Things are looking good for the cards market in Kazakhstan. Incredible growth of 50% in 2012 helped the country to reach unprecedented levels of card adoption. EPI takes a look at where the country will go from here.
Kazakhstan’s card payments channel demonstrated robust growth during the review period. Improved banking infrastructure, consumers’ shift towards card-based payments and adoption of new technology to offer safe and secure banking contributed to the growth of the channel during the review period. With the adoption of contactless technology and growth in the retail market, the channel is projected to grow at a healthy rate both in volume and value terms over the forecast period.
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The card payments channel presents positive growth potential
The card payments channel grew from 7.2m cards in 2008 to 11.9m in 2012, at a CAGR of 13.38%. Over the forecast period, the total number of cards is projected to grow from 13.9m to 17.9m, at a CAGR of 6.55%.
In terms of transaction value, the overall card payments channel grew at a CAGR of 25.43% during the review period, and is projected to grow from KZT7.0tr (US$47.7bn) in 2013 to KZT10.4tr in 2017 at a CAGR of 10.28% over the forecast period.
In terms of number of transactions, the overall card payments channel grew at a CAGR of 16.27% during the review period and is forecast to increase from 214.2 million transactions in 2013 to 266.2 million in 2017, at a CAGR of 5.58%.
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By GlobalDataDuring the review period, the highest growth was registered in the credit cards category which recorded a CAGR of 49.51% in terms of number of cards in circulation. The key drivers for the substantial growth were growing consumer awareness of the benefits of credit cards, customer-centric services, adoption of advanced technology to offer secure banking, and reward programs offered by card issuers.
Shift towards cashless transactions, predominantly card payments
Non-cash payments in Kazakhstan were dominated by credit transfers with a total transaction value of KZT104.6tr in 2008, while card payments valued KZT2.3tr. During the review period, card payments recorded a CAGR of 25.43% to value KZT5.7tr in 2012, while credit transfer recorded a CAGR of 3.26% to value KZT118.9tr in 2012.
Growing consumer awareness, increasing acceptance of cards at retail outlets, benefits through card-based reward programs and adoption of cards that offer secure banking were key factors for the growth of card payments.
Growth in online and conventional retail resulting in increased card use
Growth in internet penetration and rising disposable incomes and consumer spending resulted in increased online retail sales in the country. During the review period, e-commerce grew at a CAGR of 91.51% to reach KZT58.5bn at the end of 2012.
To further regulate and develop the e-commerce industry in the country, the government decided to introduce a law on e-commerce to be implemented by the end of 2013. As a result, the e-commerce industry is projected to reach US$2.4bn by the end of 2016.
Kazakhstan’s conventional retail industry also recorded healthy growth during the review period, recording a CAGR of 16.94% to reach KZT4.6tr in 2012.
To benefit from the growth in online and conventional retail, banks are increasingly expanding their merchant and point-of-sale (POS) networks, as well as improving their internet banking infrastructure, resulting in increased volumes of card payments.
