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Payments Landscape in Russia: Opportunities and Risks to 2021

Payments Landscape in Russia: Opportunities and Risks to 2021

Summary

Debit cards dominated the payment card market in terms of transaction volume and value during the review period. Payroll programs are a key way of issuing cards, and have led to the widespread issuance of debit cards. This was further supplemented by the large-scale issuance of domestic payment card Mir. The government mandate that all public sector employees and workers who receive welfare benefits from federal or state funds will migrate to Mir payment cards from July 1, 2018 will further enhance usage of Mir debit cards.

Although cash plays a dominant role, accounting for over 52% of total transaction volume in 2017, the Russian payment card market is gradually shifting towards electronic payments, as it grew substantially in terms of both transaction volume and value during the review period. 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, which launched the first national payment card, Mir, in December 2015.

Russian consumers are increasingly becoming comfortable with online spending. Although credit and debit cards together account for around 29% of the total value of e-commerce spending in Russia, cash or cheque on delivery is the single most popular payment tool. Alternative payment solutions such as Yandex, Money and PayPal are becoming popular within the e-commerce space, mainly because of the security and comfort they offer.

Contactless payments are gradually gaining prominence in Russia. Almost all the major banks issue contactless cards in the country. In May 2017, Sberbank migrated most of its card portfolio to contactless. As a result, it had issued nearly 15 million contactless Visa and Mastercard payment cards by September 2017. VTB24 has partnered with Visa for contactless payments on the metro, while Alfa-Bank collaborated with Russian Railways and Mastercard to launch contactless payment cards.

The report Payments Landscape in Russia: Opportunities and Risks to 2021, provide top-level market analysis, information and insights into the Russian cards and payments industry, including -

  • Current and forecast values for each market in the Russian cards and payments industry, including debit, and credit cards.
  • Detailed insights into payment instruments including credit transfers, direct debit, cash, and payment cards. It also, includes an overview of the country's key alternative payment instruments.
  • E-commerce market analysis and payment methods.
  • Analysis of various market drivers and regulations governing the Russian cards and payments industry.
  • Detailed analysis of strategies adopted by banks and other institutions to market debit, and credit cards.
Companies mentioned in this report: Sberbank, VTB24, OTP Bank, Russian Standard Bank, Alfa-Bank, Tinkoff Bank, Visa, Mastercard, Mir, Golden Crown, and American Express

Scope
  • Alternative payments are gaining prominence in Russia with the launch of global payment solutions including Alipay, Android Pay, Apple Pay, and Samsung Pay. Alipay was launched in Russia in April 2017, enabling Chinese tourists visiting the country to make payments at partnered networks using Alipay. To expand the use of Alipay, in August 2017 Ant Financial Services partnered with VTB Group, allowing Chinese tourists to use Alipay at more than 120,000 VTB POS terminals across Russia. Meanwhile Google launched Android Pay in Russia in May 2017. The solution enables users to make in-app, in-store, and online payments by storing debit, credit, loyalty, and gift cards on the wallet.
  • To disrupt the payment card market, which is currently dominated by international scheme providers Mastercard and Visa, the government launched the Mir national payment card in December 2015 under the National Payment Card System. A total of 30 million Mir payment cards were in circulation in Russia as of 2017. A new federal law mandates that all public sector employees and workers who receive welfare benefits from federal or state funds will migrate to Mir payment cards from July 1, 2018. In addition, to increase Mir acceptance in international markets the cards are now being issued as co-badged cards with American Express, JCB, and Mastercard. The rising number of Mir cards is anticipated to pose serious competition to Mastercard and Visa in the long run.
  • To foster the use of electronic payments in the country, in September 2017 the central bank and Russia’s FinTech Association approved the development of a new platform, Fast Payments System, for instant retail money transfers. The platform will operate on a 24/7, 365 days a year model. Initially the service will be available for customer-to-customer and business-to-customer transactions such as e-commerce payments, taxes, and fines. Individuals can make payments using their mobile phone, an email address, or an account on social networks; the transactions will be instant and irrevocable. According to the FinTech Association the pilot will begin in early 2018, and a full commercial launch will be rolled out based on the success of the testing.
Reasons to buy
  • Make strategic business decisions, using top-level historic and forecast market data, related to the Russian cards and payments industry and each market within it.
  • Understand the key market trends and growth opportunities in the Russian cards and payments industry.
  • Assess the competitive dynamics in the Russian cards and payments industry.
  • Gain insights into marketing strategies used for various card types in Russia.
  • Gain insights into key regulations governing the Russian cards and payments industry.


Executive Summary
Executive Summary
Card-based Payments
E-commerce Payments
Alternative Payments
Payments Infrastructure & Regulation
Appendix

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