Covid-19 Forced Greece Towards Contactless Payments
Introduction to Greece
An overview of Greece's currency, population and key statistics.
The euro (€) replaced the drachma (₯) as Greece's national currency in 2002. Until 2014, the Bank of Greece still allowed the exchange of drachma banknotes for euro banknotes as the country transitioned to full adoption of the common currency. Euro banknotes are available in various denominations, €500, €200, €100, €50, €20, €10 and €5. The shared currency is also available in coins, including €1 and €2.
There has been a surge in cryptocurrency ownership among Greeks over the past decade due to the country's prolonged financial crisis. The government initially prohibited overseas transfers of fiat currency to limit outflows. Greeks began to buy popular cryptocurrencies such as Bitcoin on exchanges abroad to conduct international transactions.
Around 8.6% of Greeks held some form of crypto as of 2022. Although Bitcoin is not considered legal tender in Greece, citizens are allowed to purchase it. The country also does not have a specific tax regime regarding crypto. Greece only imposes taxes on gains from trading crypto into fiat currencies such as euro and dollar.
Greece had a population of 10.3 million as of the middle of 2023, according to the United Nations. With a total land area of 128,900 square kilometres, the country has a population density of 80 people per square kilometre. Based on the most recent census, nearly 80% of the country's population lives in urban and suburban areas. The capital city Athens is the most populous city in Greece.
Greece has experienced a steady population decline since 2005 due to a low birth rate. Experts mainly attribute this to the financial crisis, education, and emigration.
Greek is the country's official language and also the most widely spoken. However, other languages are also spoken throughout Greece due to the country's geographical location and rich history. Albanian and Macedonian are spoken in the centre and south of the country while Muslim communities mainly speak Turkish.
Greece had a gross domestic product of $333 billion as of the end of 2022. However, it exceeded $400 when accounting for the country's large informal sector. The country had real GDP growth of 2.6% to an estimated $239.3 billion as of the middle of 2023, based on International Monetary Fund (IMF) data. The country's GDP per capita amounted to $22,900 in 2023.
The World Bank reported that Greece had a gross domestic savings rate of 12% of GDP in 2022, compared with 10.4% a year earlier.
Internet & mobile phone trends
Greece had an internet penetration rate of 84% of its total population in early 2023. The country also had 14.95 million cellular mobile connections in this period, meaning that some Greeks own more than one active cell phone. The country's smartphone market is projected to be worth $540 million in 2023.
Expensive mobile data remains a significant barrier to widespread internet penetration in the country. Mobile data prices in the country were among the most expensive in the world at $8.16 per gigabyte in 2021.
Experts have noted that Greeks had become more price-conscious after the country's severe economic crisis. E-commerce provides opportunities for shoppers to compare prices across merchants, allowing them to save money. An estimated 69% of Greeks shopped online, with nearly all of them preferring national merchants, according to Europe E-commerce Report 2022.
Greece's e-commerce sector generated $3.6 billion in revenue in 2021. The sector is expected to expand at a compound annual growth rate of 8.94% between 2023 and 2027, when it will likely hit $5.27 billion in revenue. Fashion is the biggest category in Greek e-commerce, accounting for 34% of total sales.
Summary of Greece's fiscal policy
Based on the Sustainable Governance Indicators, Greece was ranked 24 in 2022, which meant that it was above the average of countries surveyed that year. Greece was one of the lowest-ranked countries in 2019 due to its economic policies.
The coronavirus pandemic hampered the country's effort to recover from the earlier economic crisis. However, the government took several measures to boost the economy.
The country's unemployment rate declined to 13.3% by late 2021 and it fell further to 11.2% by 2023. The government also introduced a new labour law that accommodates flexible working hours.
The country's economic output also returned to the pre-pandemic level by 2021, reflecting a faster-than-expected recovery in tourism, household consumption, and foreign investment. Experts note that the government's strong fiscal response, the central bank's monetary policies, and EU support are vital in supporting Greece's economic recovery.
The number of nonperforming loans has fallen significantly due to the government's Hercules Programme and improved liquidity in the banking system. Authorities currently focus on developing policies that support privatisation and digitalisation. Greece is also working to repay its outstanding debt to the IMF.
One of the government's biggest challenges is widespread tax evasion and a narrow tax base. Additionally, spending on research and development remains low compared with the country's EU peers.
How people pay in Greece
An overview of how people in Greece choose to make payments.
