Fourth project management meeting for reducing cash transactions in Kosovo Project management group within the National Payments Council (NPC) 21 September, 2011 CENTRAL BANK OF THE REPUBLIC OF KOSOVO 1.
Agenda: 1. Approval of minutes from the last meeting (June 15 th, 2011) 2. Presentation and discussion of the project members proposals - creation of a short list to take forward 3. Setting quantifiable objectives for the project - who, how etc. 4. About Visa and MasterCard - invitations for the next meeting 5. Next steps – from conclusions CENTRAL BANK OF THE REPUBLIC OF KOSOVO 2.
1. Approval of minutes from the last meeting (June 15 th , 2011) 2. Presentation and discussion of the project members proposals CENTRAL BANK OF THE REPUBLIC OF KOSOVO 3.
• Project members proposals ( from CBK – as they are presented during the previous meetings ; action plan and implementation of the III pillar in NPS (interbank card switch), support the initiatives came from the financial and non financial community) 1. There is a need for concrete initiatives and activities for the reduction of cash payments from all institutions (this includes commercial banks, public companies, private companies, governmental agencies, etc). 2. Utility companies should expand their network where Direct Debit services are offered to their customers, because currently this service is very limited and provided only at the headquarters of the companies. Utility companies should also develop operational plans for the reduction / closure of their tellers (cash counters) that accept cash. (Setting timeframes should be required). CENTRAL BANK OF THE REPUBLIC OF KOSOVO 4.
2. Project members proposals (IPSD/CBK – the same as from the previous meetings) 3. Commercial banks should increase their campaign for electronic payment services, such as Direct Debit, E-Banking, Kos-Giro, etc. and at the same time to reduce the fees for electronic payment services ( we believe that revenue lost from fee reduction will be more than compensated by the increase in the volume of payments. 4. Analyze practices in other countries of setting maximum limits on the value of cash payments at the counters of commercial banks, and come up with recommendations to government institutions (MEF), banks, etc. anex 1 and 2 - are the questions and answers from commercial banks and utilities CENTRAL BANK OF THE REPUBLIC OF KOSOVO 5.
2. Project members proposals (PCB) Proposal of Pro Credit Bank Kosovo on next possible steps in order to reduce cash transactions in Kosovo 1 . Joint campaign for public awareness /education (for all non cash services) chaired by Central Bank and Government together with Banking Association that will coordinate the support from all Commercial Banks and Utility Companies. a) Funding for this campaign could be done via getting a donation form WB etc or paid equally from all stake holders (Commercial Banks, CB, Government etc). b) Incentivize customer through prices to use non cash payments - on this issue we do propose that Commercial banks should implement incentives for customer on non cash payments individually. PCBK up to know has worked a lot on this direction via introduction of : Bonus system for their client for payment via cards , other type of payment services via card ( KOS – Giro via ATM, SMS top Up, SMS notification), large POS network in Kosovo, fee on cash withdrawal. • CENTRAL BANK OF THE REPUBLIC OF KOSOVO 6.
2. Project members proposals (PCB) 2. There is a need for a larger POS terminal network : • a) All commercial banks should provide the cards to their client base on this direction Pro Credit Bank Kosovo would be ready to become an Agent bank for local banks that do not have wider POS network example like we are currently for Banka Ekonomike. • b) Installing POS Terminals at all cash terminals of Utility Companies, where customer could pay their bills only via cards. For this proposal Commercial Banks and CB together with Utility Companies should work closely to define and set common standard for all Utility Companies for later reconciliation that needs/could be developed at POS software (similar for Standards of Kos Gyro bills) CENTRAL BANK OF THE REPUBLIC OF KOSOVO 7.
2. Project members proposals Raiffeisen Bank Proposals for Discussion- Reducing cash Transactions 1. Awareness & Education RBKO) • Research results – customers and merchants overall are not aware what kind of benefits can be gained from paying with card, direct debit, kos-giro or any other electronic way. They perceive it as a difficult process, costly and an inefficient way of making payments. • Proposal - An initiative should be initiated from CBK and Bankers Association to create an educational campaign, which explains • What payment alternatives are available • How they work • What benefits they bring • Funding will be requested from Visa and MasterCard . As well as advertising and awareness campaigns we could use shows such as Jeta ne Kosove to raise awareness and create some debate. CENTRAL BANK OF THE REPUBLIC OF KOSOVO 8.
