Press Releases

Dear friends,

Distinguished guests,

It is a great pleasure and honor to be among you today to discuss the present and the future of digital payments. In our times, which have been aptly termed “the digital era”, the rapid evolution of technology has brought about revolutionary changes in all aspects of our daily lives, including, of course, in the way we carry out financial transactions. Smartphones, video conferences, social media, search engines providing easy access to a vast pool of information, mobile wallets and peer-to-peer payment apps as well as blockchain and artificial intelligence are just a few of the innovations that are transforming our world.

In Cyprus, the digital payments ecosystem is rapidly developing, driven by the growth of e-commerce, the increasing adoption of smartphones, and the efforts of key players such as JCC Payment Systems and the Central Bank of Cyprus. Developments such as the potential introduction of a Central Bank Digital Currency (CBDC) by the Central Bank of Cyprus could further accelerate the adoption of electronic payments in the country and provide additional benefits, such as higher financial inclusion and lower transaction costs. In addition, key players such as PayPal and Revolut, have also entered the Cypriot market, offering consumers and businesses a wider range of digital payment options.

The Government is also building its own electronic payment platform to facilitate transactions between the Government and citizens, professionals and businesses. Through the CY_Payment Platform, all forms of electronic payments are supported, including with bank transfers and credit cards. Moreover, citizens will be able to see all their transactions as well as store details of payment methods so that they can be reused.

Moreover, the Government is in the process of implementing an e-invoicing system which will enable us to carry out transactions with our contractors electronically.

Digital payment platforms Ladies and Gentlemen have the potential to provide access to financial services for those who reside for example in remote, rural areas, however, that can only be achieved provided that citizens and businesses have the necessary internet access and digital skills.

To this end, on its part, the Government, is financing within the framework of our National Digital Strategy, the coverage of all remote areas of Cyprus with ultra-highspeed broadband networks and is implementing a number of actions aimed at facilitating the digital transformation of businesses. For the period 2021-2027, a financing scheme with a total budget of 30 million euros will support the digital transition of businesses, including the use of cutting-edge technologies such as artificial intelligence, blockchain and cloud computing. The Cyprus Digital Innovation Hub, which is co-financed by the Deputy Ministry of Research, Innovation and Digital Policy is also expected to support the digital transformation of small and medium enterprises and the public sector. Additionally, to enable our citizens to fully exploit the possibilities offered by technology, the government implements the National Action Plan for Digital Skills to upgrade the skills of the entire population, for an economy without social exclusions.

 Ladies and gentlemen,

The digital payments ecosystem of Cyprus is also affected by the growing interest we are witnessing lately in cryptocurrencies and blockchain technology. Blockchain technology and the rise of cryptocurrencies are examples of innovations that cater to the need for reliable payment methods, by offering decentralized and secure payment options. On April 20, the European Parliament voted the Regulation on the Markets in Crypto-assets and the Transfer of Funds Regulation. Crypto firms across Europe welcomed the passing of the landmark legislation by the European Parliament, which brings regulatory clarity to a burgeoning innovative industry and one of the largest markets in the world, making the EU, an even more attractive place for companies. EU legislation, in particular MiCA, will allow to fully exploit the potential of cryptocurrencies and mitigate risks for investors and consumers. The European Union is promoting innovation in blockchain technology and the development of the ecosystem of distributed ledger technologies, aspiring to consolidate Europe's position as a world leader in this rapidly growing technology. Cyprus belongs to the main hotspots for blockchain technology in Europe. It is no coincidence that the academic institutions of our country play a leading role in the preparation of studies on the European blockchain ecosystem. For instance, the Institute for the Future (IFF) of the University of Nicosia has coordinated a thorough study by the European Observatory and Forum on Blockchain published in 2020. According to the study, in terms of the maturity level of the business ecosystem, Cyprus is among the pioneer countries in Europe, having implemented a national strategy to support and promote blockchain as early as 2019. In fact, Cyprus has already established itself as a hub for blockchain innovation, with several blockchain startups and cryptocurrency exchanges operating in the country. As these technologies continue to grow, they could play a pivotal role in shaping the future of digital payments in Cyprus.

Another important development in the digital payments’ ecosystem is the creation of the digital wallet throughout the EU. In accordance with EU Commission’s relevant recommendation, in order to ensure that all natural and legal persons in the Union have secure, reliable and seamless access to cross-border public and private services, each Member State should issue a European digital identity wallet.

European digital identity wallets enable the user to (i) securely request and receive, store, select, combine and share legally necessary personal identification data and electronic attestation of attributes to verify their identity when using online public and private services and (ii) to sign with approved electronic signatures.

The European coordination project that will prevent the implementation of the future European digital identity framework from being undermined has started in April 2023 and will last for 24 months. The Deputy Ministry together with partners from the private sector and the University of Cyprus participates in the Potential consortium, together with the other Member States.

The e-wallet will among other, offer an interconnection service with a certified electronic identity (eID) provider, for identification purposes at a High Level of Assurance (High Level of Assurance) using the JCC authenticator.

Dear friends,

The demand for safe, global electronic payment solutions is on the rise. New generations, such as the Generation Z, namely those born between 1997 and 2012 have grown up in a world where technology is ubiquitous. Technology is an integral part of their lives. Moreover, owing to globalization, they are more likely to travel, study, and work abroad than previous generations, and as a result, they require payment platforms that can accommodate cross-border transactions with ease.

That is partly why we are continuously witnessing new advancements in the international digital payments’ ecosystem. To mention just a few: digital currencies, contactless payments, open banking, real time payments, and biometrics for authentication.

Several central banks are exploring or actively developing their own digital currencies. China has been testing its Digital Currency Electronic Payment system, while the European Central Bank  is working on a digital euro. The US Federal Reserve is also researching the potential for a digital dollar. Mobile wallets and contactless cards have become more popular as a result of contactless payments, which have been hastened by the COVID-19 epidemic. As consumers place a higher priority on safety and convenience, this trend is anticipated to continue. To facilitate immediate transactions between banks, countries are rapidly establishing real-time payment systems. Initiatives to promote open banking are gaining pace and enabling third-party service providers to access customer data and provide cutting-edge financial services. Regulatory frameworks that support open banking include the UK's Open Banking Initiative and the Revised Payment Services Directive of the European Union. Digital payment systems are increasingly using biometric authentication techniques like fingerprint scanning and facial recognition to increase security and user experience. At the same time, businesses are looking on ways to use stablecoins and blockchain technology to increase the speed, cost, and efficiency of cross-border payments.

Ladies and gentlemen,

To conclude, allow me to congratulate the organizers of this event. I am sure that today’s Forum will provide the opportunity to exchange ideas and examine thoroughly how new technology, legislative developments and the new generations’ mindset will influence how transactions are made in the future, reshaping our economies and our societies on a global level. I wish you fruitful discussions.

Thank you.

(MH)