Even though the Russian online payment industry has seen the emergence of a variety payment instruments – with online payment services becoming more and more popular, – the market cannot be characterized as fully mature yet as this term may be understood in countries where electronic forms of payment already prevail.
In this article, Elena Orlova, a recognized Russian e-payment expert, reviews the main characteristics of this market, from online consumers’ habits, to the recent changes in the legislation, to the main payment methods and service providers (PSPs) in the country.
Online consumers’ habits
It is only progressively that Russian Internet users become online shoppers – six years on average, according to a recent study by Data Insight.
Meanwhile, the recent boom of online travel agencies has contributed to educating a new generation of online customers, reducing their fears of fishing and other fraudulent technologies targeting their bank card credentials. Thus online payment has become the norm in the eyes of Russian customers when it comes to purchasing digital products.
What’s more, with the rise of cross-border sales – while Russia was severely hit by the economic crisis during the past two years – the payment behavior of online shoppers from remote regions and small cities has changed noticeably. These customers have begun shopping massively on such Chinese platforms as AliExpress, where online prepayment is required.
Deeply rooted in Russian online consumers’ psychology, the habit of paying by cash on delivery has yielded to the appeal of Chinese low prices – but remains predominant as far as domestic sites are concerned, with up to 90% of orders settled in this way.
A gradual, but noticeable shift to payment on delivery by bank cards (mobile acquiring), is taking place.
Legislation and government initiatives
The legal environment remains unstable. Many changes have been introduced in the field of payments, personal data and to e-commerce in general, and they are expected to continue.
In particular, the ways to combat money laundering and to optimize user identification are still subject to discussions. New restrictions introduced by the central bank have affected banks working with individual entrepreneurs – and medium and small-size Internet shops as a consequence. A mechanism of simplified (remote) user identification has been defined, but is not widely used yet.
A major novelty of the past year is the development of a national payment system, aiming to operate local payments and clearing operations independently from such foreign companies as MasterCard and Visa. A brand new bank card, christened ‘MIR,’ was launched in December 2015, and was supposed to become ubiquitous in Russia as of July 1, 2016.
Main payment methods
Among online payment means, online banking and bank cards still prevail by far in Russia. E-wallets (including the market leaders Yandex.Money, Webmoney and the Visa-Qiwi wallet) come second, attracting nevertheless dozens of millions of users (1).
Introduced in the country in late 2013, PayPal is getting traction, but essentially for cross-border purchases from European and US sites – rather than from Chinese ones, where this payment method is not always accepted.
Small-amount payments from prepaid mobile phone account are used for transactions of 300 rubles (approximately $45 at the current exchange rate) on average. Driven by mobile operators’ large payment platforms (such as VimpelCom’s RuRu), mobile payments account for up to 6% of the number of transactions but just 0.5% of their total amount.
Sberbank’s loyalty program ‘Spasibo’ should be also mentioned here, since it is the only loyalty program achieved serious success among Russians, and became a new payment method with some 5% to 7% of the total amount of online payments.
Split of various electronic payment methods in various e-commerce segments in Russia in 2015
Source: Data aggregated from several PSPs and corrected based on the author’s expert knowledge.
Main PSPs operating in Russia
No significant changes have been observed over the past couple of years on the Russian payment scene. Alfabank is still the leader in the bank acquiring segment, serving such huge companies as Aeroflot.
There is no clear leader among PSPs. In a recent ranking, which was based on a large survey among digital production and payment integration service agencies, the 10 leading PSPs or payment aggregators in Russia were (in alphabetical order): Assist, Chronopay, Cyberplat, Dengi.Online, Payonline, PayU, RBC-money, Robokassa, Uniteller and Yandex Payment Solution.
(1) According to a TNS survey conducted in 2015, the most popular online payment methods are online banking and bank cards used online, with 80% and 79% of Russian Internet users, respectively, using these methods regularly, while 62% pay with e-wallets and 47% utilize SMS-payments. For services where average check is higher than 15,000 rubles (approximately $220), payment by bank cards is, in many cases, the only available payment method.
- This article was prepared in partnership with ThePaypers, which published it in the 2016 edition of its Ecommerce Payment Methods Report.
