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George Drimiotis, Cardlink’s CEO, interview to Euro2day.gr about electronic transactions

March 2019George Drimiotis speaks to Euro2day.gr about electronic payments. The competition between banks – “alternative players” and the proposals to fight corruption and tax evasion.

Electronic transactions kept on rising with high rates during 2018, having gained the trust of consumers and businesses.

George Drimiotis, CEO at Cardlink presents and analyzes useful statistics, while he refers to a series of hot topics, regarding the future of electronic transactions and new services for adding value which can be offered to businesses. Moreover, Mr. Drimiotis, after expressing his excitement for Cardlink’s progress so far which is far beyond its initial goals, speaks about the company’s future prospects and develops his own suggestions through which electronic transactions could reduce tax evasion and corruption in Greek economy and society.

Mr Drimiotis, could you provide some basic statistical information regarding the progress of last year’s market with debit and credit card and how it can be compared to previous years.

Cardlink estimates that for 2018 the total value of transactions was €31bil, with the number of transactions being about 750 million and an average transaction of €41. The increase in comparison to 2017 is about 40% in transactions and 18% in transaction value. If we assume that the overall consumption in retail is about €110bil., then we have a 28% penetration of electronic payments.

The following figures result from the transactions that are carried out through the Cardlink network:

  • The average transaction for Greek card holders is about €36.
  • The percentage of contactless transactions is up to 51% and 31% in value.
  • 1 in 10 transactions is under €5.

What do you consider to be the most important conclusions from the abovementioned statistics?

The most important conclusion is that transactions with cards have become a habit and there is trust from both consumers and businesses. The 18% increase in transactions value with cards, while general consumption is rising at a lower rate (1%-2%), confirms this trust. It is also fascinating that Greece is leading the category of contactless transactions since 1 in 2 transactions and almost 1 in 3 euros that are carried out with cards are using contactless technology. In Europe, only Great Britain and Poland share equivalent percentages.

Given the decline in cash circulation-among other- it limits the tax evasion and the corruption, there are institutional measures that could be taken by the State, in order to further limit cash transactions? How feasible could this be?

One of the most important institutional measures would be the mandatory application of e-invoicing in the business supply chain, especially in industries that operate with significant cash transaction, such as in the restaurant and small food retail sectors. A second measure that has been discussed from time to time is to provide incentives to increase transactions to categories of businesses and/or self-employed professionals, where tax collection is lower than other categories. My opinion is that the incentive for a “black market” transaction by the consumer must be eliminated and the only way is to deduct these costs from the consumer’s tax (and not the income). Obviously, the measure will also have some cost for the tax authorities at the beginning, but if targeted, there will be an increase in tax revenue. A more radical measure is the use of POS to issue receipts even for cash transactions, just like for card transactions. Such a measure has some interesting aspects:

  1. The certainty that the receipt is genuine because a POS cannot be tampered with. If someone tries to interfere with the data and / or software of a POS, then it automatically turns off and stops working.
  2. Sending these data from banks and / or POS terminals to businesses to AADE (Independent Public Revenue Authority) for cross referencing as is done for card transactions.
  3. It is an incentive to reduce cash transactions, because once the POS is used to provide the receipt, it is just as easy to make the same transaction by using a card instead of cash.

Let me note that this measure does not replace the cash registers or the cash systems of the businesses. These should continue to be used for the business to make the accounting reconciliation, VAT return and other related actions. Finally, I must emphasize that no measures will work effectively if there is no correct and timely cross-check of transaction data to identify offenders in a timely manner.

Cardlink has expressed its intention to expand its range of products and services in cooperation with the banking industry. Could you refer to some indicative sectors where you are considering expanding?

I will give a simple example. Cardlink has already developed a range of products and services that aim to add value to businesses that are Cardlink’s clients. We believe that bank networks are ideally located to operate as promotional channels for such products and services with mutual benefits. From then on, we believe that there are further opportunities for the development of our work, supporting banks in sectors that may not be of strategic value for the banks but are essential to their digitization, but also to serve their customers that demand for technological infrastructure which we either already have or we can develop.

At what risk are systemic banks of losing the electronic transactions market due to the change of institutional framework in the European Union and the introduction of new alternative “players” in this market?

Personally, I do not believe that banks are in risk of losing the market, as you are saying. The change of institutional framework in the European Union occured with the purpose of increasing the competition, to create conditions that will provoke the development and provision of new products, services, solutions and their usage in existing applications and markets as well as in new ones. The initiatives were not taken to redistribute a stable pie. The pie itself will grow significantly with these changes and with the dynamic forces that will be released. It is obvious that these changes attract new players but, as has been done in other areas, traditional players are not doomed. Traditional banks obviously have to accept that conditions change, adapt and see the future differently in order to shape it with appropriate initiatives and partnerships. It is also obvious that at the beginning of such a change the stress will be apparent and concern about the unknown and the consequences that change can bring. Anyone who is better prepared, has invested in technology, people and proper partnerships will have more chances of success.

How satisfied are you with Cardlink’s financial progress during last year? How optimistic are you about its prospects?

Cardlink is executing a five-year plan for the period 2015-2019, which was developed as part of the acquisition of Cardlink by Quest Group and Edgepay Holdings. Having completed 2018 and with our estimates for 2019, Cardlink’s financial performance over the five-year period is twice as high in all key figures in comparison with the original plan. Personally, I am very pleased and proud of this result. The success is due to the confidence our customers, banks and businesses have shown us, and to the hard work and dedication of our employees who have worked to meet the challenges we have encountered during this period. It is also very important that we had the trust and freedom from the Quest Group to move quickly to what we needed to do to bring Cardlink to its present position.

I am very optimistic about our prospects. We are now focusing on creating our plan for the next period. Organic growth, which has been largely driven by the conditions of the Greek market, will be stabilized, so from now on we have to build on what we have created and rely on our own strengths to find the levers for further growth. This fills us with energy and appetite for work, to create products and services that will help the market.