My cryptic forecasts coming true – the 2011 year in Russia I thought would be the year of direct debit based on mobile – proves itself to be the one [1]. Although most of my earlier rumblings laid bare the facts, that payments service providers are migrating from simply funneling the cash to connecting the dots between the client and the shop – it only now becomes evident of the grand plans all players are devising to make up for the task.
The players are cash kiosks operators (QIWI), emoney operators who receive a solid percentage of top-up revenue from cash kiosks, and banks that are “stuck” with cards and have “e-commerce” plans of their own. I once published a slide where the once solid boundaries between the three started getting blurry [2]:
– Kiosks started creating kiosks-detached wallets services [3]
– E-money advanced more deeply into e-banking space – providing ability to pay for utility bills, fines etc. [4]
– Banks started offering virtual prepaid cards that you can get for one or a series of purchases, they also explore e-billing like iDEAL of the Netherlands [5]
– MNOs try a bit of everything (now offering virtual cards funded from mobile wallet, bill payments via SMS from mobile account) [6]
At first, the big four seemed to cohabit just nice, but this year the rift has started to unravel:
QIWI has last week switched off all emoney wallets you can top-up with cash at their kiosks, citing that fees structure no longer suite them and explaining to customers that they will have the same experience through the QIWI Wallet: wallet business is the “new normal” for the company.
Preparing for the move, emoney operators were looking into ways to fund the their wallets through bank cards and current accounts – last week Yandex Money (as the main target of QIWI switch-off, as Yandex is the biggest and brightest of emoney
schemes in my view) said it no longer takes fee from the customer doing a top-up through a card.
Banks are increasing their attempts to allow customers to pay for e-goods (the prime destination point of all digitized money in Russia – as share of cash in POS world is even greater (due to natural causes)). Alfa-Bank partners with a big e-ACH allow its iBanking users to directly pay to thousands of e-shops from the system, rather than by using cards. Other banks like VTB24 (Disclaimer: my Employer) are also exploring the field.
Should I wear a Sherlock Holmes hat and have a puff or two from a pipe – here is my logic on this:
1. People in Russia pay with cash (due to financial illiteracy, terrible card acceptance, protecting the risk of non-shipment or goods poor quality);
2. Mobile phones are essentially prepaid wallets, since 98% of the total are prepaid ones, so following the first reason, they learned the kiosks services by having to pay for their phones;
3. Following the reasons 1 and 2, people are increasingly attuned to cash digitization via kiosks (no matter average payment is about 5 USD);
4. Kiosks, gratified by the wealth of retail payments data, mastered themselves into retail payments ACH – a new-found profitable business that banks at first shunned, but now use through these ACHs;
5. Success of e-commerce combined with the lowering costs of smart-phones makes the payments future mobile;
6. Applying factors 1, 3 and 5 mobile wallets funded by cash are success for the immediate term;
7.
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