 volumes of bank card transactions.
According to the Bank of Russia, as of 01.07.2016 the card acceptance infrastructure in Russia included 1,582,000 POS-terminals installed at merchants’ outlets and 180,500 POS-terminals in banks and government institutions. For comparison: a year earlier the number of POS-terminals at merchants’ outlets was 1,299,400, and 158,711 terminals were installed beyond merchant locations. The growth in the number of POS-terminals in these segments was 21.7% и 13.7% over year.
Regarding self-service banking devices, the total number of ATMs and banking information and payment kiosks in Russia reached (according to the Central Bank of the Russian Federation) 209,698 units in the first half of 2016. The dynamics shows reduction in the number of ATMs and bank payment kiosks in Russia by 4.5% (a year earlier the installation base included 218,646 units). This trend has been observed for the second year running, the 1st half of 2015 also saw a reduction of 7.1% in the ATM and payment kiosks networks compared with the 1st half of 2014.
It is characteristic that the share of ATMs and payment kiosks with cash-in functionality remained at the same level in the 1st half of 2016, with a slow upward trend: in the 1st half of 2016 it reached 61.14% of the total number of self-service banking devices as compared with 60.3% a year earlier.
Contactless cards, Apple Pay and Samsung Pay in Russia
According to Gemalto’s forecast, the number of NFC-enabled POS-terminals in Russia will grow to 235,000 by the end of 2016 to account for about a quarter of the total installation base of POS-terminal solutions in Russia. According to other, more conservative estimates, there are as few as about 100,000 POS-terminals with contactless readers in the country now.
The penetration rate of bank cards with a contactless interface and the frequency of their use in Russia are growing rapidly. According to MasterCard, the number of contactless transactions on their cards in Russia increased by more than four times over 2015.
According to the latest survey conducted by Visa (data as of September 2016), 41% of Russian citizens hold contactless cards today, and 38% use them. Among the main motivating factors the respondents name convenience (83%), the speed of payment (56%), and the novelty of the technology (18%). Moreover, the survey participants showed their great interest to this instrument: 52% of those who still have not got a contactless card will apply for it with high probability. At the same time 77% of respondents are confident in the security of transactions on contactless cards. 58% of the respondents used their contactless cards to pay for big-budget purchases. Most often, the Russians use contactless cards for everyday purchases at convenience stores, clothing stores, pharmacies, and gas stations.
The development of this market is boosted not only by the efforts of the international payment systems, which made the availability of a NFC-reader in the POS-terminals a common standard long ago. Another driver is the arrival of NFC-based mobile payment services such as Samsung Pay (end of September 2016) and Apple Pay (early October 2016). Experts have called the first results of these services in Russia “excellent and hardly predictable.”
Thus, in the first week of operation of Apple Pay (launched in Russia on October 4 by Sberbank of Russia and originally intended for MasterCard cards only) out of a million of its potential clients (i.e. Sberbank cardholders having iPhone models compatible with the service) over 125,000 bank customers downloaded Apple Pay on their cards. The users’ interest to Apple Pay is supposed to grow by the end of 2016, when other card-issuing banks in Russia (in addition to Sberbank) get access to the service and after the service became available for Visa in mid-November.
As for Samsung Pay, according to VTB24, the transaction volume on VTB24 customers’ cards linked to the service exceeded RUB1.2mln during the first week alone. The bulk of payments fell on food retailers (33% of the total transaction volume), clothing/footwear stores (20%), restaurants (19%), and petrol stations (9%), with about 40% of purchases made in Moscow and St. Petersburg. According to forecasts of VTB24, the popularity of the new service with customers will grow, and the volume of transactions made through Samsung Pay will exceed RUB1 billion in 2017.
