July 7, 2017

Online payments in Russia: your guide to success in the Russian market

Andrey Goncharov
Chief Executive Officer, Payture

In May, 2017 Amadeus successfully started collaboration with Payture, Russian IPSP, cooperating with Russian and CIS acquiring banks as a payment gate. We were invited to describe the specifics of the Russian e-travel market and the latest e-payments market trends.

 

E-travel market in Russia

The Russian e-travel consumer market is made up of 10 million people.  it is one of the largest segments of the Russian e-commerce market: its capacity is equal to 700 bln rubles. Researchers note a constant growth of 30% annually.

The growth is noticeable in all market segments, but primarily in e-travel: interest in air travel in 2016 increased by 38%, in railway tickets it increased by 40%, as for package tours and hotels, the growth fluctuates from 15% to 21%. Air tickets direct sales are growing, airline reservation services have become 4 times more popular1.

We have noticed that many international airlines do not enter the Russian market , but are in demand among Russian consumers. Therefore, it is important for us to facilitate the fastest and most effective entry of new international players to the Russian market, and we at Payture are ready to work with them on special terms.

Russia is now the fastest growing market for domestic air travel. Air travel in Russia grew by 16.7% in February this year, overtaking India which enjoyed a 22 month run in the top spot. The growth in travel is indicative of the desire among Russians to enjoy new travel experiences, and as soon as the inevitable economic upturn arrives, the airline industry should experience explosive growth. Airlines wanting to take advantage of this very large travel market when the upturn arrives, should act now to be ready.

 

Russian consumer profile

The monthly Internet audience in Russia as of October 2016 – March 2017 reached 87 million people, which is 71% of the total population of the country. And 56.9% of those that connect to the Internet, do so via Smartphones and tablets2.

Year by year the proportion of Internet users making purchases online is growing: in 2016 their number increased from 66% to 72%. The main reason why people use the Internet for shopping is to save time and for convenience (this option was chosen by 33% of respondents). The availability of complete and detailed information on the goods is in second place (this option was chosen by 27% of respondents). The third place goes to the material reasons (cost savings), which is important for 21% of respondents.

Demographic portrait of online buyer looks as follows:

  • With threshold revenue of 75-99 k rubles — 64% of respondents;
  • Use Internet for more than 10 years— 62% of respondents;
  • Live in town with population of 400-700 k — 59% of respondents;
  • Live in Siberia — 57% of respondents;
  • Female — 58% of respondents;
  • Married — 58% of respondents 3.

 

Most preferable payment methods in Russia

According to the latest research, most Russians pay via Internet banking (83% of respondents pay at least once a year), bank cards (82.8%) and e-money (66.3%). Contactless payment systems (Apple Pay and Samsung Pay) are only gaining popularity, 8.6% of respondents use them so far4.

Meanwhile, e-wallets for the Russian online market is on the peak of its rise: in 2016 alone the number of customers using electronic wallets increased by 42%3.

We also see that  which help increase payment conversion.

 

Local regulation

The National Payment System of Russia was established in 2014, which is regulated by the National Card Payment System Joint Stock Company (NSPK). As of April 1, 2015 all domestic transactions including those made with international payment systems’ cards within Russia are processed through the NSPK Operations and Payment Clearing Center. At Payture, we ensure these, and all local regulations are met.

 

 

1 Data Insight research http://blog.payture.com/research/rynok-etravel-2016

2 GFK, AITC and Russian Post research http://www.akit.ru/wp-content/uploads/2016/05/E-commerce_1Q2016-FINAL.pdf

3 PayPal & Data Insight research http://datainsight.ru/files/DI-PayPal-Onlinepayments2016EN.pdf

4 Mediascope research https://www.shopolog.ru/news/kak-zhiteli-krupnyh-gorodov-rossii-sovershayut-elektronnye-platezhi/