Know Your Customer
On 23rd of March 2017 the greek jurisdiction abolished all anonymous online payment methods. What seemed to be a real challenge for paysafecard in Greece, turned out to be a success story in a market, where people love sports betting and gambling.
Greece is the cradle of democracy. Its art has endured for thousands of years, and its philosophy laid the groundwork for the way we think today. It also has one of the world's longest traditions in games and gambling. According to Greek mythology, the gods on Mt. Olympus decided what aspects of the cosmos they would rule by throwing dice. Gambling on sports even predates the first ancient Olympic Games, which can be traced back to 776 BCE. So it should come as no surprise that betting is a way of life in modern Greece, with backgammon played at the tavernas on virtually every corner, and 35,000 plus video lottery machines dotting the country.
POTENTIAL FOR GROWTH
A 2014 survey by business intelligence provider Gambling Compliance revealed that Greeks spend much more on online gambling and betting per capita than their peers in other Mediterranean markets, like Italy or Spain. If the online gambling and betting revenue is expressed as a percentage of the gross domestic product (GDP), Greece is even a close second in terms of expenditure to the UK, the major gambling market. Greece, however, is yet to fully regulate its gambling and betting sector to comply with EU law, and there are still only 24 international operators working legally on interim licenses. This is an indication that there is ample potential for growth in this sector, once it becomes fully regulated.
»We launched with only 28 E-codes vending machines. Today we have a network of 20,000 Points
of Sale all over Greece.«
These findings also indicate that John Tsironis found a perfect setting for paysafecard's launch in Greece back in 2006. "We launched with only 28 E-codes vending machines, and it took us about two years until word had spread about paysafecard among Greek sports and betting enthusiasts," paysafecard's country consultant recalls. "But after that, in 2009 and 2010, it really took off." Today John Tsironis relies on a strong POS network. One of the most important partners is the country's biggest gambling operator, which also has a huge mobile phone top-up network in Greece with over 11,000 operating POS terminals. Another partner offers products and services that include prepaid mobile top-up, store value products and other custom eBusiness solutions such as eBilling for electricity services. These services are distributed through a network that spans thousands of POS terminals across Greece, located in kiosks, small retail shops, supermarkets and convenience stores. "These partners alone make up 75 per cent of our turnover," says Tsironis. "But we are always looking for ways to expand this network." One example is the cooperation with a Greek distributor, who makes paysafecard available at an additional 770 outlets, among them all those located at the outlets of the Greek postal service.
CHALLENGING CAPITAL CONTROLS
paysafecard is a very well recognized and branded service throughout Greece after a little more than 10 years in the market. However, both the brand and its clients have experienced difficult times. The government imposed capital controls in the summer of 2015 and took a number of measures to call a halt to the outward flow of money, to curb tax evasion and encourage electronic payments, including restrictions on cash withdrawals at ATMs, remittances, and the use of payment cards abroad. "We at paysafecard had a great momentum going in 2015 when capital controls were introduced," Tsironis explains: "After the introduction of the restrictions, Greeks could withdraw a maximum of € 60 cash from ATMs per person each week.
That was a very serious situation, not only for us but also for our merchant partners, who were unable to transfer money out of the country." After that, there was a dramatic increase in the use of cards for financial transactions and debit cards in particular. Even today there is still a maximum limit on cash withdrawals at € 420 per week, and Greek consumers, who have traditionally been very cash-orientated, have been forced to multiply the frequency and value of card transactions. While it has been debit cards that have primarily profited from this development, there has also been an increase in the use of credit cards. According to country consultant Tsironis however, they still are far from having a significant market share: "It is very difficult to obtain a credit card in Greece because of the difficult economicsituation in the country, and because banks have to cope with many bankruptcies and defaults on loans," he says.
