Russia Proving a Popular Market for Mobile Payments

Granted, for a lot of people out there, the first things that come to mind when thinking about Russia involve onion domes, vodka or nuclear annihilation, but for the technology-minded, mobile payments are becoming an increasing part of the picture.

There are some unexpected drivers at work here, and taking a look at the size of the market now and what it’s likely to be down the line suggests that the entire country is clearly saying “da!” to mobile payments.

The word from AC&M Consulting is that the market grew nearly 40 percent over the course of 2014, reaching a hefty 70.4 billion rubles, or about $1.1 billion.

That’s a great gain and a pretty sound number in isolation, but it’s still kind of soft against the overall eCommerce market in 2015, which managed to rack up 650 billion rubles—$10.1 billion—in that same time frame.

Yet at the same time, these numbers are for a comparatively small part of the market. Just 20 percent of smartphones on Mobile TeleSystems in Russia connect to near-field communications (NFC) technology, which means their ability to even use mobile payments is limited at best.

That number is set to increase almost a third in next year alone, with some estimating 60 million smartphone users in the country by the end of this year.

Users at MegaFon won’t have to worry about NFC access, as the company’s working on mobile payments that connect to a mobile phone balance rather than a bank account.

There will even be a pretty impressive incentive to put that system to use; the company’s offering an eight percent interest rate on balances, and 10 percent cash back, at least in some locations. Money transfers will even be free within Russia, and that should get more than a little interest going in MegaFon’s direction.

Basically, the numbers say mobile payments are on the rise in Russia, and over a pretty small slice of the market. If that market expands, and the ratios hold true, then mobile payments are going to explode in popularity over that whole region.

Naturally, those ratios may not hold true, but assuming the early adopters weren’t the only ones who wanted in, it’s good news to come for mobile payments in Russia. When a company’s willing to offer eight percent to get in, you know it’s craving an expansion.