CZECH BANKS LAUNCH NEW PAYMENT SYSTEM

A compromise between cards and cash? Czech banks launch new payment system

The new tool which negates the need for a classic payment terminal, helps reduces fees for businesses and is open to all bank clients.

In a push to advance cashless transactions, four Czech banks, spearheaded by Air Bank, are rolling out a novel solution that lets merchants skip traditional terminals while eliminating the need for customers to pay in cash.

While 90 percent of Czechs use cashless payments at least once a week, a recent survey found that over half of consumers reported that they have encountered businesses that do not accept cards, often due to the high costs associated with payment terminals.

A simpler method of payment

The innovative new system, dubbed Cvak (a Czech word that signifies a click), pledges a reduced transaction cost for merchants, contingent on their installation of a designated mobile application, and simplifies the payment process for customers.

With its promise of lower costs and convenience for both merchants and customers, the new system is expected to change the way payments are made in the country.

Fio, mBank, and Moneta Money Bank are also part of the project. Jan Bláha, director of the business and innovation division of Fio banka said, “In this new payment method, we see an opportunity for a significant shift in the system of accepting cashless payments for small entrepreneurs and self-employed people, who are the real backbone of our economy.”

Open to users of all banks

Both the merchant and the consumer can have an account with any domestic bank to use Cvak; they do not need to have an account with any of the four banks currently offering the Cvak system.

Customers can make payments through Cvak using their mobile banking app from participating banks, such as Air Bank, Fio banka, mBank, and Moneta Money Bank. If a customer does not have one of these apps, they can still pay via Google Pay or Apple Pay.

Expanding payment options in rural areas

Banks are confident that Cvak will expand cashless payments to areas where they were previously uncommon, such as mountain resorts. Such a development is significant for the Czech Republic, where cash is still the preferred method of payment for many. By offering a more affordable and convenient solution, the system is expected to encourage more businesses to adopt cashless payments.

Alternative user-friendly methods for non-cash transactions, such as QR code payments and transfers via phone number, already exist Czechia. However, Cvak is the first of its kind in the Czech Republic, offering a unique solution for businesses to go without a payment terminal while still accepting non-cash transactions.