The Cards and Payments Industry in Russia: Emerging trends and opportunities to 2020
Cash is the preferred payment instrument in Russia, accounting for 60.3% of total transaction volume in 2016. But despite economic turmoil the Russian payment card market grew substantially in terms of both volume and value during the review period (2012-16). The uptake of electronic payments can be attributed mainly to government initiatives such as financial inclusion programs, regulations to cap cash payments, and the introduction of the National Payment Card System (NPCS). In October 2013, the Russian Ministry of Finance introduced regulation that dictates retailers with annual sales of over $1.0m (RUB60m) are required to install point of sale (POS) terminals to accept card payments. In addition, the cap on cash payments was reduced from $9,793.30 (RUB600,000) to $4,896.70 (RUB300,000) in 2015.
Debit cards dominated the payment card market in terms of transaction volume and value during the review period. Growth was supported by the increased banked population, consumer awareness about the benefits of debit cards, improved banking infrastructure, and growing awareness of debt control. Payroll programs are a leading way of issuing cards, and have led to the widespread issuance of debit cards. All major banks in the country - Sberbank, VTB24, OTP Bank, and Raiffeisen Bank - offer payroll cards.
Consumers in Russia mostly opt for traditional payments such as payment cards to pay for online purchases. To further boost e-commerce transactions via payment cards, banks are offering virtual cards, and with the availability of alternative payment solutions such as PayPal, Yandex.Money, Masterpass, and MTS Money Wallet, digital wallets are slowly gaining popularity among Russian consumers. In terms of e-commerce transaction value, the stake of digital wallets increased marginally from 25.5% in 2012 to 26.7% in 2016.
Value of e-commerce transactions has grown rapidly in Russia, increasing from $11.9bn (RUB730.5bn) in 2012 to $23.5bn (RUB1.4tn) in 2016 (18.5% compound annual growth rate [CAGR]). The value is expected to increase further at a forecast-period (2016-20f) CAGR of 7.9%, to reach $31.9bn (RUB2.0tn) by 2020. An increased number of internet users in Russia, a growing preference among consumers for online shopping, and the availability of online sites all supported growth in e-commerce. Digital wallets are gaining popularity among Russian consumers, accounting for 26.7% of the total e-commerce transaction value in 2016.
Contactless technology is expected to gain prominence among Russian consumers. Almost all the major banks - including Sberbank, Alpha-Bank, MTS Bank, Russian Standard Bank, Tinkoff Bank, Gazprombank, and Raiffeisen Bank - issue contactless cards in the country. According to a Visa survey conducted in September 2016, 41% of Russian consumers own a contactless payment card, out of which 38% use them. The Russian government and scheme providers are actively involved in the promotion of contactless technology, especially in the public transport space. For example, Mastercard collaborated with the St Petersburg government in 2015 to introduce contactless payments via Mastercard PayPass technology on the St Petersburg subway.
The report The Cards and Payments Industry in Russia: Emerging trends and opportunities to 2020 provides top-level market analysis, information and insights into the Russian cards and payments industry.
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