Retail Payments in Russia: closing the infrastructure gap

8/7/2019 Retail Payments in Russia: closing the infrastructure gap

1/30

Retail Payments in Russia:

closing the infrastructure gap

Speaker: Jane Zavalishina, CEO

Yandex.Money


2/30

Russia: Enormous and Uneven

140 ,000,000 citizens

17,000,000 km2 area

1100 cities

9 time zones


3/30

Russia: Enormous and Uneven


4/30

Moscow

10,000 / km2


5/30

Evenkia reg.

0.03 / km2


6/30

More than 300 000 times

Moscow

10,000 / km2Evenkia reg.

0.03 / km2


7/30

Banking: also very different

Alfa BankSberBank

most socially oriented most technologically advanced


8/30

Cash-based economy

Until 1990s, only one retail bank (state-own SberBank) existed

Early 90s:

To pay for public services: SberBank only

To pay for private companies: also SberBank, because it has much

more offices than any other bank

Private banks appeared, but arent used for retail payments

Retails payments were mostly made in cash:

Employees are paid in cash

Its much more convenient then using bank services

Huge amount of unofficial deals


9/30

SberBank, early 90s


10/30

Banks issued a lot of cards

0 20000 40000 60000 80000 100000 120000 140000

2009

2008

2007

2006

2005

2004

2003

2002

2001

Cards issued(thousands)

Debit Cards Credit Cards Prepaid Cards


11/30

And installed a lot of acquiring units

0 100 200 300 400 500 600

2009

2008

2007

2006

2005

2004

2003

2002

2001

Cards acquiring infrastructure(thousands of units)

POS terminals ATMs


12/30

At a glance

January 1st, 2003:

Bank offices: 85 per 1 million people

Individual bank accounts: 267,2 million

Bank cards: little over 100 per 1000 people

January 1st, 2008:

Bank offices: 289 per 1 million people x5

Individual bank accounts : 434,7 million x2 Bank cards : 728 per 1000 people x7

Source: The Central Bank of the Russian Federation, www.cbr.ru
http://www.cbr.ru/http://www.cbr.ru/


13/30

On the flip side

The three big BUTs:

1. On the average, each citizen has a few bank accounts.But which ones?

2. Almost everyone has a plastic card.But how do they use them?

3. Impressive growth rate.

But is it enough?


14/30

Keep your savings in the bank

On the average each citizen has a fewbank accounts. But which ones?

More than 70% of individualbank accounts were savings

accounts.*

Traditionally, people dont see thebanking account as a payment

instrument, but as a means of savingmoney.Soviet poster that recommends

putting savings in the bank

instead of keeping them in socks.

Source: The Central Bank of the Russian Federation, www.cbr.ru


15/30

The unconscious clients

Almost everyone has a bank card. Buthow do they use them?

For many years nearly 10% ofplastic cards transactions volumewere wire payments, the other 90%being cash-outs.*

The majority of card holders: Didnt choose to open a bank account

Didnt choose the bank it is at

Get paid via the card and make full cash-out atthe ATM

Dont use if over the internet, because they areafraid to lose all their salary at once

ATM on payday

Source: Russian payment system in 2007, CB of RF, www.cbr.ru


16/30

Still not enough

2249021469 21178

19179 1885518226 17838

17020

11669

7221

2497

Card acquiring terminals installed(units per million inhabitants)


17/30


18/30

Mid-90s: in need of retail payment services

The new solution soon spread out: scratch-cards for prepaid services


19/30

Late-90s: Internet helps

Scratch-cards problems: Logistics

distribution across a huge country

High merchant threshold there isnt enough room to

showcase every card

Large expenses the retail network takes 10-20%

of cards cost

Solution:

Internet-based service for real-timepayments in convenience stores


20/30

Why do we need a cashier?

Insert cash

Input client infoChoose merchant


21/30

Terminals appear and develop

Scalable scheme created in 2005 and the terminal boom began:

Sub-agents

Payments

Operator

(Merchants Agent)

Merchants

Payment operators:

1. Agent agreements with merchants

2. Automated billing

3. Terminals manufacturing and selling/lending them to sub-agents


22/30

Terminals: DIY business

Find a good spot (like a corner shop) and rent a 1 sq. meter

Rent or buy (approx. 2500) the terminal

Sign an agreement with the operator as sub-agent, receive the

software and gain the ability to accept payments for all merchants

of this operator

Collect your money (fee)!

Right now there are around 400 000 of these machines,

the majority belonging to small businessesor private entrepreneurs.


23/30


24/30

No, Im not making this up:


25/30


26/30

Cashflow


27/30

E-money goal now

Customers bank account Merchant


28/30

Case study: Alfa-Bank

We linked Alfa-Bank and Yandex.Money accounts.

First year results:

About 100 000 clients linked their e-wallet totheir bank account

Turnover of this project exceeded 2 billionRubles (approximately 60 million USD)

Customers spendings in Yandex.Money grow3-5 times after linking to bank account

For the bank this means profit instead ofexpenses!


29/30

70%

10% 12% 8%

45%38%

10% 7%

Cash on delivery E-money Credit Card Bank transfer

Preferred online payment methods:

2008 2009

E-money in Russia today

E-money market in Russia in 2009: approx. 10 million registered users approx. $1 billion turnover e-money more popular than credit cards

Source: Romir, 2009


30/30

Questions?

[email protected]

+7 (495) 739 23 25
mailto:[email protected]:[email protected]

Date post:	08-Apr-2018
Category:	Documents
Upload:	jane-zavalishina
View:	219 times
Download:	0 times

Retail Payments in Russia: closing the infrastructure gap

Documents