Банкеръ Weekly



The fans of unusual bets can now put down their stake on who will attract two million customers first - the GSM-operator Mobiltel, or the banks that issue debit cards. It would be a curious bet, because according to information provided by the Borika card operator, 1,924,704 debit cards have been issued in Bulgaria by the end of June 2003. This is a significant and fast-growing market. For the past four years, the number of debit cards (270,929 in 1999) has grown eight times. For the same period of time, the total amount transferred through these cards has increased from BGN265.2MN to BGN2.24BN (in 2002). This amount is almost equal to the whole amount of budget revenues received from tax on income of individuals (BGN1.1BN) and excises and road fees (BGN1.3BN) in 2002.The business with debit cards is so promising that almost all banks do their best to conquer as much of it as possible.The leaders on the card marketare United Bulgarian Bank (UBB) with 413,637 customers, DSK Bank - with over 388,000 customers, and HEBROSBANK - with 200,000 customers. Considerable shares of the market were almost taken by Biochim (163,000 debit cards), First Investment Bank (FIB - 155,000), and BULBANK (120,000).The fight for attracting new clients of this service is provoked by the long-term financial resources that the holders of debit cards leave in banks. It's true that the money paid on card accounts does not remain there for more than two weeks. Still, each account has an unlowering remainder (the so called minimum balance). Most frequently it varies from BGN2 to BGN5 which the customer is not allowed to draw if he would like his card to remain valid.On international debit cards issued by banks such as UBB, Post Bank, ROSEXIMBANK and BULBANK, the unlowering remainder varies from USD30 to USD50. According to sources familiar with the debit cards market, the total amount of unlowering remainders on the card accounts (in all banks) exceeds BGN10MN. This is an untouchable long-term resource that is always available to the credit institutions and can well be used for launching long-term credits.Debit cards are profitable for the banksbecause for each drawing or payment of commodities and services through POS terminals the customer pays a commission - from BGN0.15 to BGN0.30 per transaction. When money is drawn from an ATM through an international debit card abroad, these fees amount to 1% of the drawn money at least. Some cards even require the payment of up to 3 euros plus 1% of the drawn amount. The total amount of fees and commissions that banks get from debit card transactions is BGN6MN per annum. This is 4% of all revenues registered by banks due to fees and commissions. Banks invent incredible tricksin order to sell debit cards. They hand them out free of charge to customers who open bank accounts or draw consumer credits. When banks sign complex service agreements with companies, they offer free debit cards to their employees.For advertisement of their cards, bank spend hundreds of thousands of levs. Nevertheless, the desired effect has not been achieved yet. Banks advertise their debit cards in the prime-time on all television channels. The cards of FIB could have been seen permanently on the TV until a year ago. Now, ROSEXIMBANK has taken FIB's place.Banks are struggling furiouslyin order to convince the personnel of budget organisations of becoming their customers.Since 2000, the Ministry of Finance has been recommending budget organisations managers to pay remunerations to their employees through card accounts. It means that each officer who agrees with getting his salary through a non-cash payment should hold a debit card. That's why every autumn, in November, banks start wooing the managers of budget organisations - municipalities, military establishments, police stations, customs, hospitals, etc. In order to attract customers, some banks are not ashamed of offering all kinds of benefits. Then the managers of many budget organisations simply oblige their officers to use debit cards.The consumers of debit cards have reasons to feel mistrustful.The number of ATMs is still small - 1,073 for the whole country. There are also the so-called POS terminals - installed in shops, hotels, restaurants and gas stations, which allow direct payment for goods and services by means of debit cards. Their number, however, reaches only 3,007. For the time being Bulgarians can surely pay with their debit cards at almost all gas stations, big hotels and the hypermarkets METRO and BILLA. Yet debit cards still prove useless in daily shopping and are practically used only for taking money in cash from an ATM. But exactly in this case they often play bad tricks on their owners. During big holidays like Christmas and Easter, the machines usually run out of cash. The citizens turn out unable to draw the desired amount of money and are forced to go round the city in search of a loaded ATM.When a Bulgarian card-owner travels abroad, he faces even greater danger - to be left without money. His debit card might be frozen because of failure of the satellite connection between the Bulgarian national operator BORIKA and the card operator of the foreign country. In this way the Bulgarian tourist will turn out without any means for living and will curse all Bulgarian banks as much as possible. Such cases are far from scarce. Especially unpleasant was the one in 2000 when a group of Bulgarian disabled individuals were left with almost no money in Italy where they had gone for treatment. Due to failure in the connection between BORIKA and the Italian operator, the debit card of the leader of the group turned out into useless piece of plastic. Nevertheless, debit cards are definitely of use. Otherwise they would simply not have managed to win a market place.The debit cards are designed as a form of protection of the citizens' money from thieves. If someone snatches your wallet from your pocket and your money is on a debit card, you have no reasons to worry. In order to take your money, the pick-pocket will have to know your personal code (the so-called PIN) which activates the card. Nevertheless, there are misappropriations. It's worth remembering that even if there is no one near you when you draw money from ATM, your actions can be captured from a distance by a camera which is focused on your fingers. The next step of the robbers will be to take your card. Then they will review the record at slow pace, will get your PIN and will milk your account. In exactly such way in 2000 and 2001 thousands of citizens in Romania lost their money. Therefore, the debit cards in that country are now extremely restricted and the ATMs are only 200.And this is not the only type of swindle. If the ATM machine happens to swallow your card, don't ever ask the help of a passer-by by telling him your PIN. He might very probably be a member of a criminal gang. After tellig your PIN to such person, he will not only fail to help you, but will withdraw all money from your account after you leave. And still debit cards remain part of the everyday life of most citizens of the Central European countries.

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