Catalin Cretu, general manager of Visa in Romania, Malta, Croatia and Slovenia, speaks to Anthony Manduca about how the world’s number one payment brand is performing in Malta and Europe, as well as its future direction.
The Visa portfolio in Malta has been growing much faster than the overall card market, which shows the brand is doing well in the island, says Catalin Cretu, who is responsible for four European markets, including the Maltese one.
“We are expanding the Visa footprint in the market and our customers are very happy with our products and services as well as with the support we are offering,” Mr Cretu says.
“The brand here is very healthy, we believe the Maltese love the Visa brand, and we are dedicated to coming here with new products and services that will serve the needs of the Maltese market.”
In fact, in terms of growth rates in Malta, there was an overall 18 per cent increase in terms of total spend at POS (point of sale) by Visa cards in 2015 and the growth of debit cards was particularly high.
“Malta is a debit card market, the growth rate of Visa debit card point of sale was 25 per cent while Visa credit cards use grew by 13 per cent, so we are seeing very good growth. Not only is the Visa portfolio outpacing the growth of the market but also the Visa Maltese portfolio is outpacing Visa growth in Europe.”
Mr Cretu believes there is a lot more potential for growth in Malta; only 28 per cent of payments are made by cards in Malta while 72 per cent of payments are made by cheques, direct debit “and primarily cash, which we absolutely intend to convert”.
He stresses that the conversion from cash to cards will help the Maltese economy. “We have done studies, and the shadow economy in Malta is above the EU average; it ranks around 24 per cent of GDP, and as we know, cash is the best ally of the shadow economy. We’ve conducted studies that show very clearly that intensifying electronic payments undermines the shadow economy in any market.”
He says it very important for Visa to understand the Maltese market, and in general the company see very positive moves in terms of promoting electronic payments instead of cash. Visa, he says, is in fact evaluating the possibility of opening a local office in Malta.
The brand here is very healthy, we believe the Maltese love the Visa brand
He adds: “Malta is a small island but it punches above its weight in many respects, which is important to the Visa business. Maltese cardholders are very card savvy; there are two cards per adult, whereas in Europe there are 1.5 cards per adult, which means the Maltese have cards and they use them.
“The Maltese market is important from the acceptance point of view for tourists that come here. There are many Visa cardholders spending holidays here, so it’s important that the acceptance infrastructure is in place, and that cardholders, primarily from the UK, Italy, Germany, France and Scandinavia, find many points here where they can spend.”
He explains that overall payment card spend in Malta (all payment brands) has been very healthy, with 12.5 per cent growth in 2014 and an 11 per cent average growth between 2010 and 2014.
“Many markets would envy those growth rates, underpinned by strong GDP, and people moving from cash and cheques to cards. Consumers feel an affinity with the Visa brand, they can use their card locally, overseas, and on e-commerce. We are committed to the market, we have been carrying out marketing campaigns and we are excited about Malta. We are looking at expanding our marketing to target tourists and locals in Malta.”
Visa recently decided to set up one single global company with Visa Inc. acquiring Visa Europe. Mr Cretu explains the reasons behind this decision: “We have just presented our very good 2015 results for Visa Europe, our best year ever, revenues have increased 25 per cent to €2.3 billion and POS growth has been very good at 7.7 per cent. However, we are facing a very rapidly changing landscape, intensifying regulation, increasing globalisation and fierce competition. Giants of technology are looking to get into this payment area, they have disrupted communications, they have disrupted social media and they have disrupted entertainment.
“The last frontier which they could disrupt is payments, so we believe that coming together as ‘One Visa’ will allow us to better face these new challenges and leverage these opportunities to grow the business. It will allow us to have higher investment, access to a wider range of resources that Visa Inc. brings to the table, and also in terms of the speed to market, the scale, the introduction of new technologies sooner rather than later.
“So we have already been sharing the brand, the Visa brand, which is the fifth most valuable brand in the world and the number one payment brand in the world. We have been working together in many aspects, so we believe coming into ‘One Visa’ will bring only benefits, it will be seamless and will benefit the local markets as well because although we will be one global organisation we will continue to be very focused on adapting all these global solutions to the local needs.”
He says it is too early to say how the setting up of One Visa will affect the local market, but the team working directly on Malta will have access to wider resources and a wider level of investment “which is all good news”.
There are two cards per adult in Malta, whereas in Europe there are 1.5 cards per adult
Mr Cretu says mobile payments are now “top of Visa’s agenda” and “very exciting”.
“Apple have announced the introduction of their Apple Pay service in Europe, which shows it is a very attractive market, and continues to be a very attractive market for all these tech giants”.
He says mobile payments are something Visa is looking at, and it intends to help banks to introduce this concept in as many markets as possible. “However, you cannot speak about mobile payments without a contactless infrastructure, and contactless is the biggest success story across Europe. Last year contactless payments value grew 216 per cent. We see almost a third of all the terminals in Europe have been upgraded to contactless.
“We have over 150 million contactless cards so the first stepping stone in the introduction of mobile is the introduction of contactless and this is something very important that is happening in Europe, and we are keen for this to start happening in Malta as well.”
Once a contactless infrastructure is in place, he explains, mobile payments take off.
“The service that supports and is being leveraged the most in terms of the introduction of mobile payments is called the tokenisation service, whereby your card account is substituted by a token, another number, that is then used in the transactions flow, while the card number is no longer exposed to any fraud or potential fraud.
“This service basically increases the security of transactions and is being leveraged and being used in mobile payments like Apple Pay and other new services that will come, such as Google Pay and Samsung Pay, but also it enables new mobile payments outside these services that are introduced by Apple, Samsung and Google, thereby giving the opportunity to banks to introduce more mobile payments.”
Mr Cretu explains that before you even get to mobile payments there are a lot of “cool things” that can be introduced in terms of stickers, wearables, and bracelets.
“Young people across Europe are very interested in all these devices, which are not wallets – young people do not carry wallets anymore – so if we can introduce all these cool gadgets and make it easier, fun to pay, I think this will be a big success.
“The mobile is the new turf, it changes everything. The mobile consolidates communication, social media and entertainment, it consolidates payments as well, so it is at the top of our agenda.”