No country felt the effects of the European sovereign debt crisis more acutely then Greece, and bailout measures left the country having to implement reforms and restructuring. However, electronic payments are being used to reduce corruption and tax evasion, and debit card transactions are rising

Greece was severely affected by the eurozone crisis, with government overspending, tax evasion, and a spiralling budget deficit. Many banks faced liquidity problems and loan defaults, direct impacting the cards and payments industry.

In terms of transaction value, the Greek payment card market recorded a review-period (2011–2015) compound annual growth rate (CAGR) of -8.17%, decreasing from $73.6bn (€52.9bn) in 2011 to $52.3bn in 2015. With falling profits and rising operating costs, some banks sold their operations, while others reduced their ATM networks.

Alpha Bank acquired Emporiki Bank in 2012, and Citibank’s retail banking operations in Greece in September 2014. Piraeus Bank acquired Bank of Cyprus and Hellinic Bank in 2013. The volume of ATMs recorded a review-period CAGR of -5.55%.

The government announced initiatives to revive the economy, including cuts in public sector employment, defence, and other government spending.

In 2010, the IMF, the ECB and the EC announced a three-year aid package worth $144.7bn to bail out the Greek economy.

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A second bailout of $167.1bn followed in February 2012. In August 2015, the EU approved a $95.5bn bailout, requiring the Greek government to impose austerity measures including a tax increase, public spending cuts and efforts to tackle tax evasion by encouraging electronic payments.

With the anticipated economic revival and the injection of liquidity into the banking sector, the Greek payment cards market is anticipated to gradually shift towards sustainable growth over the forecast period to 2020.

Capital-control measures

To comply with bailout conditions, capital-control measures were imposed by the government in June 2015 to arrest the outward flow of money, curb tax evasion and encourage electronic payments.

Conditions include restrictions on cash withdrawals at ATMs; the compulsory use of debit cards to withdraw salaries, pensions and social allowances; restrictions on the use of payment cards abroad; restrictions on funds transfers from Greek to foreign banks; and the compulsory acceptance of card-based payments by retailers, as well as certain categories of profession such as doctors, lawyers, electricians and plumbers.

The government also promised incentives for individuals and businesses to promote electronic payments.

Debit card payments continue to grow

While the debit card market registered a decline in terms of transaction value, the number of debit card transactions recorded positive growth during the review period.

With restrictions placed by the Greek government on cash withdrawals, consumers fear that banks might freeze available funds. This has driven debit card transaction volumes at POS terminals, which registered a review-period CAGR of 17.55%.

Banks are encouraging consumers to use debit cards rather than cash or credit cards, using promotional offers such as reward points and cashback to maintain growth.

Pay later cards recorded a decline both in terms of transaction value and volume. Growing unemployment and uncertain economic conditions forced many Greek consumers to abandon the ‘buy now, pay later’ attitude. Concurrently, banks also adopted a more cautious approach to issuing credit and charge cards, fearing payment defaults.

The country’s biggest banks, National Bank of Greece (NBG) and Eurobank Ergasias, experienced significant declines in pay later card transaction values.