DEBIT AND CREDIT CARDS CONQUERED FINANCIAL MARKETS
If there was a championship for the most quickly developed financial service, the first prise would be undoubtedly given to debit and credit cards issued by banks. The statistics of the Bulgarian National Bank (BNB) point out that since the end of 1999 to June 30, 2004, credits have grown fivefold, while deposits attracted from individuals and firms - only twice. At the same time data published in the web-site of the BORIKA national card operator are dizzy. They show that from the end of 1999 to the middle of 2004 the number of card issued has leapt 12 times. Four and a half years ago bank customers used 272,000 cards, while on June 30, 2004, they were already 3.17 million, i. e. almost every second Bulgarian has a debit or a credit card. Some banking chiefs argue that these data distort the real situation because at least 20% of the outstanding cards are dormant - there are no cash withdrawals, payments or transactions made with them. Even so, however, the number of acting cards is huge - 2.55 million.The steep increase in debit and credit cards number and transactions made with them is mostly due to the state support. Even in the 2000 Budget Act and in the regulations for its implementation was marked that budget departments are advised to pay non-cash salaries to their employees. That recommendation urged department executives to sign contracts with banks for issuing debit cards for their staff. State companies and even hospital chiefs followed through. Thus more than 800,000 state servants, doctors, teachers, military men and policemen became debit card owners. It is proved that debit cards are very useful when somebody needs money in weekends, holidays or different kind of trips. Almost all credit institutions offer up to four additional debit cards to be issued along with the main one. They are all connected with one and the same account, but the client can determine limits for daily money withdrawals from the additional cards. This system is frequently used by families who want to strictly balance their expenses. Unfortunately, ATMs - about 1,471 at the end of June, 2004, are still insufficient to ensure effective use of credit cards in Bulgaria. POS-terminals are also few - just 5,031, even though their use is very simple and many firms would eagerly install and make transactions through them. There are such devices in the Shell and Petrol oil-stations, in Metro, Billa, Oasis, Bonjour and Europa retailer groups and in most big hotels and agencies selling airplane tickets.Many banks, including BULBANK, EIBANK, SG EXPRESSBANK, DZI Bank, FIB and BNP Paribas (Bulgaria), do not collect fees for money transfers from clients who own their cards. Fees paid to other banks for transfers or goods and services purchases with their debit cards varied from 0.15% to 1% of the amount paid (between BGN0.10 and BGN0.30). Debit and credit cards can be also used in overseas trips. However, individuals should bare in mind to have enough cash as in many cases cards issued by Bulgarian banks cannot work abroad. The tragedy emerges when the ATM swallows the card because it could be restored only in Bulgaria and its owner should seek money from different sources. The easiest way for every person is to contact relatives or friends in Bulgaria to send him funds through Western Union or Money Gram immediate payment systems. They have broad networks of representative offices in almost all countries with relatively developed banking sectors and anyone could receive the money in 10 minutes after being sent from Bulgaria. The bad news is that fees which the person sending funds should pay are rather big - 3-15% of the transfer size.If the debit card works perfectly abroad, but there is not enough money on it, its owner could ask his friend in Bulgaria to pay some funds in its account and in one day they could be used without any additional fees or commissions. Credit cards have entered in large numbers the Bulgarian market since 2001. They, however, are rather difficult to be received, as the client should declare his incomes, savings, properties, liabilities to the state and to other financial institutions. Moreover, interests charged on these cards are from 1% to 2% monthly. Banks argue that interests on credit cards are bigger because loans used through them have no collateral. UBB permits up to BGN10,000 to be drawn, depending on the card type and personal incomes, BULBANK has a limit of BGN20,000, while FIB launces up to BGN50,000 on its credit cards. The point here is that in most cases interests on credit cards are charged from the 45th or 48th day after the client uses the loan, which enables him to escape big interests if repaying quickly liabilities to the bank that has issued the card.This product development depends mostly on the higher individual incomes and ability to pay out debts. Future, however, belongs to them, which is also proved by the BORIKA statistics. Data show that at the end of 1999 credit cards issued were 1,417, while four and a half years later they were already 54,241. Some bankers think that when the average monthly salary in Bulgaria reaches BGN1,000, the number of credit cards will be equal to the debit cards one. Bulgarians, however, should have to wait long enough, as according to the latest data from the National Statistics Institute the average monthly payroll was BGN283 at the end of March, 2004.