AzFina: Less than 1% of entrepreneurs use digital payments

Less than 1% of entrepreneurs in Azerbaijan use digital payments, Zeynal Karimzada, a member of the Board of Directors of the Azerbaijan Fintech Association (AzFina) Public Union, said at an event held in Baku on Azerbaijan's digital finance agenda, Report informs.

"According to data released by the State Tax Service under the Ministry of Economy, there are currently 882,000 active taxpayers in Azerbaijan, and approximately 822,000 of them are SME entities. This means that the majority of these businesses will undergo digitalization in the future. Unfortunately, when we look at current trends, we see that less than 1% of entrepreneurs are fully digitalized. This situation has both positive and negative aspects. The positive side is that there are great opportunities in the market. Thousands of entrepreneurs will digitalize in the future, and the services they use will also transition to digital form. Because suppliers, service-providing companies, and businesses selling various products operate within this ecosystem. The negative side is that a certain part of the market has digitalized, but this process has not gone in the right direction. In the post-pandemic period, payments were mostly carried out in what we call the 'grey zone' – through card-to-card transfers, cash payments, and various e-wallet transfers," he noted.

Karimzada added that currently, quite large payments are made through unofficial channels: "We hope that in the coming years, and even in the coming months, a larger portion of these transactions will move to an official and transparent digital environment. This means new opportunities and a large market for fintechs. Because currently, there is competition for a limited number of active customers in the market, and companies are fighting over the same customers by lowering commissions. The expansion of the market will create new development opportunities for all participants."

In addition, according to him, by the end of this year, e-commerce turnover in Azerbaijan is expected to exceed 90 billion manats ($52.9 billion): "Last year, this figure was 86 billion manats ($50.6 billion). Although the growth rate may appear relatively lower compared to previous years, we observe that the market continues to grow, and this trend is expected to continue in the future. An interesting point is that the amount and the number of transactions are not growing in parallel. For example, while a 4.6% increase in transaction amount is expected by the end of the year, the increase in the number of transactions is forecast to be 10%. This indicates that the number of transactions is increasing, but the average check amount is decreasing. This may have various reasons, such as consumer behavior changes, an increase in small-amount payments, and wider adoption of digital payments."