2. Project members proposals Raiffeisen Bank Proposals for Discussion- Reducing cash Transactions 2.Simplify Processes • Simplify the registration process for Direct Debits (one-stop-shop at bank or ATM) • Enable Kos Giro : to facilitate payments through ATM’s. 3.Expansion of POS Network and Usage • Incentivize merchants for installing POS through: • o revised tariff scheme (the more payments, the cheaper) • o removing ATM's from shopping malls • o reduce/remove operational costs (bank profits only on transaction costs) • o competition and rewards for best performing merchants (campaign-based)
2. Project members proposals Raiffeisen Bank Proposals for Discussion- Reducing cash Transactions 4.Increase Availability and Usage in Other Non Bank Institutions • Incentivize other companies and organizations to provide Direct Debit , Kos Giro, e-Banking. These companies include telecoms, municipalities, Tax Administration, Customs, Embassies, etc. • Convince utility companies to allow online payments (through e- banking or credit cards) • Price incentives for individuals using alternatives to cash (transaction costs) • Flexible payment options for Kos Giro regarding billed amounts • Direct Debit: allow client to easily confirm/refuse payment (ex. no reply=confirmation, payment statement returned signed=refusal)
2. Project members proposals Raiffeisen Bank Proposals for Discussion- Reducing cash Transactions 5.Laws and regulations • Employ a payments / banking law specialist to make a detailed analysis of regional best practice / EU regulations concerning payments in order to propose changes in areas such as the maximum size and types of payments that can be made by cash etc.
2. Project members proposals KEK At KEK after conducted analyses think that main reasons for huge number of cash payments are: • Banks for objective reasons, do not process client payments during the day (within24 hours),but always net day, so after at least 24 hours clearing procedure begin and most of the clients have complained that they are being disconnected despite payment made at the bank(consumer tendency is to pay on last day – due date ) Consequently , they come and make payments at the KEK Counter and not in the bank. • Other reason is that categorization of the consumer for power supply is being done based on the payment date, since most of the banks are delaying payments for at least one day , as a result lot of our customers are being categorized to the categories that do not pay on time. • Lack of POS- at the counter – It is very important that clients have a possibility to pay at the counter with POS. Clients after checking their amount due at the counter – due to the absence of POS at the counter, they go about withdraw Money and come back to pay at the counter. We think that the awareness is not missing but we need to create opportunities for non cash payment • CENTRAL BANK OF THE REPUBLIC OF KOSOVO 12.
2.Project members proposals KEK • Lack of information form the staff in banks, namely failure to inform consumers for the flexibility of payment with Giro, so possibility of payment not only the fixed amount from the invoice but also a different value from invoice • We have received complaints from clients for the charges (service – fee) for payments of electricity bills through E-banking (And this is being done without KEK-knowledge) despite information from KEK that payment of electricity bill bears no additional cost • Marketing coverage on Direct Debit is very low • It is worth mentioning that due to the aforementioned reasons and the reasons outlined in the document drafted by the CBK, the payments in our corporation for the period January-June2011 were 85% in cash CENTRAL BANK OF THE REPUBLIC OF KOSOVO 13.
Project Terms of References and Scope • To prepare a code of conduct and possibly proposals for legislation for actions and measures to be undertaken by the banks, the business community and private individuals for reducing the volume of cash transactions. • To build consensus amongst the banks in order to sign and implement the code of conduct and possible legislation • Action plan based on the research, regional comparisons and gap analysis ?? CENTRAL BANK OF THE REPUBLIC OF KOSOVO 14.
Setting quantifiable objectives for the project • Who, how, etc. • Creation of a short list to take forward CENTRAL BANK OF THE REPUBLIC OF KOSOVO 15.
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