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Slide 1:

BANK CARDS IN THE CONDITIONS OF ELECTRONIC PAYMENT


EXPANSION

Author:

full time studies

student gr. FB147

ADAM Eugeniu

Scientific advisor:

Associate Professor, Ph.D. Stela CIOBU

Slide 2:

The objective of the research:

The main objective of the research is to show the importance of the development of the
electronic payments not only in the Republic of Moldova but also in the world as a whole. It is also
necessary to reflect the role of bank cards in the electronic system of payments, to determine their
influence on the world electronic commerce and find the best way of their development in our country.

Slide 3:

The purposes of the research:

to determine the place of the electronic payments in the world commerce, their
classification, modern forms and both positive and negative features of their
development;
To assume a bank cards as the main means of electronic payments, to reflect its
importance in the modern society;
to analyze the development of electronic payments system in the Republic of Moldova,
to find the ways of improvement of this system and implementation of bank cards in the
lives of our citizens.
Slide 4:

Advantages of electronic payments Risks of Electronic payment


Electronic payments can benefit the The volume growth of electronic payments
business by extending the customer base; and the wider array of payment vehicle now in
boosting cash flow; reducing costs; enhancing common use has made managing the risks
customer service and improving the competitive associated with these payments more important
advantage. than ever to consumers, businesses, financial
Five reasons why Electronic payments institutions, and the economy as a whole. The
improve customer service-the five Cs: Federal Reserve is concerned about these risks for
Choice- like your competitors, you can several reasons:
offer a wide range of payment options; as a central bank and provider of payment
Convenience- they remove the need for services, the Federal Reserve seeks to
invoices, checks, cash; prevent systemic risk that can disrupt the
Credit- they may allow purchases that payments system;
would otherwise be delayed; as a regulator of financial institution, the
Concessions- small discounts to Fed is concerned with bank-specific risks
encourage online purchases improve that may impact the safety and soundness
the perception value; of individual financial institutions;
Competitive Edge- if you do not offer as one of the nations primary regulators
the full range of payment options but of the relationship between consumers
your competitors do, what does this say and the payment system, the Federal
about your business? Reserve is concerned about the
Five reasons why Electronic payments imbalances between individual users of
increase profitability: the payments system and their financial
Convenience- removing administrative institutions.
resources required by invoices, checks
and cash;
Immediacy-credit cards enable instant
purchasing (without delay);
Improved cash flow-payment at the
time of purchase reduces the pressures
caused by 30-day invoicing;
Competitive advantage- match and beat
the services of your competitors and
gain the edge.
Slide 5:

.
The bank card is a personalized payment instrument that gives the user the right to pay for
goods and services, without using cash as well as the reception of cash at the banks windows, or in bank
machines.

Types of bank cards:

During the last two decades many cards have been introduced to the banking market, having
different characteristics, abilities and way of being used. The most important and widely used are the
following: credoit cards, atm card, debit card, smart card+ short description

Slide 6:

According to credit types there are:

credit cards- bank cards for which the following scheme for the settlement of accounts are
used. The client gets from the bank certain credits, without using the discount from his account.
The credit limit is set up individually, depending on the clients solvency;
debit cards- are bank cards through which the customer deposits financial means on the cards
account in the process of the cards usage, he or she has the right to make use of balance from
the cards account;
the Charge card- is a card that the following scheme for settlements is used: the client is given a
credit limit and it must be repaid at the end of the settling up period (usually monthly).
*To make payment by credit in commercial network the customer must present the card. If the
sum of money to be taken is not very large, the customer must not present any other
documents. But if the sum of money is too large, the cashier can request an identification
document.

Slide 7:

Examples of participants and goals in the credit card market.

There are three participants in the credit card market.

Cardholder: the one client of the banking system who is aiming at:

convenience and safety (i.e. non carrying amounts of cash to pay any unexpected or scheduled
payments);
availability of credit facility, which is unsecured and for which usually no big procedure is
required to obtain;
delaying payments and extending payments when needed (taking also advantage of the various
related payment programs);
ease of record keeping (since the statement of the account shows all movements).
Merchant: the other client of the banking system who is aiming at:

increased sales (by having each of his customers able to spend as much as he wants up to his
limits, by presenting the credit card);
service to customers who need credit in order to spent;
reduced exposure of accepting non-sufficient (NSF) cheques and
safety against robberies (as compared to cash sales).
Banks: (including the issuing banks and the merchant banks) aiming at:

generation of revenues from cardholders due to interest charge and fees;


generation of revenues from the merchants due to commissions and other charges;
attraction of potential customers for other banking services and
selling or renting special equipment to support the Point of Sale (POS) sales.

Slide 8:

Transactions that can be effected by using bank cards.

Actually, the main transactions that can be effected by using the bank cards are the following:

transactions with ATM;


transactions by POS-terminals;
transactions through Imprinter;

transactions on the Internet. (imag.la POS-terminals)


Slide 9:

The diversification of bank cards on the market of the

Republic of Moldova and their main advantages


All commercial banks in the Republic of Moldova provide general services for their clients and
offer a wide range of payment cards.

Actually all commercial banks of Moldova have different tariffs and commissions, but they all
have some common features.

the safety
the convenience + short description
the flexibility

Slide 10:

Numrul cardurilor de plat aflate n


circulaie, trimestrial 2014-2015
1,600,000
1,400,000
1,200,000
1,000,000
800,000 Nr. carduri aflate n
600,000 circulaie
400,000 Nr. carduri active
200,000
0

The number of payment cards in circulation.

