Payments Landscape in Russia: Opportunities and Risks to 2022

Payments Landscape in Russia: Opportunities and Risks to 2022

Summary

The Russian payment card market evolved at a rapid pace during the review period; it experienced a strong compound annual growth rate (CAGR) of 20.6% between 2014 and 2018, in terms of the overall transaction value. Consumers are enthusiastically embracing new technologies, and increasingly preferring card-based payments for low-value transactions. A growing e-commerce market, the adoption of alternative payments, the introduction of mobile-only banks and the growing popularity of contactless payments will further drive electronic payments in the country.

Mir was introduced in December 2015, and by December 2017 a total of 372 banks had joined the system, with over 140 banks issuing these cards. This provided a much-needed push to the overall payment cards market. The relatively low interchange fee charged on Mir cards, coupled with loyalty programs associated with card transactions, is driving its use in Russia.

Meanwhile, financial inclusion initiatives and improving banking infrastructure also contributed to the rise in the Russian payment cards market. While the international scheme providers Mastercard and Visa continue to dominate the Russian debit card market, they are now experiencing a decline in their share, owing to the rise in adoption of Mir cards.

Debit cards dominated the overall payment card space, accounting for 96.6% of debit card transaction value in 2018; rising banked population and a general consumer preference for debit cards over credit cards drove this growth. Following a period of limited access to credit facilities against the backdrop of the economic crisis in 2015, credit cards are gradually gaining adoption amongst Russians, supported by central bank initiatives and banks actively issuing credit cards to their customers. Overall, the frequency of credit card payments rose from 22.5 per card in 2014 to 58.9 in 2018.

The e-commerce transaction value grew from RUB1,287bn ($22.3bn) in 2014 to RUB2,201bn ($38.1bn) in 2018, at a review-period CAGR of 14.4%. Rising consumer confidence in online purchases, coupled with an increasing number of merchants entering this space, drove this growth. To capitalize on the growing e-commerce market, retailers such as H&M, Vans, L’Oreal and Furla; and international-commerce player such as Alibaba are entering this space. Consequentially, the rise in e-commerce is driving overall electronic payments.

The report "Payments Landscape in Russia: Opportunities and Risks to 2022" provides 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 debits, cash, and cards. It also, includes an overview of the country's key alternative payment instruments


• E-commerce market analysis


• 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: Sberbank, VTB Bank, OTP Bank, Russian Standard Bank, Alfa-Bank, Gazprombank, Raiffeisen Bank, Societe Generale Group, Bank Uralsib, UniCredit Bank, Mastercard, Visa, Mir, Golden Crown, American Express.

Scope

• A federal law signed by the Russian president in May 2017 mandated that all public sector employees and workers who receive welfare benefits from federal or state funds to migrate to Mir payment cards from July 1, 2018. To increase acceptance in international markets, these cards are now being issued as co-badged cards with American Express, JCB and Mastercard.


• Alternative payments are gradually gaining adoption in Russia. Consequently several players are entering this market to capitalize on its growth. Most recently, Google Pay - initially launched as Android Pay - was introduced to Russian customers in May 2017. This solution enables users to make in-app, in-store and online payments using the payment card details stored in the wallet. Several leading players are also present in the mobile payments space in Russia, including Samsung Pay, launched in September 2016, and Apple Pay, which was launched in October 2016. Yandex.Money, launched in 2002, is now one of the most popular payment solutions in Russia; as of December 2018, the solution serves around 46 million users.


• Contactless card usage in Russia is gradually on the rise, supported by a rise in consumer adoption and merchant acceptance of contactless payments during the Fifa World Cup. More specifically, Visa - which was the official payment service partner of Fifa in 2018 - enabled over 3,500 POS terminals in stadiums to accept contactless payments. According to data published by Visa in July 2018, over 50% of purchases made by Visa cardholders in the tournament venues were made through contactless technology, including cards and mobile apps. In addition, to boost contactless payments in 2018, Russian banks introduced contactless ATMs, which enabled users to make transactions via Apple Pay, Samsung Pay and Google Pay.

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.