Turkey’s card market is already one of the most advanced
in Europe, but Garanti has gone one step further with the world’s
first near field communication-enabled SIM card for mobile
contactless payments. Farah Halime spoke to Yalin Özcan, head of
credit cards at Garanti about moving to a ‘cashless Turkey’ by
2023.
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Garanti, Turkey’s
largest bank by assets, has signed an agreement with the country’s
third-largest mobile phone operator Avea offering SIM cards enabled
with near field communication (NFC) capability.
Once it is up and running, the service will
allow users to conduct mobile contactless payments at compatible
terminals around the country.
Developed in conjunction with credit card
issuer MasterCard and Dutch payments technology specialist Gemalto,
the system will be available from July with contactless readers
already in place in nearly 80 Turkish cities.
Customers can convert their existing mobile
phone to become compatible with NFC technology by installing a new
SIM card, giving them access to 14,000 contactless card readers
across the country.
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By GlobalDataYalin Özcan, head of credit cards at the bank
was confident the bank’s target would be met.
Özcan told RBI: “Our main objective is
to replace cash in Turkey by 2023. But we know we also have to
replace coins; the low-value payment of choice. [This] is a huge
market in countries like Turkey where we are still using too much
cash.”
The move comes amid a steady transition to
contactless payments in the Turkish market, with 64.6m debit cards
and 44.3m credit cards in the country, up by 63% and 123%
respectively over the seven years to 2009, according to statistics
from the Turkish Interbank Card Centre (BKM).
The number of point of service (POS) debit card
transactions has also soared, reaching 153.7m in 2009, from 12.4m
in 2003, according to BKM. The number of ATM and POS terminals
climbed to 1.7m in 2009, from 675,000 in 2003.
Garanti’s NFC-enabled SIM is also building on
an existing product; the Bonus Trink pay pass feature, which
already allows users to make contactless payments of up to TRY35
($22) using either a credit card, keyfob, watch or a sticker with
in-built contactless technology.
Özcan said, unlike Bonus Trink, the NFC-enabled
SIM cards were more convenient for users who did not have to update
their handset to access the new payment system.
Although the market has been bombarded by
various contactless cards from the country’s biggest players
including Akbank, IsBank and Halk bank, NFC technology is new to
the market and Özcan is confident of Garanti taking a “leading”
market share, although he would not be drawn on an exact
figure.
“Garanti was the bank
that created this [contactless] market. The aim is to be the market
leader [in NFC technology], and after the market has grown, I am
sure we will be competing with other banks as well,” he said.
Of the 1.1m contactless credit cards in Turkey
950,000 belong to the bank, with Özcan adding that Garanti is
expecting to attract 100,000 customers within the first year
following launch. Longer-term targets will be set after some
feedback about the new technology.
In terms of target segments, Özcan highlighted
the youth and unbanked of the country as having potential to boost
the technology’s customer base.
Özcan estimates that between 16m and 20m people
do not have a bank account or access to financial services, opening
up a potentially massive goldmine for growing the customer base and
taking market share.
Turkey is also one of the world’s youngest
populations, with an average age of around 28, a growth potential
for the mobile communications market which has already been
identified.
Garanti first piloted an NFC-enabled system
with Turkcell, the biggest phone operator in the country, two years
ago.
Despite Turkcell taking the biggest market
share for mobile communications in Turkey with 56%, compared to
Avea’s 19%, Özcan said the agreement with Turkcell was only as part
of a handset-dependant solution.
But the bank admitted there are still
improvements needed for the system to match up to standards
expected in the market.
The technology is not yet compatible with
Apple’s iPhone, although it functions with most smart-phones.
Özcan remains positive, however, and said:
“Turkey is at the front of Europe in terms of payment technology,
we are the leaders in all types. I am sure we will be the market
leaders but it will take some time.”