Faced with cash shortages, Greek consumers substantially increased the use of eBanking for various payments, while the penetration of mobile banking grew at an even higher pace due to the widespread use of smartphones and an ever-increasing internet penetration. The use of pre-paid cards for E-Commerce recovered substantially in 2016 against this backdrop with their use shifting away from an internet safety instrument towards a budget control tool.
A VERY SUCCESSFUL NICHE
"All this has never affected the transaction volume in one of our core markets," Tsironis points out. Online sports betting and online gambling represent a niche that paysafecard has really covered with its payment service. "As a football fan, I like visiting sports bars and cafes withfriends so I can watch my favorite team. I am always amazed, how often the name paysafecard pops up at nearby tables," he says with a smile.
»The use of prepaid cards for
substantially in 2016.«
So Tsironis stayed very confident when Greek lawmakers came up with yet another potential blow to paysafecard's business model. A new law introduced in mid-December 2016 banned all anonymous online payments in the country as of March 23, 2017. CompulsoryKnow Your Customer (KYC) procedureswere also introduced. This meant changes in the way clients could use their paysafecard - quite a challenge for Tsironis and the paysafecard team, who only had three months to deal with the new set of rules: "Of course I thought about the short-term difficulties these changes created. But with the 'my paysafecard,' the company had already developed and thoroughly tested the perfect product for our situation. We just had to make people switch from voucher and pin to username and password." He took advantage of the experience his colleagues had gathered in Romania, where similar legislation and a market regulation were already in effect. Tsironis put all the resources he had into a big marketing campaign. "Our merchant partners helped us a lot during these weeks. They put up banners on their websites, and they provided all the necessary information to make the switch a success." In addition, thousands of flyers and leaflets were printed and distributed over paysafecard's entire POS network in Greece.
When March 23rd finally came around, there was nothing left but to wait and see if the campaign had paid off. "The first few hours were horrible," concedes Tsironis, "but the transaction volume started to pick up again after just one or two days, and we could see people register for 'my paysafecard'by the thousands. That was a very good feeling," a relieved Tsironis recalls. In the end, nearly every existing paysafecard user registered for a "my paysafecard" account. "Many even opted for the unlimited version right away, uploading the scan of an ID document and doing a face scan for verification." After completing this full due diligence process, clients can upload and use an unlimitedamount of money per year using their "my paysafecard" account. All that is required to set up the account is the applicant's name, address, and email. After June 26th, 2017, it is limited to transactions of € 1,000 per lifetime now instead of an annual limit and a maximum of € 250 per single transaction and per month. (€ 5,000 for the unlimited accounts).
REGISTRATION KEPT SIMPLE
"We know that these thresholds are very high for an average user of a 'my paysafecard' account," explains Dr. Hartwig Gerhartinger, paysafecard's Vice President Regulatory and Governmental Affairs: "That means that for most paysafecard customers, the first time registration for 'my paysafecard' will be a very simple process indeed. The numbers for Greece, Bulgaria, and Romania prove that this strategy works just fine." But isn't losing anonymity a problem for clients? paysafecard's country consultant Tsironis says no. His opinion is supported by a very recent study done by the Hellenic Statistical Authority. It found out that 82.7% of Greeks have no problem providing personal information online. Close to 80% see no problem in providing contact details and more thanhalf regularly submit personal details. In contrast, only 29% are willing to provide bank account or credit card details.
"Anonymity is not crucial for our clients. It's always ease of use," Tsironis remarks with confidence: "People want a fast, easy and safe way to pay for their bets. And that is what paysafecard can offer them." So for paysafecard and its merchants, the mandatory switch to compulsory Know Your Customer procedure in Greece has been a big success. The paysafecard transaction volume is even beginning to reach the same heights as before the introduction of capital controls. Meanwhile, the new procedures have yet another, very relevant positive aspect: "Now we also know our customers much better," remarks a happy Tsironis. "This opens up whole new ways for Customer Relationship Management (CRM) measures, like our loyalty program myplus, or channels like email marketing." The concept of "Know your Customer" takes on a totally different aspect when it is considered this way!