Polish Banks Team Up To Expand Mobile Payments, Bypass Global Majors

By Patryk Wasilewski

WARSAW--Six major Polish banks Thursday announced they have agreed to expand a mobile payments system that could rival Visa Inc. (V) and Mastercard Inc. (MA) in the largest emerging market in the European Union.

The alliance, led by the state-controlled PKO Bank Polski SA (PKO.WA), aims to capture some of the market for cash-based transactions that make up for 77% of non-Internet based transactions in Poland.

The system will be based on PKO BP's existing system which allows its clients to use a mobile phone to pay out cash from automated teller machines or pay at retail points instead of using a debit or credit card. The new platform will allow users to pay over the Internet and transfer funds between accounts.

As well as PKO Bank, the initiative includes Bank Zachodni WBK SA (BZW.WA), BRE Bank SA (BRE.WA), Millennium (MIL.WA), Alior Bank SA (ALR.WA) and ING Bank Slaski SA (ING.WA). It will have a potential customer base of around 16 million and hold a 70% market share in 18-35 year-olds who are most likely to use mobile payments.

"The idea is that the system will be more effective and cheaper than the card-based system," Millennium's Chief Executive Boguslaw Kott said.

"This will certainly create a basis for potential discussions on lowering interchange fees," BRE's Chief Executive Cezary Stypulkowski said.

The banks would like the new system to go online before the Christmas holidays or early next year.

Poland's central bank and financial regulator recently pressured Visa and Mastercard to lower their fees charged for using cards starting from 2014.

With the Polish economy slowing and the main interest rates at a record low of 2.5%, banking sector earnings are under pressure. Lenders are introducing new products for clients in an attempt to increase fees that heavily depend on transaction volumes.

Write to Patryk Wasilewski at [e-mail]

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