An estimated 3.69 billion retail transactions were logged by the domestic electronic payment network Shaparak in the first month of the calendar year to April 21.
It processed an estimated 11,688 trillion rials ($22.91 billion) e-payments -- up 15.55% in volume and 50.97% in value on the same period last year, the company said on its website.
In volume terms, transactions were 12.88% lower on the month before when 4.22 billion transactions worth 11,688 trillion rials ($14.5 billion) were reported.
The value was down 29.75% on the month before. The report did not include the real value of transactions (adjusted for consumer price inflation) since the Statistical Central of Iran had not yet updated CPI data by the time the report was published.
Regarding types of services, 89.64% was for buying goods and services. Buying cellphone recharges and paying bills was second at 6.16% while 4.2% were for checking bank balances.
POS in the Lead
The number of instruments for processing payments was up 0.62% from the earlier month, reaching 10.78 million.
However, growth was noticeable in online payment gateways, up 1.41% to 802,611. Total POS terminals, mostly used by retail outlets, increased 0.59% to 9.85 million devices, but mobile payments were almost unchanged at 123,528.
As is the norm, POS devices topped the list of instruments with the biggest market share at 92.24% followed by online payment gateways 5.1% and mobile instruments 2.66%.
Processing more than 3.4 billion transactions worth 6,927 trillion rials ($19.5 billion), POS devices accounted for 92.36% of the total transactions.
Based on the report, there were 1,744 instruments per 10,000 adults (above 18 years old) and POS terminals topped the list with 1,594.51 per 10,000 adults. Mobile instruments had the lowest penetration rate with 19.99 instruments for every 10,000 adults.
Tehran topped the list of provinces with the highest number of POS terminals with 1.692 million devices in the sprawling metropolis – 0.5% higher on the earlier month.
This was followed by Khorasan Razavi with 748,351 devices and Fars 650,351. Ilam Province was at the bottom end with only 69,000 terminals.
Almost one-third of the transactions via POS terminals were each worth 50,001 to 250,000 rials. More than 52.4% of the total POS transactions were above 250,000 rials.
Figures indicate that there were about 59.75 transactions per 10,000 adults above 18 years. POS terminals topped the list with 55.11 transactions per 10,000 adults, followed by online gateways 3.04 transactions and mobile gateways 1.59 transactions.
Role of PSPs
Shaparak said that most payment service providers (PSPs) reported change in their market share in the month to March 21.
Beh Pardakht Mellat was at the top with 19.68% of the total transactional value. Saman Electronic Payment (SEP) was second with 19.06% -- slightly lower than last month, followed by Pasargad Electronic Payment 11.61% and Sadad Electronic Payment Company 11.03%.
Beh Pardakht led in terms of the volume of transactions via POS terminals with 18.50%. The highest number of transactions via online payment gateways was logged by Saman Electronic Payment at 30.66%.
Earlier Saman had lost its share of online gateways' transactions, however, it posted a growth of 4.73 percentage points during the month under review to restore its winning post in online payments.
Shaparak provided data on the quality of PSP services saying PECCO accounted for the least failures during the month. Pardakht Novin Arian Company had the worst monthly performance as 0.098% of its transactions were rejected.
Twelve PSPs operate in Iran and are mostly affiliated to banks. Stringent regulations of the Central Bank of Iran for setting up a PSP have apparently discouraged the emergence of new players in the lucrative market.
Fees
The Central Bank of Iran on Sunday unveiled a long-awaited fee model for transactions per which payment acquirers, shops and retailers will be charged for transactions via POS terminals.
Up until the weekend, banks receiving and making payments had to bear the bulk of payment fees because when a payment was made with a bank card, the bank receiving the payment has to pay a fee to the bank whose card has been used. This was on top of the amount banks pay as rent and support fees for each POS device to payment service providers.
Unlike the past the new system requires shops, where POS terminals are used, to pay a fee for each transaction.
In the new model three parties bear the cost, namely the merchant, issuing bank and the acquiring bank even though banks are still responsible for the big portion of the costs.
Acquiring banks used to pay between 500 to 2,500 rials for each transaction. Whereas, in the new system acquiring banks will pay a 0.0005-rial fee each transaction.
Research by the Central Bank of Iran shows that implementation of the new model should reduce bank costs by 48% that will instead be paid by retailers.
Based on the new formula, merchants pay a fixed fee of 1,200 rials for transactions below 6 million rials and 0.0002 (two-thousandths) of the transaction amount up to a cap of 40,000 rials for transactions above 6 million rials.
The current transaction ceiling is 1 billion rials; therefore, under the new plan, a merchant will have to pay a maximum fee of 40,000 rials for a 1-billion-rial transaction while (debit card) issuing banks will pay a fixed amount of 240 rials for each transaction.
CBI says about 41% of retailers pay less than 10,000 rials per day in fees. Asa of now, the average daily fee for nearly 62% of the shops will not exceed 20,000 rials simply because such retailers have a high number of small transactions
However, acquirers with larger payment transactions, such as currency exchange shops, gold shops and financial service providers are charged higher.
According to the regulator, the new model will be implemented in phases and some businesses such as supermarkets and bakeries will exempt from fees in the initial stages.
Per rules, lenders can charge customers proportionate to the total cost of the services they provide. In the past banks largely waived fees to compete in the market saturated with lenders.
Talk of rewriting bank service fees has been around for years but was in limbo apparently due to the perceived negative response of the public, particularly at a time when most households at the lower end of the economic ladder are already saddled with high and rising living costs.
The latest measure follows calls from market players for reforming the fee system. In late 2022, Mehran Mahramian, CBI's deputy for innovative technology, said reforming the system was a priority.
