While cash still accounts for over half of payments, Czech consumers are gradually embracing card-based purchases. This is mainly due to the convenience of electronic payments, improvements to the payment infrastructure, and the growing availability of contactless technology.
The Czech payments market is considered to be fast-developing, with surges in technological innovation and the launches of various banking and payment services. This is further supported by government initiatives to improve banking penetration, increasing financial knowledge among citizens, and incentives such as discounts and cashback provided by banks to promote electronic payments.
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Consequently, the frequency of card use increased from 66.4 times per card per year in 2015 to 118.0 in 2019, with this figure set to rise to 136.0 by 2023. Debit cards are the most popular card type, and are increasingly being used for payments as consumers gradually switch to them for low-value transactions.
The recent coronavirus outbreak has made electronic payments such as contactless cards and mobile wallets, and online shopping more appealing in the country, as it allows consumers to avoid close social contact and helps prevent the spread of the virus.
However, rising unemployment will restrict consumers’ disposable incomes, which in turn will push down spending, affecting the payments industry.
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By GlobalDataDebit cards
Debit cards are by far the preferred card type for payments, accounting for 87.1% of the total transaction value at the POS in 2019. This can be attributed to the country’s growing banked population. In line with EU regulations relating to citizens’ rights to a basic bank account, banks in the country now offer payment accounts with basic features.
Meanwhile, digital-only banks such as Revolut and Hello bank! are also driving competition in the banking space, helping to boost debit card holding and use. As of July 2019, Revolut had 90,000 users in the Czech Republic.
Credit and charge cards
Credit and charge cards are at a nascent stage of development in the country. Collectively they accounted for just 12.9% of the total payment card transaction value in 2019; however, they recorded healthy growths in terms of transaction value and volume, partially driven by banks offering reward benefits and instalment facilities, as well as growing merchant acceptance.
Credit and charge card payment growth will likely be impeded over the four-year period to 2023 as consumers cut spending during grim economic conditions.
E-commerce growth
The Czech Republic’s e-commerce market registered a robust CAGR of 17.6% from 2015 -2019, increasing from CZK81.0bn ($3.58bn) in 2015 to $6.84bn in 2019 due to growing internet and smartphone penetration as well as the rising number of online shoppers.
Online sales have increased since the coronavirus outbreak, as consumers are purchasing online to avoid exposure. Popular online checkout solutions such as PayPal and Masterpass are likely to benefit from this trend.
Prepaid cards
Prepaid cards are gradually gaining traction, with the number of prepaid cards in circulation rising from 449,630 in 2015 to 561,641 in 2019 at a CAGR of 5.7%.
In addition to individuals, banks also offer prepaid cards to business clients. Česká spořitelna offers the reloadable contactless Maestro business prepaid card, which helps businesses distribute funds for employees’ business trips, make payments to temporary workers, and carry out company purchasing.
POS terminals
The number of POS terminals in the Czech Republic recorded a CAGR of 8.5%, rising from 143,184 in 2015 to 198,368 in 2019. In line with this increase in the number of POS terminals, the overall card payment transaction volume also posted a robust CAGR of 21.6%.
In June 2019, payment solutions provider Viva Wallet expanded its services to 12 countries across Europe, including the Czech Republic. It also launched a mobile POS terminal that allows local merchants to accept multiple payment methods, including chip and PIN, contactless and mobile.
