The market of electronic currencies is Russia is quite young, but already very aggressive. Just like with social networking and search, it is dominated by local players, leaving the world-known brands far behind.
Online payments in Russia
Even through cash is still the most common way to pay for online purchases in Russia, other means of payment are becoming more and more used. According to the latest TNS research (in Russian), 35% of the respondents use credit cards for making online purchases, 27% – electronic currencies, and 17% – online banking services. Among these, e-currencies usage demonstrates the fastest growth. The turnover of the market doubled in 2011 reaching 125 billion Russian rubles (around 4.2 billion US dollars).
Electronic currencies in Russia
There are 34 million active e-currency accounts in Russia. The leading electronic money transfer system is Yandex-owned Yandex Money (15%), followed by Qiwi purse (10%) and WebMoney (10%). PayPal is still struggling in Russia holding 6% market share. e-Currency from Mail.ru Money.Mail.Ru managed to gain 2% market share since the launch in 2010.
In certain segments electronic money are more used than in others. 36% of all payments for mobile/ telecom services and 38% of all social networking services are paid with e-currencies, for example. The respondents of the TNS research say that they used electronic money at least ones for paying for the following products or services during the last 6 months:
I must, however, note that survey was conducted on a specific target group: people who are between 18 and 45 years old, and live in larger cities (from 800 000 inhabitants and up). The country-wide statistics would be slightly different, of course.
In one of my old posts I mentioned WebMoney being the absolute market leader when it came to online payments in Russia. Yandex Money was a relatively new system at that time, but it has been aggressively expanding, acquiring new customers not only in traditional ways, but also through a series of large scale partnerships with world’s largest companies like Opera and Skype.
PayPal, being the world’s leading electronic money transfer provider, is having a hard time in Russia. With its 6% market share, PayPal is mainly used when buying products on eBay (up to 90% of all Russian PayPal transfers). Interestingly, the competitors, who more or less copied their business model, are very skeptical about PayPal’s chances in Russia. “I don’t see where their competitive advantage is”, said Boris Kim, Kiwi’s chairman of the board. “The only offer they have is foreign online shops”, comments Evgenya Zavalishina, CEO of Yandex Money, “It is interesting, but it is a niche”.