In the next 10 years, Russia will overtake everyone in terms of growth, according to BCG analysts in the report “The Global Payment Services Market 2021: Rates for Growth.” Izvestia experts say about the reasons for the phenomenon, which has already been called a Russian miracle, and whether BCG’s forecast will come true.
By leaps and bounds
BCG analysts have analyzed the dynamics of card payments development since 2010. Compared to the world leader Norway, then the gap in transactions per capita was 40 times. In 2021, the Russian indicator is only 1.5 times lower. The speed of development of cashless transactions has already been dubbed a Russian miracle at BCG.
According to the forecast of analysts of the company, in the next 10 years Russia will go in plus by 12% in the number of transactions and by 9% in the amount of payments.
In addition, the report notes that the 2020 coronavirus did not hit e-payments as hard as predicted: a drop of just 2.5%. The global volume of the market for card transactions is estimated at $ 1.5 trillion, and in 10 years this figure will double.
The popularity of card payments in Russia is due to the development of mobile banking applications and, in general, a very high level of digitalization of the banking sector, says Igor Dodonov, an analyst at FG Finam.
Photo: Izvestia / Alexey Maishev
– In particular, last year, the country entered the top 10 of the Deloitte rating in terms of the level of digitalization of banking services. It also helped that the development of modern payment technologies in Russia began later than abroad, and our country “skipped” through a number of intermediate stages. For example, checkbooks are still common in Europe, while in the Russian Federation they were practically not used.
According to the analyst, Russians quickly felt the benefits of card payments, and BCG’s forecast seems plausible to him.
– This is due to the expansion of the coverage of the population with financial services and the development of Internet commerce, the share of which in the Russian Federation is still lower than in developed countries. Russians are increasingly resorting to online shopping and delivery services, which will also spur the growth of non-cash payments, Dodonov concludes.
No miracle – everything is natural
Over the past 30 years, the bank card market in Russia has grown from a niche product to the size of a powerful national industry, whose share in retail payments has exceeded 70% of the total volume and continues to grow, – said Alexander Pushko, Deputy Director of the Institute of Communication Management at the Higher School of Economics.
– At the same time, the average annual rate of the issue of bank cards in Russia, according to the Bank of Russia, exceeds 12%, and the volume of retail payments is growing by 9% annually. And this is perhaps the record growth rate in the world.
The expert evaluates the constant mention of Russia in the reports of reputable foreign analytical companies as a positive development.
Photo: Izvestia / Alexander Kazakov
– For example, a couple of months ago, the technological level of development of the Russian retail banking was determined as the best in Europe.
According to Pushko, there are several objective reasons for the explosive growth.
– Firstly, it is the result of many years of purposeful work and investments of the Russian banking community. Secondly, this is the work of the state and the Bank of Russia, which invariably support the development of non-cash forms of payment, for example, the National Payment Card System and the issue of the national card “Mir”. Thirdly, the financial and technological literacy of the population is growing, which has felt the benefits of cashless payments. Fourth, Russia has high rates of digitalization in the country (Digital Life) and, as a result, the development of a network for accepting bank cards.
The growth rates of card payments in Russia in the last decade have been driven by the low base effect. For a long time, the coverage of the population with plastic cards and the number of places where it was possible to pay with them were significantly lower than in most developed countries, – explains the “Russian miracle” director of the capital market department of the investment company “UNIVER Capital” Artyom Lyutik.
– Growth was stimulated by the state and state banks, pushing recipients of pensions and social benefits to get a card. However, even now, representatives of the older generation, especially in the provinces, prefer to use cash.
Photo: RIA Novosti / Alexander Kryazhev
Businesses have also been spurred on to the transition to electronic payments, but not so much by the state as by the coronavirus, Buttercup says.
– The pandemic also contributed to the development of this segment of payments: many operations then switched to electronic format forcibly, in particular, with the transition of employees to a remote mode of work and the growing popularity of delivery services.
However, the expert is wary of the BCG forecast.
— There is no reason to expect that the share of card payments will continue to grow as quickly in the future, – he continues. – The older generation, who categorically did not accept such forms of payment, are gradually leaving, and the part of the population not covered by banking applications is very small, the growth potential of the share of remote services and delivery services is also not endless. At the same time, the state’s ability to control electronic payments and the willingness of fiscal and law enforcement agencies to take special steps for this are growing, so that part of semi-legal or bypassing the tax system payments, on the contrary, will return to the cache or go to the cryptocurrency segment.
The growth of incomes of the population and consumer activity will help to really increase the share of non-cash payments. But this scenario is realized only if the current economic crisis in the world is successfully overcome, a new phase of growth begins, and Russia successfully integrates into it.
It will be difficult for those who are in the “shadow”
First of all, the trend towards non-cash acceptance of payments will hit the “gray” business, says Yekaterina Kosareva, managing partner of the analytical agency WMT Consult.
– With non-cash payments, you can immediately see the income and expense. However, there are small entrepreneurs, and there are many of them, who do not yet understand how it works. They give the client an acquiring terminal for the buyer to pay, but they do not knock out the check at the online checkout. The tax authorities have a smart system at their disposal that analyzes and highlights such discrepancies. After several large-scale tax inspections of such objects, violations, apparently, will decrease. And those who try to hide their income will face serious fines, up to and including the suspension of their business. I think this positive development will spur healthy competition.
Photo: Izvestia / Dmitry Korotaev
The share of Russians who use cards will grow rapidly, the analyst believes.
– Gradually, those who categorically did not accept the card as a means of payment are leaving. People who, in principle, are accustomed to using cards, are beginning to receive pensions. In addition, the user is getting younger. Banks are actively developing special products for children – cards linked to a parent’s account. For example, for completing a task, the allowed amount falls on the account. The ethics of this order can be debated, but supply is dictated by demand.