Greeks fall in love with plastic after cash controls

Tue Oct 13, 2015 10:28am EDT
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By Angeliki Koutantou

ATHENS (Reuters) - A Greek TV commercial shows two fishmongers in a market touting their wares. "I've got sea bream," one shouts. "Me too," says the other. "I've got saddled sea bream," the first cries. "So have I," his rival retorts. "I take cards," the first says, silencing his competitor, who pulls a long face.

Other commercials feature vets and pharmacists, all part of a campaign by banks to boost electronic payments in a country long dominated by cash. The drive is a boon for Prime Minister Alexis Tsipras' government as it seeks to boost revenue and crack down on tax evasion.

Greece lags far behind other EU countries in non-cash transactions. But Greeks have suddenly fallen in love with payment by plastic after capital controls were imposed in late June and banks were shut for three weeks.

About one million cash cards were issued in July and August in a population of 11 million, compared to about 100,000 a month before the capital controls, said Athanasios Geramanis, the country manager for Mastercard (MA.N: Quote), one of the four payment services available in the country.

"Consumers felt the urgent need to bypass the 60 euro ($68.15) withdrawal limit," Geramanis said, referring to the daily cash ceiling Greece imposed in late June. The limit has since been eased to 420 euros a week.

"Greeks used to think that by getting a cash card, they were taking out a bank loan," he said. "All of a sudden, they discovered that cash cards can help them in their transactions."

Card payments accounted for barely 6 percent of total annual retail sales before the capital restrictions were imposed, compared to 60 percent in Denmark.

Geramanis estimated that the proportion of card transactions had jumped to 25-30 percent since the summer, although it would smooth out in the coming months.   Continued...

An elderly man exits a bank branch in Athens, Greece, October 13, 2015.  REUTERS/Alkis Konstantinidis