By Leman Mammadova
Visa International payment system and Azerbaijan Financial Market Supervisory Authority (FIMSA) have launched the Visa Token Service that will allow non-cash payments to be made via mobile phones along with payment cards.
The sides agreed to continue joint work to expand the share of cashless payments in Azerbaijan.
The relevant memorandum of understanding was signed by Kristina Dorosh, head of Visa International in the Caucasus region, and Tamerlan Rustamov, head of Financial Markets Infrastructure Supervision Division at FIMSA, on September 10 in Baku.
“The memorandum will enhance the development of digital payments in the country. It will help introduce new Visa technologies in Azerbaijan and their development,” said Dorosh at a press conference on the presentation of Visa Token Service.
She noted that the document also provides for the expansion of the use of modern means of payment, support for digital business and training for the population of Azerbaijan.
Dorosh further pointed to the growth in Azerbaijan's non-cash payments. “In the first half of this year, the share of non-cash payments in card transactions in Azerbaijan amounted to 20 percent, which is four percent higher than in the same period last year.”
The number of transactions increased by 40 percent during the reporting period and the amount of cashless transactions increased by 39 percent.
Dorosh added that the average check size decreased to 54 manats ($32), by 14 percent compared to last year. “This is a positive trend, as it indicates that customers began to use cards even for small operations.”
Rustamov, in turn, spoke about the development of digital payments and innovative solutions for their implementation, including the regulatory mechanism to accelerate the digital transformation of banks, the development of remote banking services.
He also noted that interbank payments of 152 billion manats ($89.44 billion) were made in Azerbaijan in January-July this year, which is 46 percent more than in the same period of 2018.
“As many as 7.38 million payment cards were issued in the first seven months of this year, which is 31.7 percent more compared to the same period last year,” Rustamov added.
He also said that the volume of operations carried out with using plastic cards amounted to 11.9 billion manats ($7 billion), 21 percent of which accounted for non-cash payments. In addition, the volume of e- trading operations has increased 5.9 times to 1.66 billion manats ($0.98 billion).
Rustamov also noted that there were 104 mobile phones per 100 people in Azerbaijan in 2018, according to the data by the International Telecommunication Union. “This means that the country has the infrastructure for mobile payments.”
He stressed that the proposed Visa Token system will play an important role in the development of mobile payments in the country.
“Visa plans to start implementation of a new pilot project, "Tap to Phone", in Azerbaijan in 2020,” said Oleksandr Stelmakh, Director on Digital Solutions for Ukraine, CIS and Southeast Europe at Visa.
He said that this project will allow accepting payments via cards by using mobile phones or other smart devices (for example, smart watches) without additional manipulations, only by touching the gadget screen.
“We know that it is not always cost-effective for banks to purchase and install POS-terminals. Our technology allows turning a phone into a POS terminal,” Stelmakh said.
The application runs on the Android operating system.
Stelmakh noted that this project is already being implemented as a pilot project in two countries - Ukraine and Belarus. “In 2020, we plan to start two more pilot projects in the region, one of which will be implemented in Azerbaijan.”
Tokenization is an essential element of digital non-cash payments. The system will allow digitizing payment cards. Tokenization technology allows to secure electronic payments with the help of a reliable data encryption system (when paying with a card, the buyer’s details are not transferred to the seller).
Tokens are stored in the customer base of stores where the user pays. For further purchases, just one click is enough. The advantage of using this method is not only convenience - it eliminates the possibility of theft of a customer card number in digital space.
In the future, tokenization will also allow to link cards to users' mobile phones, which will make physical presence of a card unnecessary.
Visa announced the plan to launch a tokenization system in Azerbaijan in May 2019 at the Financial Technologies Summit (FINTEX) on the topic "New trends in banking and the payment ecosystem: innovative solutions, financial technologies and security".
Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888
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