The number of cards35 in circulation decreased at the end of 2015 by 0.9 percent compared to
the end of 2014, accounting for 1 290 164 unities.

The decrease was determined by the withdrawal from circulation of a significant number (324
983 unities) of cards issued by the banks, the licences of which have been withdrawn in the third quarter
of 2015.

Slide 11:
Numrul operaiunilor efectuate cu cardurile de
plat emise n RM, anii 2005-2015
25,000,000 80.0%
20,000,000 60.0% retrageri de numerar
15,000,000 40.0%
20.0%
10,000,000 0.0% pli fr numerar
5,000,000 -20.0%
0 -40.0% rata de cretere
retrageri de numerar

The number of operations performed with payment cards issued in the Republic of Moldova.

the number of active cards of total payment cards issued in the Republic of Moldova changed
insignificantly, decreasing only by 1.4 percent compared to the end of 2014 and accounted for 60.7
percent of total number of payment cards in circulation in the Republic of Moldova (783 523 unities).

During 2015, there were carried out both in country as well as abroad 28.97 million of
operations with payment cards issued by the payment service providers of the Republic of Moldova,
amounting to MDL 35.4 billion, increasing by 12.0 percent by number and 22.1 percent by value
compared to 2014. The cashless payments performed with cards issued in the Republic of Moldova held
a share of 31.2 percent by number (25.4 percent for 2014) and of 13.1 percent by value (12.0 percent
for 2014). The upward trend is positive and these indicators reflect the further use of payment cards
mainly for cash withdrawals.

Slide 12:

The share of domestic operation in 2015.

Ponderea operaiunilor domestice, anul


2015
100%
6.1% 1.4% pli fr numerar
5.0% fr prezena
80% 18.4%
fizic a cardului
60%
pli fr numerar
40% cu prezena fizic
a cardului
20% retrageri de
75.4% 93.6%
0% numerar
Numrul Valoarea
The share of cashless payments for the cards issued in the Republic of Moldova and performed
locally accounted for 6.4 percent of total value (5.6 percent for 2014) and 24.6 percent of their number
(19.5 percent for 2014) of total number of domestic operations (19.75 million). It should be also
mentioned that 18.4 percent of total number of local operations were cashless payments performed
with card (15.3 percent for 2014) and 6.1 percent were performed without card (4.1 percent for 2014).

Slide 13:

The share operations with cards issued in the RM

and performed abroad in 2015.

Ponderea operaiunilor efectuate n strintate cu


cardurile emise n RM, anul 2015
100%
167,735
90% 570,709

80%
70% retrageri de numerar
897,825
60%
1,117,872 pli fr numerar cu
50%
prezena fizic a
40% cardului

30% pli fr numerar fr


prezena fizic a
20% cardului
10% 1,713,749 1,454,581
0%
Numrul Valoarea, mii lei

The number of operations with cards issued in the Republic of Moldova and made abroad during
2015 recorded an increase of 30.5 percent compared to 2014. The cashless payments represent 94.0
percent (92.0 percent in 2014) of total number of operations performed abroad (2 779 309 operations),
increasing by 33.4 percent compared to 2014. It should be mentioned that the cashless payments made
without cards represent 61.7 percent of total number of operations performed abroad (56.5 percent in
2014) and the cashless payments made with cards represent 32.3 percent (35.5 percent in 2014).

These figures show that more than half of operations performed abroad with the cards issued in
the Republic of Moldova are "on-line" shopping.
Slide14:
The development indicators if cards market in the Republic of Moldova

Indicatori de dezvoltare a pieei de


carduri din RM
4.0 50% POS terminale
40% per mie
3.0 locuitori
30%
2.0 20%
10% Pli fr
1.0
0% numerar per
0.0 -10% capita
2011 2012 2013 2014 2015

The basic indicator applied to assess the situation of payment card fraud is the share of the total
amount of fraud committed in the total value of transactions with payment cards issued by local
licensed banks conducted both at home and abroad. In the Republic of Moldova, this indicator
amounted to 0.0071 percent for 2014 and 0.012 percent for 2015, which is below the European level.

Slide 15:

Fraud in use of bank cards and methods of

risk reduction in the Republic of Moldova

Different methods are used in fraudulent reception and use of cards:

false requests, resulting in accounts and lending to criminals;


stolen or lost cards, used for unsolicited shopping;
changing stolen or lost cards for fraudulent purposes
secretly agree with traders who are involved in such business with the use of fake and changed
cards;
bank frauds fraud, where they steal cards from the card production center, open accounts for
future criminals.

Slide 16:

In the first chapter we described the electronic payment system in general as a cellule of modern
society, its traditional forms, risks and advantages, and trends in its dynamical development.
In the second chapter we showed the real importance of bank cards, their characteristics,
classification, transactions that can be effected by their means. We indicated the main guarantees and
risks associated with utilization of bank cards, the role of bank cards in the international system of
payments where we mentioned two international payments systems VISA and MasterCard, showed the
international practice of using debit and credit cards, their advantages and disadvantages.

The third chapter is completely consecrated to the development of bank card market in the Republic
of Moldova. We showed the legal framework of electronic payments, reflected the diversification of
bank cards and showed their advantages in national marketplace. We reflected the offer of the bank
cards in the national market provided by Victoriabank which is the First Bank of Moldova, the variety of
services provided and innovations implemented

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