Reluctance in cooperating with banks and informality - Serious obstacles in increasing the use of bank cards and POS terminals Erion MAXHARI

www.aab.al Reluctance in cooperating with banks and informality Serious obstacles in increasing the use of bank cards and POS terminals BANKING SYSTEM

There is a reluctance and uncertainty, from business part, since the very first steps, to approach the bank and open business bank account, and then such reluctance is noticed after having a POS terminal, where there are cases when the terminal is switched off, is hidden and customers are not provided with a card payment option.

Erion MAXHARI Head of AAB Cards Committee ALBANIAN ASSOCIATION OF BANKS, AAB

As the Albania Investment Council puts it, there are significant problems in the tourism sector, which are, at a certain extent, caused by businesses, themselves. Regarding the expansion of the POS network, I do not think that seasonality is the key issue, or any other element related to business and infrastructure; instead I do think that it’s a necessity to eliminate and combat the spirit of informality, created in these areas.

From an infrastructure perspective, we, as AAB Card Committee, do not believe that there are any barriers, regardless the costs that these terminals require, such as: investment in equipment, interconnection costs, maintenance and training. Banks in Albania have provided businesses with POS card acceptance services mainly without fixed maintenance fees, but only with transaction fees, the latter deemed as necessary, due to the costs of interoperability with VISA, MasterCard, AmericanExpress card networks, etc. Albanian banks have also offered extra services, such as: POS in Euro currency, an advantage for both the customer and business, with no conversion losses, but also an expansion of ATM terminals in such areas.

In the meantime, AAB Card Committee points out that despite the banks' mitigation of costs, we are witnessing a reluctance, from a sizeable mass of businesses,

to get POS terminals. This is due to the issues specified by Albania Investment Council study, such as: distance from bank branches/ networks, seasonality, infrastructure problems, education, but not only. From our point of view, there is a reluctance and uncertainty, from business part, since the very first steps, to approach the bank and open business bank account, and then such reluctance is noticed after having a POS terminal, where there are cases when the terminal is switched off, is hidden and customers are not provided with a card payment option. Furthermore, it is important to note that many businesses are reluctant to fully cooperate with the bank, by failing to provide proper signs in their business premises, concealing POS terminals and accepting card payments, selectively. Despite the fact, that some businesses do such actions because of their inadequate training, or of their employees, the main cause remains high informality, in most cases, especially in touristic areas and small businesses.