Cosmin Vladimirescu, MasterCard: The cash-back law is a major step forward for financial inclusion
What are your thoughts with regard to the latest legislative initiative adopted by the Romanian Parliament, the cash-back law?
MasterCard salutes the adoption of this initiative, as we were an affirmed supporter of the law project from the early stages of discussions. We, at MasterCard, have always made strides towards expanding the Romanian cards’ acceptance footprint; especially when taking into account that around half of the country’s population is underbanked and lacks access to basic financial services. We will always support initiatives that set to expand the cards acceptance network, a profound necessity within our local market.
While it is reasonable that, up until now, the banks operating in Romania did not have a business case for penetrating the rural area with ATMs, given the costly implementation and maintenance, enabling POSs is, by comparison, far less expensive, and can be very beneficial towards bolstering cards’ acceptance in the local market and even more so in the rural environment. Prior to the
cash-back initiative, retailers with an annual turnover lower than 100,000 euros were not even required by law to accept card payments.
We feel that the most efficient way of doubling the level of card payments within the next five years’ horizon is by tapping into the huge potential existing in the rural areas of Romania and we firmly believe that the
cash-back law will bring us closer towards
this goal and will have a positive impact on the cards’ market, as well as for the economy as a whole, by encouraging transparency, sustainable growth and progress through
large scale usage of electronic payments. Furthermore, the law can have an added effect in driving the gradual education of rural communities in terms of cards usage. As such, we are delighted with the adoption of the cash-back law and are looking forward to seeing it applied and resume its course.
Can you please detail the extent of the support MasterCard provided towards adopting this law?
As previously said, we were strong supporters of this project from the earliest discussions surrounding the cash-back law.
MasterCard was invited to provide an opinion regarding the aforementioned cap
limit that obliged merchants to accept card payments, during the debates held in the Commission for Budget and Finances with the Chamber of Deputies. As said, the previous legislation foresaw an annual turnover cap of above 100,000 euros, which we felt was insufficient towards critical mass adoption, whereas the cash-back law project, if adopted in its original form, would have lowered the
cap to 10,000 euros.
During the debates, we have gathered and analyzed data from the National Institute of Statistics and the National Trade Register Office and were able to show that a mere 17% of the merchants based in the rural areas of Romania record an annual turnover exceeding 100,000 euros, with another 10% recording an annual turnover of in-between 50,000 and 100,000 euros. As such, MasterCard was confident that modifying the initial form of the cash-back would have strongly bottlenecked the law’s potential outreach and, therefore, minimize its impact, by failing to meet those merchants it was designed to target, and we argued consequently.
The debates resulted with a resounding success, with the initial law project receiving
a favorable notice from the Commission with 14 votes in favor, 2 votes against and one abstention.
How will the merchants and retailers fare with the costs associated with implementing POSs?
First of all, there is no such associated cost in terms of implementing this service for the retailers and merchants – all these costs are encumbered by the acquiring bank.
In this regard, we are already considering means to entice, as well as reward, the most active retailers in terms of accepting card payments. Moreover, at MasterCard, we strongly feel that the retailers should be able to use their law in their advantage, by differentiating themselves from their competition, by meeting this new customer demand, and will also find new benefits through usage. MasterCard is open to provide its expertise in talks with any parties
interested in implementing this system in a transparent and efficient manner. Regarding the implementation costs, we would like to reaffirm that, should any banks be beset by what they might view as high costs in terms of enabling the service, MasterCard is ready to extend its support by waiving these costs up until the end of 2016, as part of our ongoing strategy of driving the local cards’ market.
MasterCard salutes the adoption of this initiative, as we were an affirmed supporter of the law project from the early stages of discussions. We, at MasterCard, have always made strides towards expanding the Romanian cards’ acceptance footprint; especially when taking into account that around half of the country’s population is underbanked and lacks access to basic financial services. We will always support initiatives that set to expand the cards acceptance network, a profound necessity within our local market.
While it is reasonable that, up until now, the banks operating in Romania did not have a business case for penetrating the rural area with ATMs, given the costly implementation and maintenance, enabling POSs is, by comparison, far less expensive, and can be very beneficial towards bolstering cards’ acceptance in the local market and even more so in the rural environment. Prior to the
cash-back initiative, retailers with an annual turnover lower than 100,000 euros were not even required by law to accept card payments.
We feel that the most efficient way of doubling the level of card payments within the next five years’ horizon is by tapping into the huge potential existing in the rural areas of Romania and we firmly believe that the
cash-back law will bring us closer towards
this goal and will have a positive impact on the cards’ market, as well as for the economy as a whole, by encouraging transparency, sustainable growth and progress through
large scale usage of electronic payments. Furthermore, the law can have an added effect in driving the gradual education of rural communities in terms of cards usage. As such, we are delighted with the adoption of the cash-back law and are looking forward to seeing it applied and resume its course.
Can you please detail the extent of the support MasterCard provided towards adopting this law?
As previously said, we were strong supporters of this project from the earliest discussions surrounding the cash-back law.
MasterCard was invited to provide an opinion regarding the aforementioned cap
limit that obliged merchants to accept card payments, during the debates held in the Commission for Budget and Finances with the Chamber of Deputies. As said, the previous legislation foresaw an annual turnover cap of above 100,000 euros, which we felt was insufficient towards critical mass adoption, whereas the cash-back law project, if adopted in its original form, would have lowered the
cap to 10,000 euros.
During the debates, we have gathered and analyzed data from the National Institute of Statistics and the National Trade Register Office and were able to show that a mere 17% of the merchants based in the rural areas of Romania record an annual turnover exceeding 100,000 euros, with another 10% recording an annual turnover of in-between 50,000 and 100,000 euros. As such, MasterCard was confident that modifying the initial form of the cash-back would have strongly bottlenecked the law’s potential outreach and, therefore, minimize its impact, by failing to meet those merchants it was designed to target, and we argued consequently.
The debates resulted with a resounding success, with the initial law project receiving
a favorable notice from the Commission with 14 votes in favor, 2 votes against and one abstention.
How will the merchants and retailers fare with the costs associated with implementing POSs?
First of all, there is no such associated cost in terms of implementing this service for the retailers and merchants – all these costs are encumbered by the acquiring bank.
In this regard, we are already considering means to entice, as well as reward, the most active retailers in terms of accepting card payments. Moreover, at MasterCard, we strongly feel that the retailers should be able to use their law in their advantage, by differentiating themselves from their competition, by meeting this new customer demand, and will also find new benefits through usage. MasterCard is open to provide its expertise in talks with any parties
interested in implementing this system in a transparent and efficient manner. Regarding the implementation costs, we would like to reaffirm that, should any banks be beset by what they might view as high costs in terms of enabling the service, MasterCard is ready to extend its support by waiving these costs up until the end of 2016, as part of our ongoing strategy of driving the local cards’ market.
The editorial is also available in our print edition.
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