The digital transformation of credit card payments in Eastern Europe

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It’s a digital era that allows consumers to make cardless transactions conveniently. The advent of COVID-19 also played an integral role in changing the payment landscape worldwide. The shift has also been evident in various parts of Eastern Europe. People looking for contactless yet safer banking options switched to digital credit cards.

What is Digital Credit Card?

Digital cards allow users to purchase goods and services without swiping their physical cards. Also known as virtual cards, this contactless payment system uses NFC (Near Field Communication) technology.

A traditional cardholder can activate digital credit card service by downloading supporting e-wallet apps. Once linked with the app, a person can seamlessly use the virtual card on offline POS, e-commerce, credit cards casino sites, and for personal transfers.

Current Market Trends in Eastern European Regions

Digital credit card payment systems entered the Eastern European market in the late 90s. Cut to today, government and financial institutions are making various initiatives to expand the reach of this new-age payment system.

Presumably, digital wallet users will boom from 26.4% to 29.9% by 2024 in Eastern European countries. On the contrary, the number of credit cardholders will grow by only 0.1% in the same year. This data shows that the economy is advancing toward digital payment systems.

The most common payment options in Eastern European countries include

• Paysafecard (Poland, Romania, Czech Republic, Slovakia)
• PayPal (Bulgaria)
• Przelewy24 (Poland)
• American Express (Croatia, Hungary)
• Maestro (Moldova, Belarus)
• Privat24 (Ukraine)
• Mir (Russia)
• Mastercard/Visa (almost all countries)

Digital Payment Adoption Rate Across the Demography

The Eastern European market is versatile socially, culturally, and economically. However, adapting to the advanced payment systems is still challenging. Hence, banking preferences vary across different demographics and businesses in this subregion.

Since the younger generation is more tech-savvy, they have been more openly adopting m-payment systems. Low internet access is a key factor behind the slow adoption rates in certain regions, such as Moldova (76.1%), Bulgaria (71.0%), and Ukraine (67.6%).

Most Preferred Payment Methods in European Countries

Let’s delve into the payment landscape of various East European countries.

Poland

Poland saw a massive spike in online shoppers post-pandemic. That said, nearly 84% of citizens engaged in e-shopping for categories like fashion, toys, furniture, appliances, food, personal care, electronics, and media.

The majority of residents used mobile wallets and payment services for online transactions. The market players in this region are Przelewy24, Payu, Paysafecard, and BLIK.

Russia

The number of purchases via card increased in Russia between 2020 and 2021. It includes card prepayments and payment by card upon receipt.

Bulgaria

There was a shift in the online Bulgarian trade market with the popularity of credit cards, digital wallets, and mobile app payment options.

As per a survey by Paysafe, 52% of Bulgarians accepted they use contactless payment modes more often after COVID-19. 24% of citizens shop online via digital wallet apps, while 45% prefer debit card transactions.

Czech Republic

The Czech Republic was one of the first Eastern European countries to embrace the m-payment system in 1999. Over 50% of shoppers from this landlocked country transact using card payment gateways.

Croatia

Most merchants conducted cross-border and domestic e-commerce trade via e-payment systems. Besides, residents preferred digital wallets for online shopping.

Ukraine

More Ukrainians shifted toward card payment systems from January 2022 to April 2023.

Benefits of Contactless Payment Methods

• Instant access to the banking system once linked with digital wallet apps on NFC-enabled phones.
• Available to use anytime and anywhere, including offline and online stores.
• More secure than traditional cards due to tap-to-pay and encryption technologies.
• A transaction completes only when the user adds One-Time-Password (OTP) received on the registered mobile number.
• Frequent users will receive loyalty points, rewards, cash back, and discount vouchers from the service providers.
• A virtual credit card user can customize online transaction limits to refrain from overspending.
• Digital credit cards allow users to track purchase history regularly.
• Users can set transaction alerts to take instant action against fraudulent activities, such as card blocking.
• Contactless technology minimizes time spent on authenticating payments on POS terminals.
• There are no additional charges for using digital wallets.

FAQs

1. Which Eastern European countries are using digital payments most?

Residents of Poland, Russia, and Slovakia are top digital payment users.

2. What is the most used online payment method in Europe?

Mobile wallets are the most common transaction method in Europe. In 2022, 59% of Europeans transacted using digital wallets, while 53% preferred traditional credit card payments.

Final Words

Traditional credit and debit card transactions are still the preferred choices in many Eastern European countries. However, the market in these regions is slowly shifting towards digital payment systems.

The fintech industry has also been making significant efforts to accelerate the digital payment ecosystem in Eastern Europe. From cashless to cardless, the trend will continue to grow in the coming years.