Oksana Korobkina, CCO at Yandex.Money tells Lakshay Aggarwal from Ken Research that The infrastructure for non-cash payments is rapidly developing in Russia and POS-infrastructure is now savvier in Russia than it is in Europe or the USA.
Yandex.Money is the market leader in the Russia Payments Industry. What were the success factors throughout the journey, that helped the company to attain this position?
Yandex.Money initially started with the B2C Segment, around 17 years ago, when people didn’t have much awareness about the non-cash modes of payment. We started working on our E-Wallet and with the rapidly increasing awareness coupled with suitable product, brand and efficient distribution we could establish ourselves as one of the biggest players in the industry.
Yandex.Checkout, the B2B segment, was started around 6 years ago with the objective of facilitating easy collection of money for businesses. We have been successful in implementing the model owing to our easy to access platform backed by innovative API. We further plan to capitalize on growing small and medium enterprises by offering value added services to them.
I think building the right set of products as per the needs and customer acceptance helped us to reach where we are today.
In 2018, around 55% of the total payment transactions were observed to be non-cash in nature. What contributed from being highly cash dependent in early 2000’s to becoming cashless by 2018?
The infrastructure for non-cash payments is rapidly developing in Russia and POS-infrastructure is now savvier in Russia than it is in Europe or the USA. Also, number of cashless transactions has grown 30 times from 2010 to 2018 - from 5.8 to 172 per year per person and the overall volume of payments in the country has grown by an average of 22.1%. I feel that mentality of the people and the spending patterns of consumers have also changed from being cash dominated to cashless. Although the transition was slow earlier, people are now realizing the benefits of non-cash payments. Another fear in the minds of people used to be regarding the security of non-cash transactions, which is getting removed gradually.
Does the industry face any challenges from the regulatory side?
In fact, the government and authorities are emphasizing on the need to go digital/cashless. Few years back, NSPC and MIR cards were introduced in the industry. Recently, direct debit facility was also supported by the authorities.
Is there any direct involvement of Yandex in POS and ATM Terminals segment of Russia? Owing to the high growth estimated in these segments, are there any plans on venturing into the underdeveloped space?
We are currently involved through our partners which in total accounts for the largest network of terminals. That allows our users to top-up their accounts and pay for their purchases in offline stores. Our merchants who utilize Yandex.Checkout have automatic access to 250K payment points.
The usage of digital payment channels for small value transactions is on the rise. Our analysis show that the average value of an e-money transaction has decreased from RUB 1,112.2 in 2013 to RUB 734.6 in 2018. How is it going to affect the revenue of Yandex.Money in the coming years?
While the Russian market grows approximately 30% per year, Yandex.Checkout develops twice faster and over the last two years our turnover has doubled. Thus, a decrease in the transaction value at the growing market value indicates an increase in number of transactions. That leads to the demand for boosting capacity (at the moment we can operate up to 600 transactions per second) and providing new and superior products and services, which is exactly what we are working on and what we are positive about.
The rise of tokenization system of payments including Apple Pay, Google Pay and others have changed the industry dynamics from e-wallets to contactless payments. How do you think is it going to impact the industry?
It is the trend we support and develop within our B2C and B2B services. Yandex.Money as a B2C solution also issues its own bank cards which fully support contactless payments. The number of payments via Apple Pay, Google Pay, Samsung Pay, and Garmin Pay made with Yandex.Money cards have increased 2.5 times over the last year, while the turnover has increased 3.1 times. Yandex.Money users can also pay contactless with a Smartphone using the service’s own app: the number of such payments has increased 2.9 times over the past year; the turnover has increased 2.5 times. On the other hand, Yandex.Checkout as a PSP surely involves contactless methods for accepting payments.
What do you think would be the biggest asset for Yandex? Is it the data /revenue /strategic partnerships or high market penetration?
It would be difficult to single out a particular asset. I think all of them together contribute to our growing business.
“The interview was conducted as a part of the research for assessing the current scenario and future prospects of the Russia Payment Services Industry.”
About Yandex: Yandex.Money is the most popular online payment service in Russia, according to a 2019 survey by Mediascope. The company is the joint venture of search engine Yandex (NASDAQ: YNDX), and Sberbank. Yandex.Money offers consumers easy, safe, and reliable methods of paying online on its own site and mobile app. The service hosts about 60M user accounts and has around 120k registered merchants on its PSP, Yandex.Checkout.
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