World Economy

Ukraine Warms Up to Cashless Economy

Ukraine Warms Up to Cashless EconomyUkraine Warms Up to Cashless Economy

Many Ukrainians think it is much safer to keep their money under the mattress than in the bank. This point is proven by Ukraine’s richest: The country’s top officials and lawmakers, many of them millionaires, tend to keep their vast savings in cash, according to their recently filed electronic declarations of assets.

But even with distrust in the banking sector lingering, the number of cashless operations is slowly increasing in Ukraine, Unian reported.

In the first nine months of 2016 Ukrainians have made in total 1,272 million cashless payments worth Hr 398 billion ($15.13 billion)–more than for the whole year of 2015, according to the National Bank. Today, 35.8% of all the payments in Ukraine are cashless, up from just 8% in 2011.

Based on the data for July-September 2016, the most popular way to pay cashless is through a shop’s point of sale terminal–that’s how 35.9% of the cashless payments were conducted, while 33.1% were card-to-card payments, and 27.8% were internet transactions. The remaining 3.2% were made through self-service devices.

The top five banks behind the most internet transactions in 2015 were PrivatBank, Raiffeisen Bank Aval, Alfa Bank Ukraine, Oschadbank and First Ukrainian International Bank (PUMB).

But while the number of cashless payments is slowly increasing, this slow growth shouldn’t mislead one into thinking that Ukraine is moving to cashless economy at any great pace.

The numbers are still very small compared to developed European countries and the United States, where citizens have almost forgotten about the times when they had to pay cash in public transport or in a store. Compared to them, Ukrainians are only beginning their move towards a cashless economy.

According to the Swedish National Bank, Riksbank, in 2014, Ukraine was among those countries in the world with the greatest fondness for cash: The amount of cash circulating in the economy equaled 18.1% of the country’s gross domestic product. In comparison, in Poland the same indicator was 7.5%, in Canada, 3.8%, and in Sweden, 2.2%.

“It’s been a long time since I last used cash in Sweden–cards work everywhere,” says Gustav Henman, a Swede, and the cofounder of Beetroot, an IT company that operates in Ukraine. “In Ukraine, using cash is obviously inevitable in some cases.”

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