The growth of electronic payments and e-commerce development in Russia is exponential. As a confirmation new giant players try not to lose opportunities and enter the market. Most remarkably, in mid-September 2013 Paypal started accepting payments in Russian rubles.
Online payments main market players
The main players of the Russian online payments market are – WebMoney, Yandex.Money, QIWI, RBK-money, Kredit Pilot, E-Port, Moneta and Rapida. A large proportion of the electronic payments market is driven by special Russian conditions. This is mainly due to distrust of people to the banking system (similar situations are observed in Africa, while African users prefer mobile payments). Another characteristic special to the Russian market is high monopolization. According to research conducted by J’son & Partners Consulting the share of the most prominent three players (Yandex.Money, QIWI and WebMoney) is 90%.
WebMoney is a global settlement system established in 1998. In general, this is an e-wallet solution which supports different currencies. Currency exchange and assets storage is organized via a network of so called “guarantors” from various jurisdictions.
Yandex.Money – is a payments solution from Russian search engine giant Yandex. The account can be topped up with cash, bank card, and electronic money. Additionally to every Yandex.Money account a bank account can be connected. Mainly it is also an e-wallet solution similar to Paypal. Yandex.Money can be used as an easy solution to pay for mobile services and Skype, online games and different goods. You can also easily transfer money between two accounts, e.g. sending money to your friend of for some services; it is quite popular in the Russian freelancers’ market.
QIWI appeared in Russia in April 2008 with headquarters in Moscow. QIWI payment service covers a range of products. With Visa QIWI Wallet, one can easily pay for services online or even make a payment to a person knowing his mobile phone number. Also there is a service to order plastic card which would be attached to QIWI Wallet with the possibility to pay online as well as in offline shops. Another remarkable feature of QIWI – it has a network of more than 169 thousand kiosks and terminals used by 80 million people with 12 million transactions per day (average payment 146 rubles (5 USD)). The QIWI Wallet system has an audience of 14 million people with 650 thousand transactions per day (average amount 800 rubles (25 USD)). Since May 2013 the company is listed on the NASDAQ stock exchange.
Payment terminals are also some peculiarity of everyday life in Russia. They are literally everywhere and provide clients with an additional payment instrument offering a high payment security level. The main players here are QIWI (mentioned above), also CyberPlat and ElecsNet. The share of these players is about 80% on the market.
Figures of payment systems market in Russia
According to forecasts the volume of Russian electronic payments market in 2015 may reach 3000-3500 billions of rubles (approx. 90-110 billions USD). The most increase is expected in non-bank services, which currently comprise 1/3 of the market and expected to reach 40% in 2015.
According to studies of “Restko Holding” during the 2012 year the market volume increased by 24% and reached 1811 billion rubles (~60 billion USD).
One fourth of all internet users in Russia paid online at least once. And about 30% of all online payments audience is concentrated in Moscow. Half of transactions are done using bank cards and average amount of payment across the country is 2800 rubles (~90 USD).
According to research of PayU and Data Insight Agency, online-payments in Russia become more and more popular: 17 million of Russian citizens in the age of 18-65 years have paid for the goods online at some point of time. Adult internet-audience in Russia is 68 million and 25% of them are users of online-payments. Twelve millions of people in Russia make a payment over internet at least once a month.
Internet payments activity depends on the geographic area. Almost 1/3 of Internet payments users live in Moscow (29%) and 9% is covered by St. Petersburg (“second capital” of Russia). These are most populated cities, but also with highest income across Russia. But even in agricultural regions there are people who pay over Internet – more than 2 million people.
According to results of a recent poll there are about 7 million active online-payers in Russia, who pay over the Internet at least 2 times a week. As mentioned above, the average payment is 2800 rubles (~90 USD), but about half of all online transactions are not exceeding 600 RUB (~20 USD). Higher ticket sizes (more than 5000 RUB (160 USD)) account for 15% of all payments, but they contribute 73% to all online payments.
63% of all users prefer to pay with bank cards (debit or credit cards), 30-35% use electronic money or ebanking and 27% pay online using mobile phone account balance.
Patterns of purchases online
The most popular category of payments is cellular services and other communication services. They are followed by utilities payments, taxes and fines, tickets and tourist services, goods in the shops. The highest value payments are seen in the online-travel segment and the lowest value payments are in online consumer goods and digital services. Payments for tickets and tourist service payments contribute only 7% from the total number of online payments, but 40% of the market volume.
According to research done by J’son & Partners Consulting during the period of 2008-2012 there were structural changes in the market of online-payments in Russia. The share of non-bank services grew from 12% to 31% basically due to reduction in of share in banking services sector.
Last trends on the online-payments market in Russia
The usage of crypto currencies like Bitcoins and later Litecoins is becoming a common practice. Russia is in top leading countries according to interest to Bitcoins from online users and in leading five countries of downloading Bitcoin-applications intensity. Without conversion to real money, Russian citizens can make online payments without a commission, for example to pay for mobile services. The legally official payment system Webmoney supports commission free conversion from Bitcoins to any of its own currencies (WMZ, WMR, WME and others). New processing centers start accepting Bitcoins for online-retailers. Today, crypto currency has become a fully accepted payment method.
Initially, there was fierce competition among electronic payments operators to launch mobile platforms, finally the rivalry ended up in peace: today 100% of online-payments market players have their own mobile applications.
Some payment systems agreed on native integration of mobile devices and their application. For example payment system uBank agreed that their mobile application would be by default provided in the factory software of smartphones Samsung and Fly. Another operator QIWI is trying to achieve the same, but meanwhile not successful.
• State involvement
Recently several laws were issued by Russian government. The federal law called “About National Payment System” was accepted in 2011. It gives definitions for electronic payments and provides requirements to transfers of electronic money. This activity was regulated by many different legal acts, but now there is a separate federal law responsible for all details in this area. The state regulators understand the importance of this market and provide more control over it. The regulation happens mainly through the Central Bank of Russia, which plays the main role in enforcement and supervision of the above law.
Russian state involvement also happens through the increase of shares of state corporates online-payments market players. The increase happens mainly through expansion of Sberbank services (main Russian bank with state ownership). There is even a more direct way of expansion – in July 2013 Sberbank bought 75% of Yandex.Money (e-money wallet in Russia which is used by 17% of population).
This summer top players on the online payments market in Russia – QIWI and Yandex.Money launched a massive campaign of identification of their users. The main reason is legal requirements from mentioned above and AML laws. Now electronic payments equated to bank payments and for all transactions bigger than 15000 RUB (~500 USD) the payer’s identity has to be confirmed. There are agreements achieved with main network business who would help organize identification of payers and transfer information to electronic payment systems representatives.
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PayU and Data Insight research
J’son & Partners Consulting research