Last month,
the Turkish interbank card centre Bankalararasi Kart Merkezi (BKM)
won the Cards and Payments Trailblazer Award for Best Marketing
Initiative with its innovative anti-cash campaign – and rightly so,
writes Duygu Tavan
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In a country where credit
cards usage and affiliated loyalty schemes are held in very high
regard by banks the world over, cash is still very much ingrained
in people’s daily lives. But BKM, a non-profit
assosation that brings together 27 major Turkish
banks, is striving to put cash where many in the banking industry
feel it belongs: in the past.
BKM has come up with an
engaging, clever and innovative marketing campaign that revolves
around a cartoon partridge, to lobby against cash. The partridge
may seem like a soldier in the war against cash, but it is proving
a force to be reckoned with.
The idea comes from the fact
that the Ottoman word for ‘partridge’ is the same as the modern
Turkish word for ‘cash’ – nakit. So, the campaign, titled
Bay Bay Nakit (“Bye Bye Cash”), is specifically aimed at
increasing debit card usage for low-value payments instead of
cash.
Bay Bay Nakit, which began in
May 2011, is targeting a very broad audience. While it targets
consumers with a recurring salary, the BKM also positions the
campaign so it appeals to consumers with no recurring salary, as
well as those who are not eligible for credit.
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And the campaign is certainly
paying off. Debit card payment volume soared by 54% to just under
TRY12m (USD6m). Total debit card payment transactions increased by
40% year-on-year to 308.4m. Canko says that in the last ten years,
the average transaction amount on debit cards has risen from TRY14
(USD7) to TRY39 (USD20).
“Although economic improvement has had a
positive effect on debit card payment volumes, a direct connection
between volume increase and positive economic indicators, like
inflation rate and GDP, cannot to be found,” says BKM’s CEO Soner
Canko (right).
“In the last four years there was a
significant increase in payment volume, but the growth rate is
slowing. The increase of payment transaction numbers is lower than
the increase of payment transaction volume. It shows that people
prefer to pay more, even if they do not make more
transactions.”
Seasoned
campaigners
The BKM has been
conducting anti-cash campaigns since 2004 to increase debit card
usage, but Bay Bay Nakit is the most aggressive so far,
employing TV, online and on billboard media.
In June 2011, BKM went a step
further, launching a website solely dedicated to the campaign. By
the end of the year, the website had been viewed more than 400,000
times.
Debit card penetration in
Turkey is already high, but they are rarely used. Aside from the
dominant position of cash in the market, credit is also preferred
due to the attractive loyalty schemes many of the issuers
offer.
Growing debit card
use
Data that the BKM has
shared with Cards International shows that debit card
penetration increased by almost a fifth (17%) in the twelve months
to the end of 2011 – the highest rise in debit cards ever. This
overshadowed the still impressive 9% year-on-year increase in
credit cards for the same period.
“By the end of 2011, the
number of debit cards in Turkey were 1.5 times higher than the
number of credit cards,” says Canko.
“Banks give almost all
account holders a debit card, so there is one in almost every
wallet. But while debit cards have a high card penetration rate –
1.5 debit cards per person over the age of 15 – payment transaction
values of debit cards still remains limited,” he says.
“Although 61% of all cards
are debit cards, payment transaction volume of debit cards was only
4% of the total by the end of 2011,” Canko adds.
The average payment volume
per debit card in 2011 was TRY146 (USD81) and the average monthly
cash withdrawal volume per debit card was TRY2,971 (USD1,653), a
trend that confirms that consumers see and use debit cards as an
ATM card rather than a POS payments product.
These figures stand in stark contrast to the
highly popular credit card: The average transaction volume per
credit card was TRY5,170 (USD2,878) in 2011. These three key
statistics validate credit cards’ dominant role in the Turkish
payments market. Canko cites three main reasons for the dominant
role of credit cards in the Turkish market: One, he says, is that
banks offer credit cards with a late payment options due to a high
interest rate environment, which is advantageous to issuers. A
second reason is that credit is easily accessible and there are a
number of flexible payment instalment options available to
cardholders. Thirdly, credit cards are clearly more profitable than
debit cards for banks, and as such attract bigger marketing
spend.
However, this is changing.
“Debit card usage is increasing because loyalty schemes and reward
programmes are being offered to debit card customers as well as
troubled credit card holders are shifting to debit cards,” explains
Canko.
Cash-back at the
POS
Canko says that there
are three key ‘tools’ required to increase the usage of debit cards
now: e-commerce, cash-back at the point of sale and SMS balance
checking services.
The cash-back option at the
point of sale, in particular, is likely to be particularly
attractive to Turkish shoppers.
Visa has already enabled Visa
Electron and Visa Debit cards for cash-back at the point of sale.
Consumers who spend TRY10 (USD5) can now withdraw up to TRY100
(USD50) at the check-out of participating stores.
Denizbank, Finansbank,
Garanti Bank, Halk Bank, Is Bank, Tekstil Bank, Vakıflar Bank, Yapı
Kredi Bank and Ziraat Bank have already opened up their debit card
portfolios to this POSpara service (‘para’ means cash in
Turkish) and supermarket chains Carrefour, Kiler, Real and Dia, as
well as selected D&R music and book stores.
“BKM hasstarted to work on
necessary actions to help the members enable e-commerce and
cash-back options for their debit card customers,” says Canko. “At
the beginning of 2011, we enabled 3D Secure implementation for
debit cards. We also decided to offer balance checking services via
SMS, which make debit cards transactions more transparent.
“And after a year of work,
almost every bank is ready to offer cash-back and balance checking
services.
“Working in parallel with the
consumer-focused Bay Bay Cash campaign, these important product
developments made the use of debit card easier and more
convenient,” Canko says.
e-commerce
For many years, banks
had banned the use of debit cards from e-commerce because of the
perceived and potential security risks. However, in April 2011 BKM
drove the implementation of 3D Secure technology, paving the way
for online debit card acceptance.
“By the end of the year,
e-commerce volume had risen sharply and reached nearly TRY2m
[USD1.1m],” Canko says.
He also points out that, the
average e-commerce transaction in 2011 was TRY60 (USD30) – higher
than average transactions value at the point of sale.
e-commerce has grown at an
incredible speed. This is due to a combination of social,
economical and technological factors: The implementation of 3D
Secure last year certainly spurred the growth of e-commerce on.
Then there is the continuously growing appetite among Turkey’s
consumers (half of whom are under the age of 30) for innovation and
‘newness’. In addition to the technical advance and consumer
spending appetite, there is also a concentration of retail stores
in big cities, which leaves a lack of infrastructure elsewhere.
These, and other factors will have, and will continue to do so,
played a role in e-commerce growth.
BKM Data shows that total
card transactions volume in e-commerce grew by 50% in the twelve
months to the end of 2011, amounting to TRY22.9m. So far in 2012,
total e-commerce card transaction volume has reached TRY11.77m,
more than twice the amount compared to the corresponding period of
the previous year.
As banks in Turkey continue to innovate –
mobile banking via SMS was introduced years before it reached
Europe – and as Turkey’s economy continues to boom with
entrepreneurs and e-commerce services, BKM is likely to see further
growth in debit card usage in favour of cash.
It is also currently working on a digital
wallet, which Canko describes as “a breakthrough solution”.
But what is clear is that while debit cards
look set to chip away at the domination of cash, it will take a lot
to move the credit card from the top of Turkish consumers’
wallets.
