Russians starting to embrace e-wallets
More Russian consumers are shopping online, but still the lion’s share of payments happen with cash. But that may be something of the past soon, as electronic wallets are gaining some serious ground in the Russian ecommerce industry. And this of course will help drive the growth of online retail in Russia.
Ecommerce sales in Russia are growing at an estimated 26% a year and still, according to a recent report from PwC [pdf], the Russian ecommerce industry accounts for just 3% of total retail sales in the Eastern European country. But that’s not for long, as both home and mobile internet penetration grows. Last year, more than half of Russian households had broadband internet access and it’s expected to grow to 68% by 2017, reaching 38 million households. And last year, four in ten respondents said they used their mobile phone for shopping, up from 28% in 2012.
What’s typical about the average Russian consumer, is the preference towards paying with cash. A lot of Russians who order something online choose the option of picking up their goods and when their order is delivered, they pay their items with cash money. Dmitry Kostygin, chairman of Ulmart, one of Russia’s biggest online retailers, told the Financial Times that around 90% of the company’s sales were picked up by customers. Two third of payments were cash, while cards take a further 25% and electronic wallets the remainder.
But although paying with cash is still very popular in Russia, the share of electronic wallets is growing. “You’re starting to see more electronic payment types like Yandex and QIWI”, says Souheil Badran, senior vice president at Digital River, which sets up payments systems. And according to Ieuan Owen, senior vp at WorldPay, e-wallets nowadays account for between 25% and 33% of all ecommerce consumer spend in Russia. “Given the distrust of cards, the rapid rise in the use of these payment methods by consumers and merchants is a key driver of ecommerce growth in Russia.”