FOCUS: Russia welcomes Apple, Samsung contactless payment systems

By Yekaterina Yezhova

MOSCOW, Oct 17 (PRIME) -- Archrivals Apple Pay and Samsung Pay have recently made their first forays into the Russian market of contactless payments, as banks tied them to MasterCard cards, and retailers and airlines willingly offered to accept them. Analysts said the local market is well prepared, and more companies will join the projects.

“The market was technologically ready for the appearance of the payment systems,” Sergei Shavkunov, executive director at researcher J’son & Partners Consulting, told PRIME.

Samsung Pay debuted on September 29 with support of Alfa-Bank, Raiffeisenbank, Russian Standard Bank, VTB 24, as well as mobile operator MTS and Internet giant Yandex. Other large banks are expected to join the project later.

“MTS, as a leading player on the junction of the telecom and payment industries in Russia, actively promotes banking and financial services among millions of subscribers through all channels: remotely on mobile devices and in the Internet, as well as at its stores,” Vasil Latsanich, vice president of the country’s top operator with 78 million subscribers, said.

The mobile operator said in a statement that the Samsung Pay service can be used almost everywhere. As soon as the system is tied to banking cards of MTS-Bank, controlled, like MTS, by multi-industry holding Sistema, it is compatible with most of cash terminals.

Clients of Sberbank, the country’s biggest bank, have been able to use Apple Pay since October 4. “Apple Pay is becoming a distribution driver for contactless payments in Russia and in the world. Many Sberbank clients actively use new technologies and will prefer cashless and contactless payments via their smartphones more frequently,” Alexander Torbakhov, deputy chairman of the bank’s executive board, said in a statement.

Georgy Vashchenko, director of operations on the Russian stock market at investment company Freedom Finance, welcomed the news about Sberbank’s launch of Apple Pay.

“The bank has not seen any income from the new service yet, and I think it will make money not on commissions, but on a higher number of payments. The bank has at least 10 million potential clients of this service, and turnover on the cards could reach about 1 trillion rubles in a year,” Vashchenko said in a research note.

Apple Pay will start working with Visa and other local banks later.

Samsung and Apple say their systems are secure and reliable as all transactions are verified with a fingerprint check. Samsung Pay uses a special digital code, and no personal information is used for the payment.

When a credit or debit card is added to Apple Pay, its number will not be stored either on the device or Apple’s servers and it is not handed over to sellers. The service uses an individual number of a device and a unique code of a transaction. Apple Pay does not keep records of deals to identify the user.

Mass media reported earlier that Apple Pay charges commission from banks for every transaction, which is at 0.05% of the amount for a debit card and 0.12% for a credit card. Besides, banks pay 45 rubles per year for every card connected to the service.

Samsung Pay charges no commissions from either partners or users.

Shavkunov at J’son & Partners said that growth potential of the contactless payment services will depend on their promotion by banks in the coming years. “Territories will not be limited by Moscow and St. Petersburg, and demand for the services can be seen in cities with population of over 1 million,” he said.

Large local grocery retailers, such as Magnit and X5 Retail Group, which runs such chains as Pyaterochka, Perekryostok and Karusel, have already started or are going to start accepting contactless payments via Apple devices.

Big air carriers Aeroflot and S7 Airlines also made Apple Pay available for their clients. When choosing this option on the Web site of Aeroflot, a user sees the amount to pay, a list of banking cards and confirmation of the deal with a fingerprint. The option is valid both on the desktop and mobile sites.

S7 Airlines offers Apple Pay in its mobile application. “The share of passengers buying tickets via the mobile application is rising…The option of using Apple Pay adds comfort, speed and security of payments, because no card information has to be entered,” Dmitry Chuiko, director for e-commerce at S7, said in a statement.

Aeroexpress, a Moscow city-airport commuter train operator, also started servicing Apple Pay.

“The launch of Apple Pay is a logical step in the development of digital channels of Aeroexpress’s sales,” Yekaterina Bonya, head of the company’s press office, told PRIME.

The operator also accepts, among others, Visa Pay Wave and MasterCard PayPass cards, allowing passengers to pay straight at the gates. The company will befriend Samsung Pay soon as well, Bonya said.

(62.9934 rubles – U.S. $1)

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