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  1. Country Surveys
June 25, 2014updated 04 Apr 2017 4:06pm

Country survey: Portugal

According to the central bank, Banco de Portugal, post-recession growth potential in the banking sector exists in terms of electronic payments, both from consumers and businesses. In terms of payment channels, credit transfers held the highest channel share of 77.9% in 2013, followed by check payments with the second-largest channel share of 10.3%. With consumers shifting to modern electronic payment systems, the channel share of card transactions increased from 3.9% in 2009 to 5.7% in 2013.

By Editorial

According to the central bank, Banco de Portugal, post-recession growth potential in the banking sector exists in terms of electronic payments, both from consumers and businesses. In terms of payment channels, credit transfers held the highest channel share of 77.9% in 2013, followed by check payments with the second-largest channel share of 10.3%. With consumers shifting to modern electronic payment systems, the channel share of card transactions increased from 3.9% in 2009 to 5.7% in 2013.

Despite the European sovereign debt crisis, the Portuguese card payments channel grew both in terms of volume of cards and transaction value during the review period (2009-2013). In terms of the number of cards in circulation, the card payments channel posted a review-period compound annual growth rate (CAGR) of 0.71%, and is expected to record a forecast-period (2014-2018) CAGR of 3.95%. The forecast-period growth is anticipated to be driven by the prepaid cards category.

The weak economy, coupled with high unemployment and inflation rates, led to prudent consumer spending using debit and credit cards during the review period. With banks and card issuers restricting themselves from making credit availability easy due to increasing levels of non-performing loans (NPLs), the card payments channel grew slowly in terms of the number of cards in circulation.

Growth of e-commerce to drive the card payments channel

E-commerce in Portugal is increasing as a result of improvements in telecommunications infrastructure and payment and security systems, as well as an increased consumer willingness and awareness towards online shopping. Increasing internet penetration was a key driver behind online retail sales in the country and the evolution of the modern retail sector also significantly impacted the purchasing decisions of consumers.

E-commerce registered a review-period CAGR of 25.07%, rising from EUR642.9 M in 2009 to EUR1.6 Bn in 2013. Likewise, the total value of retail sales in Portugal increased from EUR40.9 Bn in 2009 to EUR42.2 Bn in 2013.

Adoption of new technologies and enhanced infrastructure for payments

Technological advancements resulted in the development of a high-tech payment system and supporting infrastructures, which include EMV, Near-Field Communication (NFC) and contactless technology. EMV technology with chip-based cards replaced magnetic strip-based cards. Chip-based cards store data and can be read with the help of any radio frequency identification device (RFID) or NFC device. RFID and NFC technology enable contactless payments, where transactions can be completed without swiping the card. Contactless technology reduces processing times and improves security, helping both consumers and retailers to save time and money.

In March 2012, TMN wallet, a mobile payment service, launched a mobile payment pilot for its 11,000 employees. The growing security measures with the implementation of EMV technology and convenient and secure mobile payment methods, such as NFC mobile payments, are expected to encourage growth in Portugal’s card and payments industry. Usage of these technologies will also increase the adoption rate and usage rate of cards for various transactions.

A new ticketing system for public bus transport in the city of Coimbra using contactless cards started in February 2011 and was completed in February 2012. The new system has been incorporated into all Coimbra Municipal Urban Transport Services (SMTUC) bus fares and Coimbra’s Park & Ride services.

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