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Visa survey: Wider e-payment acceptance to help boost financial inclusion

Electronic payment acceptance by a higher number of merchants starting in 2023, due to the new provisions of the Cashback Law, responds to increased customer demand for digital services and will contribute to boosting financial inclusion by the development of e-payment infrastructure in rural areas and in small towns, as well as to combating underground economy, notes the article "The new amendments to the Cashback Law support SME digitization" published on Monday on the local Visa blog.

The Chamber of Deputies, as a decision-making body, adopted on November 16, 2022 the Law approving the Government's Ordinance No. 16/2022 which amends the current legislation regarding the introduction of modern payment systems, known as the Cashback Law. Thus, starting January 1, 2023, merchants with annual cash receipts in excess of 10,000 euros (50,000 RON) are required to also accept payment by card. The previous acceptance threshold was 50,000 euros in turnover.

"The decision of the authorities to extend the provisions of the Cashback Law can make a significant contribution to the digital transition of SMEs and the reduction of underground economy. We are confident that the adopted measure will support the expansion of the acceptance network and encourage the habit of paying by card or other electronic devices, so that increasingly more consumers can enjoy the comfort and safety of digital payments," the cited article states.

The decision to extend the obligation to accept card payments for a larger number of merchants, at the proposal of the Finance Ministry, together with the implementation of the project regarding the implementation of cash registers with electronic log will help increase budget revenues and fight tax evasion, because electronic payments ensure transaction traceability and taxation.

According to Visa, SME digitization and access to financial services will support the spread of financial education and inclusion of local communities, as well as the sustainable development of small and medium-sized businesses, particularly in rural areas and small towns where bank penetration rates are still low.

"The need for digital transformation is critical for small and medium-sized companies, considering that according to the Digital Economy and Society Index (DESI) 2022 Romania ranks last in Europe in terms of digital competitiveness. Digital payments offer SMEs the opportunity to obtain additional revenue, but also advantages such as convenience, safety and speed. These are the reasons mentioned by almost two-thirds (64 pct) of the Romanian small and medium-sized companies that accept payment by card," shows a survey on business digitalization carried out this year by Visa in partnership with the National Council of Small and Medium Private Enterprises in Romania (CNIPMMR).

According to the survey, almost half (48 pct) of the companies that do not yet accept payment by card stated that they intend to implement electronic payment acceptance solutions in the future, as a measure to support business development. An important reason cited by the companies that already accept or intend to implement electronic payments is customer demand for such solutions.

Visa notes that the change in legislation and modern payment solutions are extremely important as digital payments have been widely adopted in big cities, while in small towns and rural areas they are less used due to the less developed acceptance network. More than 300,000 terminals are currently installed at retailers in Romania, and the network has been expanding at a pace of approximately 30 percent in the last two years. However, this means only 18 terminals per thousand population compared to a European average of 33 terminals, which shows the need for further development of the electronic payment infrastructure.

To support card payment acceptance, Visa has made efforts to significantly reduce all the possible costs entailed by the implementation of acceptance solutions by merchants and other service providers. At the end of 2020, together with its partners, Visa introduced in Romania the Tap to Phone service through which merchants, couriers or other local economic operators can download a simple app on their phone or tablet, enabling them to accept contactless payments. Tap to Phone has the potential to boost card acceptance due to its undeniable advantages - low costs and the fact that it does not require additional equipment.

Currently, more than 10 financial institutions offer this solution on the local market and more than 10,000 vendors in Romania have implemented it. According to market data, the Tap to Phone app is installed on approximately 25,000 phones or other electronic devices transformed into contactless e-payment terminals, 80 percent of which are held by Romanian SMEs.