ukfinance.org.uk/wp-content/uploads/2018/06/Summary-UK-Payment-Markets-2018-1.pdf )
In the Netherlands, debit card payments have already overtaken cash payments, and the debit card dominance is expected to steadily become bigger in the coming years. According to a recent survey by the Dutch Payments Association and DNB, consumers paid 61% of their purchases at points-of-sale by using debit card and 39% in cash in the first half year of 2018. This increase in debit card payments is in part driven by the introduction of contactless payments in 2014. Currently, about half of consumers’ debit card payments are contactless. As a result of the demise in the use of cash, ABN AMRO, ING and Rabobank will migrate their entire ATM network to Geldservice Nederland who will operate the ATMs under a bank-independent ATM brand. Parties aim to complete the migration by the end of 2020.
In the Netherlands, we have a bank-owned online payment method called iDEAL which is based on the so-called ‘redirect’ model. This means that a user making an online payment is redirected to his own bank’s secure website to authorize the payment transaction. iDEAL remains by far the most popular method for online payments in the Netherlands, well beyond credit card use, and is the focus of continued innovation (such as QR code-based payment).
Many Dutch banks have launched innovative and seamless payment apps that can be used for credit transfers and to redeem money from others. These apps typically use iDEAL and enable users to send a payment request via Whatsapp, Facebook Messenger or SMS. These apps are very popular, especially among younger generations , with one app currently having more than two million active users.
From the beginning of 2019, Instant Payments will become available in the Netherlands. All major Dutch banks will be participating in this new payment scheme. Instant Payments enables credit transfers to be credited immediately to the account of the beneficiary, resulting in access to the funds for the payee within seconds, 24/7, any day of the year. Compared with the European standard, these Instant Payments are processed more quickly and do not have a maximum limit. It is generally expected that Instant Payments will pose a serious threat to credit card based payments.
The most popular payment methods in China are electronic payments through communication networks (including the Internet) and prepaid card payments.
Credit card payments remain the most popular payment method in Taiwan; however, the number of retail sellers offering, as well as consumers using, mobile payments is on the increase, and people in Taiwan (especially the younger generations) are getting used to purchasing goods and services not using cash or credit card. Some of the mobile payments use QR code system or other means to incorporate credit card functions into smartphones, while some of the mobile payments are offered based on digital wallet services offered by the electronic payment institutions licensed by the FSC. The Taiwan government authorities also provide various incentives to promote mobile payments. For instance, the Ministry of Finance provides a tax incentive to small businesses by allowing them to continue paying 1% in business tax (compared to the regular rate of 5%) so long as they offer mobile payment options to consumers.