PolCard aims to expand electronic payments industry

By Timothy Sifert

The recent announcement of rapid expansion plans at Poland's debit and credit card transaction clearinghouse, PolCard, which include providing services in more rural areas, is welcome news for Poland's payment card industry as a whole. Credit card market players say that, should PolCard's plans come to fruition, they would directly deliver a larger client base to the country's credit and debit card providers.

Though the specifics of the PolCard growth push are as yet unclear, Wiesław Federowicz, associate vice president and general manager for Poland at MasterCard International, happily received the news.

If it directly increased credit and debit card activity, "it would be warmly welcomed by all players on the market," Federowicz noted.

Besides simply providing more access points for transactions, PolCard could also pave the way for the industry's growth spurt in revolving credit card issuance and usage. Credit cards have a lower penetration rate on the Polish market than they do in western European countries.

PolCard recently put forth its designs to tap into the country's rural community, which in the past has been given short shrift by financial institutions in terms of service variety. Employing the experience of its newest shareholder, G-Tech, the company will tap the 37 percent of the population that live in villages, said Elżbieta Kuzio-Sulowska, PolCard's chairwoman. The strategy is similar to the one G-Tech pursued in Brazil.

"In the new shareholder structure, PolCard will pursue its strategy in a quicker way than we were able to before," she pointed out. "We can provide a merchant base and point-of-sale terminals where we could implement services. These point-of-sale terminals could be used to check pension funds or top up mobile phone cards for instance."

In line with its new focus on rural markets, PolCard plans to further develop its outsourcing services as well. "Now we can look for other customers - such as two to three big banks," Kuzio-Sulowska said.

The company is looking to banks with between one million and 2 million customers, that want to outsource payment card services such as issuing cards, transaction monitoring and processing, as well as handling of complaints.

PolCard also wants to provide ATM management services, a strategy that would include purchasing entire ATM systems from banks. According to Kuzio-Sulowska, this is an ideal time to snap up ATM business because local banks are looking for cost-cutting measures. And, she added, ATM management could become more expensive in the longer term, as banks would have to install novel technologies to keep pace with increasing customer demand.

Moving beyond Poland

At the same time, G-Tech is scouting for acquisitions that could expand PolCard's role beyond the domestic sphere: The investor would like to see PolCard become a central clearing hub for central and eastern European financial transactions.

"Our shareholders have taken a look at opportunities in neighboring countries," she pointed out, noting also that PolCard could be used as processing hub for many of the new transactions acquired from purchases. The company is particularly interested in the Czech Republic and Romania.

PolCard expects total revenue this year to reach zł. 278 million (€63.3 million), and forecasts 2007 revenues of zł. 650 million (€148 million).