Slowly but surely Cyprus is entering the digital age of commerce, but experts say it has a long way to go before it mirrors what is happening in places like China.
Two months ago, Cyprus took baby steps towards entering the new digitalized era in trying to catch up with the rest of the world.
The Cyprus Securities and Exchange Commission launched its first attempt to regulate the market and companies active in the development of Financial Technologies introducing the Innovation Hub, a Dialogue platform between authorities and companies employing FinTech.
Meanwhile, banking institutions have been developing and introducing digital payment applications as the global trend goes online and moves away from traditional payment methods.
Just this week RCB Bank became the first bank to launch a Digital Wallet application for mobile payments utilizing Visa’s Tokenization Services to the Cypriot market.
Essentially RCB customers will be able to make payments at any store anywhere in the world, with the use of their smartphone. All they have to do is add a digital copy of their RCB credit and debit cards to their Android smartphones.
The new application, which can be downloaded by Android smartphones devices with operating systems 4.4 and above, creates a digital copy of your card with the same parameters which allow your phone to replace the plastic cards in all transactions.
The Head of RCB’s Digital Banking, Viktor Levytskyi said: “We clearly see the global movement from plastic cards into mobile as the customers are spending more and more time with mobile devices, and now it is more common to forget a wallet at home rather than a mobile phone.”
“The new RCB application will enhance smartphone capabilities by creating a simple and convenient way to make purchases worldwide. You can make payments using RCB Digital Wallet at any merchant, in Cyprus and internationally, that accepts contactless payments.”
Levytskyi said that the new RCB application provides transparent, fast and a secure way to pay worldwide, with an Android phone using mobile Near Field Communication (NFC) technology.
“The payments are even more secure than plastic card transactions, as the card details are not stored on the mobile device or transmitted during the payment.”
RCB’s head of Digital Banking added: “Mobile transactions are made by placing your phone to the contactless payment terminal and your RCB Visa card will be charged for the transaction, while if the client chooses to, they can add additional security features for transaction confirmation, such as biometrical identification based on their fingerprint.
This allows customers to have complete peace of mind while making mobile payments”.
This way there is no need for entering your password for every transaction.
RCB said electronic payments is a natural extension of the range of the Banks digital product offerings for its corporate clients.
It said the pace of e-commerce growth worldwide is even higher than mobile payments and RCB is working towards introducing new technologies and methods to facilitate online payments for business clients.
Way behind China
Digital wallets are gaining popularity across the globe as China takes the lead in digital payments with the use of mobile payments, said Antonis Polemitis, the University of Nicosia CEO.
Polemitis said that digital wallets are the future for digital payments, but Cyprus needs to do more to catch up with the global trend.
“Cyprus banks’ digital wallets have to add immediate value to the consumer. They need to offer more complete solutions like the WeChat application which is much more than a wallet,” said Polemitis.
“They are a full application ecosystem that makes it easier to conduct transactions, financial and non-financial. An application system which can even be used in e-governance in the near future,” he added.
China saw USD 8 trln worth of mobile payment transactions in 2017, while the figure is estimated to rise to 10 trln this year and more than 12 trln in 2019.
If one wants to look at the global trend in mobile payments, China is the place to start and not the USA as one would expect. Chinese consumers conduct 11 times more mobile payments than their counterparts in the United States.
China’s mobile payment applications Alipay and WeChat have swelled in popularity, boasting USD 520 million and one billion monthly active users, respectively.
According to Visualcapitalist.com, “Scan-and-pay” is widely popular in China, particularly in big cities where it’s hard to find a product or a service that cannot be purchased with a mobile device. Reportedly, over 90% of Chinese consumers have adopted WeChat as a method of payment in offline purchases.
The two payment systems differ from RCB’s mobile payment application in the sense that they are not directly linked to a bank account.
Alibaba created Alipay in 2004 to let millions of potential customers who lacked credit and debit cards to shop on its vast online marketplace. Tencent Holdings, similarly, debuted its payments function WeChat in 2005 in a bid to keep users inside its messaging system longer.
Polemitis said mobile payment transactions can be broadly categorised into two types, namely, online and physical, with respect to the transaction points.
RCB's Digital Wallet app falls into the latter type (i.e., physical) since the app runs on a mobile phone. Similar solutions are based on wearable devices, like Wearablepay by Bank of Cyprus.
A Bank of Cyprus official, while not revealing future plans, said that the bank is committed to further enhancing mobile payment options offered to customers.
Speaking to the Financial Mirror the bank official said that they have seen an increase of 42% in the payments made through BoC’s mobile payment application since last year, which fits in with the global trend.
“Just in the month of August 1.5 million transactions took place through our ‘Quick Pay’ app,” said the official.
The official noted that there is an increase in mobile payment services in Cyprus, while digital banks have made their appearance.
Indeed, digital banks such as start-up Revolut have not only made their appearance in the Cyprus banking market but have also launched a series of joint activities such as the prepaid VISA card issued in cooperation with telecom provider PrimeTel.
“Digital services are a cheaper, safer and easier transaction option both for customers and the bank and as such, the bank is working to promote these services,” the Bank of Cyprus official said.
“Digital services are cheaper and, in some cases, free.”
Hellenic Bank did not make themselves available for comment regarding their digital products.
