The Cards and Payments Industry in Croatia: Emerging trends and opportunities to 2020
Croatian economy finally registered a positive growth rate of 1.98% in 2015, after experiencing a recession since 2009 owing to the Eurozone crisis. Croatia became the 28th member of the EU on July 1, 2013, and has since raised its competitiveness after benefiting from EU funding to support economic development. Consequently, the government has undertaken labor, pension, social benefit, and investment reforms, which have stimulated employment opportunities. Growth in the cards and payments industry remained weak during the review period (2010-15); however, given the strengthening economy it is anticipated to show growth over the forecast period (2016−20).
In terms of transaction value, debit cards remained the most popular payment card during the review period, accounting for 79.1% of the total payment cards transaction value in 2016. Due to the European debt crisis and uncertain economic conditions, the majority of Croatian consumers became debt-averse and preferred to use debit cards to make payments in order to track their expenses. Consequently, the debit cards market registered growth in terms of the number of cards in circulation, transaction value, and volume during the review period. Frequency of transactions at the POS remained higher at 24.1 compared to at ATMs (15.1), indicating card holders’ preference for using debit cards for small-value purchases.
The payment cards market is embracing new technologies such as contactless. Contactless cards were first introduced in Croatia in December 2012, with Mastercard PayPass first issued by ESB. To widen the growth of contactless payments, banks are increasingly offering rewards to encourage customers to adopt contactless payments. The number of contactless payment cards increased significantly from 878,326 in 2012 to 2.7 Million in 2016. As of December 2015, around 27% of POS terminals were contactless-enabled, an increase of 17.9% on the previous year.
Banks are also making concerted efforts to educate customers with regards to credit card benefits and how to use them judiciously, without falling into debt. In April 2013, Erste & Steiermärkische Bank (ESB) launched the budget control app ‘Diners ProFile,’ enabling customers to learn about their spending habits on food, mobiles, fuel, clothing, and utilities. To promote the use of credit cards, banks also offer card holders a number of benefits and value-added services such as installment facilities, reward points, cashback, and discounts at partner retailers. Privredna Banka Zagreb (PBZ) revamped its membership reward program in 2012, enabling its credit card holders to instantly and directly redeem their points at establishments that accept its Membership Rewards Card.
The report The Cards and Payments Industry in Croatia: Emerging trends and opportunities to 2020 provides top-level market analysis, information and insights into the Croatian cards and payments industry.
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