Most popular payment methods
Traditional payment methods
The primary traditional payment methods used in Greece
Visa currently accounts for 47% of card-based payments in Greece. This payment processor offers services via debit or credit cards that display its logo. Most commercial banks in Greece, including Alpha Bank, offer Visa cards to their clients.
Mastercard's share in Greece's card payment market is 52%, slightly larger than Visa's. Like Visa, Mastercard-branded cards offer benefits such as reward points to users. Cardholders can exchange these points for various real-life rewards. Most Greek commercial banks, including Piraeus Bank, also offer Mastercard-branded cards.
Alternative payment methods (APMs)
Alternative payment methods
Google Wallet has become a prevalent digital payment service in Greece because many people use Android devices. This wallet allows customers to make payments with their mobile devices at merchants. The device must be equipped with NFC technology.
Apple Pay is less prevalent than Google Pay in Greece because fewer people own Apple devices. Apple's market share in Greece ranged between 15% and 16% in 2023. However, merchants in larger cities have started to accept payments from this digital wallet service.
Qiwi is another popular digital wallet in Greece. This wallet is accepted by 75,000 merchants across the globe. It allows Greeks to pay for utilities, goods, loans, and even make money transfers. Its virtual card also allows people to shop online with ease.
PayPal is the most widely used digital payment platform in Greece. A survey conducted by the European Central Bank showed that one in every five Greeks uses this digital wallet. This payment option is popular because it is cost-effective, especially for personal use.
Accepting payments in Greece
A guide to accepting payments in Greece.
How to accept online payments in Greece
An online payment scheme occurs between several parties: a payer or buyer, a merchant or business, an issuing bank or financial firm, and an acquirer. In this payment scheme, multilateral interchange fees are usually applied, increasing the operational costs for merchants.
Although several payment gateway and authorisation service providers operate in Greece, they generally process payment in a similar procedure to other nations.
The buyer selects the payment method at checkout, filling out their banking information.
The merchant's system then sends the payment details to the acquiring service. They will send a payment request to the issuing bank or financial firm.
The issuing institution will confirm whether the buyer has enough funds in their account to pay the transaction. Once confirming the fund availability, the issuer will send an authorisation code to the acquirer.
The acquiring service sends the authorisation code to the merchant, completing the payment. The merchant can then process the delivery of goods or services to the buyer.
How long does it take to make an international payment from Greece?
In recent years, it's easier for residents to make international payments. However, the speed and ease of international payment still vary depending on the method.
Bank transfer: International bank transfers from Greece can take days to complete. However, some banks, such as the National Bank of Greece, offer instant transfers.
Online money transfers: Greeks prefer to transfer money internationally using online because they don't need to visit banks or contact banking officers. The speed of international transfers depends on digital wallets, varying from minutes to hours.
By deciding to accept digital payments, merchants must be prepared to add payment processing fees to their operational costs. These fees are imposed on merchants, not consumers. Some merchants opt to increase their product prices to cover these costs.
Interchange fees: Credit card companies charge this fee to the merchants via their service providers. The fees are based on the type of card and the value of the transaction. It can be a flat rate or a percentage of the transaction value, depending on the issuer's policy.
Merchant service fees: Merchants pay this fee to the acquiring service. Regulated/unregulated debit, capture method, channel, holder location, and merchant's transaction capacity are among the factors that influence the fees.
Businesses based in Greece also pay extra fees for accepting international payments. The fees include currency conversion and international processing costs.
Security challenges of online payments in Greece
The government has pushed for digitalisation in various sectors, including online payments. In 2022, Greece even began to roll out a virtual wallet for citizens, replacing the need to carry physical IDs or driver's licence. Nevertheless, safety concerns remain an issue in the adoption of digital payments.
In the third quarter of 2021, Greece ranked 5th globally in the prevalence of phishing scams. Many of these scams involve the use of prominent Greek businesses and organisations. Scammers pretend to represent trusted brands to entice consumers into sharing their banking information.
Bank clients in Greece are also vulnerable to attacks, according to Cyble Research & Intelligence Labs. An emerging tactic is fake websites posing as Greece's tax refund platform.
Article 22 of Law 5019 of 2023 is aimed at increasing consumer protection. Payment service providers must implement additional safeguards for online transactions. If not, they will be legally required to compensate the victims of online scams involving amounts exceeding €1,000.
Experts have also called for the introduction of an automated risk analysis system, especially with the EU planning to boost instant payments across the regional bloc. According to Moody's Analytics, risk analysis must occur at a fraction of the current time needed if the EU wants to achieve a significant increase in instant payments.
