Paul McCREА, Vice President of Visa Inc. , Head of Products, CEMEA:
IN KAZAKHSTAN WITH A POPULATION OF 18 MILLION OVER 20 MILLION MOBILE DEVICES ARE USED
Last week Astana hosted the 10th jubilee Astana Economic Forum, which brought together more than 4,000 speakers from the world’s 100 countries. One of the main topics of the forum was innovations in the field of financing. Paul McCREA, Vice President of Visa Inc., Head of Products, CEMEA (countries of Central and Eastern Europe, Middle East and Africa) and Galym TABYLDIYEV, General Manager of Visa Inc. in the Central Asia countries talked on the margins of the forum of global trends in e-commerce and peculiarities of Kazakhstan’s e-payment market in an interview with Interfax-Kazakhstan.
- Mr. McCrea, what are the global trends in the field of Internet commerce, to which the attention should be paid?
- I am talking about four-five digital things that stimulate changes in the field of e-commerce, first, this is mobility. Simply the fact is that more people own more mobile devices that is bringing e-commerce into the environment where it has not been before. Second, it is connectivity, the possibility to connect to the Internet. So, the Internet of things is really changing the way when commerce will happen and how it happens. So, devices that have never had Internet connectivity before are becoming e-commerce devices. Third is the data. The availability of data, the possibility to store and analyze data is a massive driving change. And lastly, the open platforms. The increasing use by companies , including Visa Inc., of technology standards, the Open Application Programming Interface to allow what we do to be accessed by other companies and similarly for us to have access.
- What do you think about Kazakhstan’s needs in this sphere?
- I would not say that I am an expert on Kazakhstan. What's interesting - listening to the economic forum, the panel – a lot of challenges and opportunities in Kazakhstan are similar to challenges and opportunities in the other countries, you have the very young population and it means they are very familiar with mobile devices and very comfortable with digital commerce. Second, you have the government willing to lead and that is very important. If you look at the other examples around the world whether it is Dubai and Singapore and other places. It is so important for the government to lead and signal any intention to go digital. You have the very strong and involved academic sector, the universities are important to incubating Kazakhstan’s young entrepreneurs. And the last thing: it is really important for the government and private sector to work out how to grow and retain Kazakh talents, so young people who might seek jobs in the other countries which are at the moment much more appealing. We need them here, we need them being here as "digital aborigines" and champions of future Kazakhstan’s e-commerce.
- What conditions, do you think, are necessary for young talented people to stay in Kazakhstan and start a business here?
- First, obviously, I think, having education is a point of difference in order to be a smart city, a smart state, it is really important. Second, young people should have opportunity to gain global experiences and be motivated to come back to Kazakhstan and apply the learning locally. Third, they need a platform and an eco system that allow them access to further skills, investment, coaching, mentoring and general development so that they can integrate good ideas into new businesses in Kazakhstan.
- How much are cashless payments required in Kazakhstan?
- If I step back for a minute the whole world is undergoing digital transformation. Last year the number of digital transactions in the world for the first time in history surpassed the number of cash transactions. So, general change, general momentum is happening. In this context I come back to some points I have already said, the young population is a big advantage for Kazakhstan. You do not have to educate them how to use mobile devices; you do not need to tell them to trust devices; Everybody has a phone. They do not need a lot of convincing. I look at the fact that roughly the population of 18 million in Kazakhstan have 20 plus million mobile devices in circulation. This tells you that people are quite comfortable with technology. In Kazakhstan we have some around 15 million active Visa card holders. The share of Kazakhstan’s consuming economy is significant. My point is not to talk about the Visa market share here but to talk particularly about Kazakhstan's consumers more increasingly and rapidly comfortable with technology as a way not only to communicate but actually to engage in e-commerce both regionally and globally.
I would like to say this technology is also equally important for Kazakhstan's small businesses. I think the focus needs to be on two things: it is necessary to create the ecosystem where entrepreneurs turn into small business owners and employers and make sure that barriers impeding businesses and engagement in e-commerce come down.
Galym TABYLDIYEV, General Manager of Visa in the Central Asia countries
- The National Bank seeks to increase the share of cashless payments. At the same time, according to the regulator, in 2016 only 15% of all payments were cashless. How do you think, why do not we like cashless payments so much?
- Out of the total amount of payments people make, both cash and cashless, payment card transactions account for 4%. Historically, cards were issued for us to receive wages. That is the banks issued cards, people received wages. It took some time for people to start using the card itself as a means of payment. Now the picture is changing. 15% is a small figure, but there is a big potential.
Last year, the volume of cashless payments increased by 50% in terms of volumes of transactions. The number of transactions is growing even faster. This suggests that people use cards for daily payments with large, small and medium amounts. The dynamics are positive.
- And what do you think about the compulsory installation of POS-terminals for trade and services enterprises? This requirement is still not fully implemented. Why?
- Financial institutions, including banks, should work more actively with businesses, explain to them what this is like. Every businessman, of course, has his own business model. But that businessman who thinks of his business thinks first on how to increase the turnover. He receives income from that. The turnover comes from different channels. This is, firstly, when a person pays in cash, secondly, when a customer pays with a card, and thirdly, when a person pays for a product or service via the Internet. That is the more channels for attracting a new client, the more profitable the business will be. I would consider a commission that the banks impose not as direct costs but as indirect costs, like marketing costs, to attract new customers.
But now the network of trade and services enterprises is expanding. Already about 100,000 POS-terminals accepting VISA cards have been installed in Kazakhstan. This is a good growth - 30% - compared with last year. There is a potential for nearly 500,000 more POS-terminals to be installed in Kazakhstan. We need to work with small and medium-sized businesses.
- Thank you for the interview!
June, 2017
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