According to Alfa Bank, Russia's largest private bank, most of its customers pay using Samsung Pay in Moscow (39.4%) and St. Petersburg (8.93%). Samsung Pay is more often used for payments in supermarkets (30.78% of the total number of transactions), cafes and restaurants (18.68%), and clothing stores (12.06%). Top-5 categories of goods paid via Samsung Pay with the biggest receipt size include electronic home appliances, clothing, sports, hotels and household goods. The size of average receipt (by all clients of the bank) is RUB1035.
In no small part because of the high expectations associated with the involvement of high-income users of mobile payment services, the leading Russian banks accelerate the migration of their merchant acquiring networks to 100% support of contactless transactions. Thus, Sberbank of Russia is planning to ensure the full support of contactless payments by its POS-terminal network in 2017. At present, according to Sberbank, two-thirds of their terminals are already equipped with NFC-readers. VTB24, the second largest bank with state capital, promises to complete this process by 2018-19. Now more than half of the VTB24 POS-terminal fleet in the bank’s merchant acquiring network support NFC.
According to expert data published in J'son Partners Consulting research, the “optimistic” scenario predicts that the number of contactless payment users in Russia, including NFC-based m-payments, can reach 7.5 million by the end of 2016. Also, according to Euroset’s forecasts, the contactless payment market in Russia will amount to no less than RUB20 billion and can even reach RUB50 billion in case of favorable situation.
The market of bank card manufacturers in Russia: stability
Domestic production of bank cards meets the needs of issuing banks in the Russian Federation almost completely (except for some niche projects).
The market landscape and positioning of the leading players are stable. Rozan, Alioth and NovaCard are among the largest Russian card manufacturers. The positions of other manufacturers such as NIIME, Micron, Sitronics and “Orenkart” are also quite noticeable. The largest foreign player in the Russian market of payment card manufacturing is Gemalto. Ukrainian manufacturers of plastic cards have practically left the Russian market (though earlier they occupied a small market share). Experts traditionally give a high rating to the potential of Chinese companies producing and supplying cards to Russia. However, so far most of them have had difficulties in their adapting to the realities of Russian business, and – what is most important – have faced a lack of adequate Russian partners able to “lead them by the hand” to a market rather complicated for them.
More information about the Russian card market
If you are interested in more detailed information about the Russian card market, analytical reviews, expert evaluation of business opportunities of your company in Russia or need to get in touch with the Russian card market players, please contact Konstantin Grizov, Business Development Director, PLUS-Alliance:
phone: +7 (925) 005-40-05
For registration, please click here.
Looking forward to seeing you on our Forum!TweetSelling SaaS (software as a service) applications aimed at specific lines of business is one way that SAP has tried to stake a claim in the world of cloud computing and during the Sapphire conference it unveiled a broad series of updates to the portfolio.
For marketing purposes, SAP has oriented the line-of-business applications into four thematic areas: people, customer, money and suppliers. SuccessFactors falls into the first category with its HCM (human capital management) products, with SAP’s Cloud for Customer, Cloud for Financials and Ariba fitting in the other categories.
Among the more significant features announced Wednesday was that support for 29 new countries has been added to SuccessFactors Employee Central, for a total of 51. In addition, SuccessFactors’ payroll module is now fitted for 22 countries, SAP said.
Meanwhile, Cloud for Financials has also been rolled out in more geographic areas, with support for local taxation and reporting standards available in Austria, Denmark and New Zealand. The application is now available for 14 countries.
The added global reach could help SAP compete more effectively against rival Workday, which has been winning large deals for its own cloud-based HCM and financials software.
SAP also announced a wide range of improvements to its Cloud for Travel application, including the ability for users to take photos of receipts and include them with expense reports and an integration with Traxo that allows them to book flights and hotels.
Through Ariba, SAP offers software for spending management as well as a business network that helps buyers connect with suppliers. New features in the network include a recommendation engine and functionality that allows users to “quickly discover and qualify new sources of supply for one-off, time-sensitive or hard-to-find purchases,” according to a statement.
Beyond the particulars of each application’s new features, SAP is trying to send its customers a broader message, namely that they can keep running their core ERP (enterprise resource planning)