PayPal has held discussions with the Russian Post to prepare its entry on the local market, Russian business daily Kommersant reported earlier this week. Beyond the launch of the international virtual currency on the Russian market, a co-branded payment card has been discussed, which could be replenished from PayPal accounts and used to settle purchases, to withdraw cash from ATMs, and to pay for parcel items delivered by postal mail.
The discussions were confirmed by the Russian Post, but PayPal declined to confirm or comment on them.
Although considering Russia as “one of the most interesting regions” for its development, PayPal is not fully present yet on the local electronic currency market. A number of restrictions come with using the Russian language version of PayPal, chief among them the fact that PayPal currency is generally not accepted on Russian sites. However, Russian users are currently able to make payments on foreign sites and transfer money to PayPal users around the world.
In late 2011, Russian PayPal users were allowed to receive money on their virtual wallets, opening the way to their participation in eBay’s trade. Russian users, however, still cannot withdraw funds from their PayPal account to a Russian bank account.
For the last two years, PayPal has held discussions with several Russian players to prepare its entry on the local market, notably with mobile operators.
PayPal could apply for the status of a credit organization to comply with the new law on payments, which was adopted in June 2011.
When it becomes fully operational to Russian users, PayPal will benefit from the invaluable advantage of allowing payments on virtually any site on the planet – which seems out of reach for Russian electronic currencies. Yet, this does not necessarily mean that the international payment giant can easily assert its domination on the Russian market. “This market is already occupied by companies that originated locally and gained a unique experience,” said Viktor Dostov of the Russian Electronic Money Association in an exchange with East-West Digital News.
The expert was hinting at Yandex.Money (‘Yandex.Dengi’) and WebMoney, in particular, which claim more than 9 million and 11 million accounts, respectively.
“PayPal’s close association with eBay and other foreign merchants is surely an asset, but not all of the Russian audience is interested in shopping abroad. Another issue is that PayPal has so far allowed account replenishment only from bank cards. With Russians still very reluctant to use bank cards online, that option may not be enough,” Dostov added.
Update
- RUSSIAN E-COMMERCE REPORT 2012 – The total volume of Russian online retail reached 310 billion rubles, a little more than $10 billion, in 2011, up 25% from the previous year. EWDN’s research study of Russian e-commerce, which includes an analysis of payment systems, will be available soon. To receive free insights or to order the full version, please contact us at [email protected].