Key sectors & industries in Greece
The following sectors and industries have contributed most to the Greek economy over the past years.
Tourism is one of the largest sectors in the Greek economy, contributing 20% to the country's GDP. International tourism accounts for 80% of total income. The sector has become a pillar of the country's economic recovery following the pandemic.
The Bank of Greece reported that the balance of travel services had recorded a surplus of €233.2 million in the first quarter of 2023. In the same period, travel receipts rose by 63.8%, while inbound travel flows gained 74.7%. Experts have pointed out that Greece needs to continue developing its tourism sector to maintain sustainable growth while adopting an environmentally friendly approach.
Shipping and Marine Services
The Greek shipping industry contributed approximately 7.5% to the country's GDP. Gross receipts from marine services exceeded an average of €13 billion per year between 2015 and 2021. According to recent data, Greek shipping services even indirectly contributed up to $1 trillion to the US economy.
Greece remains at the top of the global shipping chain. The country ranks No. 1 in the world in terms of merchandise vessel ownership, with a 28% increase in owned capacity over the past five years. Meanwhile, the average vessel's size nearly doubled, indicating that Greek ship owners commonly operate in high-volume markets. Ship owners also maintain the median age of their fleets lower than the global standard.
Agriculture contributes around 4.1% of the country's GDP. Understanding the importance of this sector, the government works with the EU to ensure its sustainable growth. The EU has committed to support Greece with €13.5 billion in funding between 2023 and 2027. The funding is delivered through two schemes, the European Agricultural Guarantee Fund and European Agricultural Fund for Rural Development.
The Greek agricultural sector is characterised by low capital investment and small-scale farm ownership. About 5 million hectares of land is used for agriculture, with 43% in mountainous or semi-mountainous areas. Olives, cheese, and cotton are popular agricultural products from Greece. The top markets for Greek goods are Germany, Italy, and the UK.
The Greek mining sector accounts for approximately 4% of the country's GDP if accounting for related activities such as processing and quarrying. Most Greek mining products are exported, representing 65% of total sales in the sector. The mining sector also employs a significant portion of the country's labour force.
Due to its geographical location, Greece is rich in metallic minerals. Its top mining products are bauxite, copper, and gold. Industrial minerals like bentonite, gypsum, and kaolin are also produced.
Information and Communication Technology
Greece ranked 25th out of the 27 EU member states in the Digital Economy and Society Index in 2022. The government has a plan to fully digitise Greece by 2025. It has increased investment in information and communication technology (ICT) to drive digital transformation. The pandemic helped speed up the digital transition, with the government moving various public services online.
Greece's ICT market was worth $7.203 billion, according to 2021 data. Economists expect the sector to maintain its growth trajectory from 2022 onward, with the adoption of 5G technology seen as a catalyst. The leading sub-sectors are IT hardware equipment, IT services, and business software.
Food processing is a key sector in Greece, employing 10% of the country's labour force. Experts project the production of processed food in the country to decline at an annual rate of 2.1% between 2021 and 2026.
However, from a revenue standpoint, the sector is expected to see moderate growth. By 2026, sales of food products are expected to hit €14.7 billion. Meanwhile, spending on food products could rise to €21.6 billion over the same period. Olive oil is one of the top products in the sector.
Greece is currently focusing on developing its renewable energy sector. Renewable energy accounted for 20% of Greece's energy use as of 2021, with the country planning to increase it to over 60% by 2030. In January 2023, the government presented the revised National Energy and Climate Plan (NECP), part of which calls for the construction of a large-scale energy storage facility.
The country generates renewable energy from various sources, including solar, wind, and hydro. Mordor Intelligence predicts that the Greek energy market will expand at a compound annual growth rate of 4.20% between 2023 and 2028.
This sector contributes 5.5% of the country's GDP but accounts for up to 13% of the country's annual exports. Around 60% of chemicals produced by Greek companies are exported. Chemical plants are spread across the country, with plants based in northern Greece responsible for 20% of the total output.
The chemical industry employs nearly 13,000 people nationwide. Large chemical companies mainly produce basic chemicals, petrochemicals, fertilisers, and polymers. Small and medium companies focus on consumer products, construction and isolation materials, and agrochemicals. A small portion of companies in the sector are involved in the production of nanomaterials.
Regulation in Greece
The regulatory environment of Greece.
Summary of the regulatory environment in Greece
Greece has reformed its business regulation to foster a conducive environment for domestic and foreign companies.
Corporate law: Greece recognises various legal business forms, including public limited companies and limited liability companies. Each type of legal entity operates under a different law, such as public limited companies, which are governed by Law 4548 of 2018.
Employment law: Greece has introduced Law 4990 of 2022 to improve workers' rights. The law deals with industrial relations, employee data protection, and termination of employment. It also allows for maternal leave and family leave.
Consumer protection law: Law 2251 of 1994 protects consumers in Greece. This law provides guidance for companies to advertise their products and services. It also offers guidance for dispute resolution and compensation.
Competition law: The Greek Competition Act (Law 3959 of 2011) ensures that all businesses operating in the country implement fair competitive practices.
Data protection law: Law 4624 of 2019 is the country's main data protection law. It incorporated Directive (EU) 2016/680. This law mandates companies to appoint data protection officers to oversee their digital operations. It also guides companies in solving data breaches.
How card payments are regulated in Greece
Credit cards are widely accepted in the country, especially in tourist areas. The government requires businesses to accept credit cards as a response to its financial crisis. This strategy is done to crack down on tax evasion. According to the Foundation for Economic and Industrial Research, government regulation has pushed card payment adoption in Greece.
All card issuers in Greece must obtain a licence from the central bank under Bank of Greece Executive Committee Act 193/1/27.09.2021 The central bank also monitors the operation of these financial institutions. The law further requires firms to implement safety measures to protect consumers.
Do I need a licence?
All companies in Greece require a licence to operate. The licence application process has become fully digital in recent years. The applicant must have an active tax identification number to register their business. The TAXIS system credentials, username and password, will be used throughout the registration process.
Non-Greek EU citizens can acquire tax identification numbers from their home countries. However, they must fill out a digital application form and make an appointment for an online meeting with an officer from the Independent Authority for Public Revenue (AADE).
Payment solutions in Greece
An overview of how to accept payments from customers in Greece.
Payment gateways and providers in Greece
E-commerce businesses based in Greece must offer various payment methods to consumers so that they can personalise services. This accommodative approach is necessary because certain payment methods may not be accessible to a group of people.
Unfortunately, managing multiple payment systems simultaneously is challenging because each payment service implements different policies. Payment tech firm APEXX can help Greek merchants tackle this challenge. The London-based firm provides an all-inclusive solution to simplify payment management.
APEXX's Payment Orchestration Layer (POL) is a hub for multiple payment services. Its features can improve the payment experience, not only for merchants but also for buyers. POL is equipped with automated routing, designing a specific payment scheme for every single transaction. POL considers the potential costs and risks of each service. It leads to a significant reduction in transaction fees and payment failures.
POL's APIs and pre-built plugins enable merchants to integrate the technology instantly into their existing systems.
Cheapest payment solutions in Greece
Greek merchants who accept digital payments can implement the following strategies to lower fees:
Negotiate fees with payment services: Businesses, especially those with high transaction volumes, have a chance to lower their payment processing costs by negotiating with service providers.
Opt for the most suitable pricing model: The pricing model determines how much the business will spend on payment processing costs. It depends on the business size and transaction volume and types. Usually, a new business will use the flat rate model.
Set up account and terminal properly: Merchants must set up their accounts properly to prevent future errors. Filling out the business' banking details inaccurately can result in rejected payment requests, causing the business to lose money. Terminals also affect processing costs.
Flag fraud immediately: Businesses must flag fraud immediately, hopefully before transactions are conducted. It can prevent chargebacks from payment processors. Some merchants use address verification to reduce fraud risks.
Managing multiple payment systems is challenging for merchants. It increases the necessity of using payment services like APEXX. The automated payment routing system will enhance business efficiency. The ease of payment also increases the likelihood for customers to close deals with merchants.
BNPL in Greece
The expanding e-commerce market, precipitated by the coronavirus pandemic, has stimulated the growth of the buy now pay later (BNPL) sector in Greece. BNPL allows people in the country, which has a GDP per capita of $20,732, to easily afford products and services. They have the freedom to pay bills in instalments.
Data show that BNPL payments in the country will grow by 55.2% to $1.69 billion in 2023. The BNPL market is projected to expand at a compound annual growth rate of 31.1% between 2023 and 2028, when it will likely hit $6.55 billion.
As an EU member, Greece follows the bloc's guidelines in managing its BNPL market. Based on EU regulations, BNPL firms must assess their customers' credit scores before approving loan applications. The EU also requires BNPL providers to display the total costs of the loan upfront.