FOCUS: Wildberries may set good example to enjoy natl systems’ low rates

By Yekaterina Yezhova

MOSCOW, Aug 30 (PRIME) -- The discount offered by marketplace Wildberries, founded and headed by Russia’s richest businesswoman Tatyana Bakalchuk, for payments via the national systems may pave the way to other sellers to use local payment systems, analysts said.

“The marketplaces competition does not provide other scenarios but settlement with customers at the lowest transaction cost, which is now available through the Russian payment systems. A rising number of consumers in the Russian Federation get salaries and pensions on the Mir cards and pay via the Russian systems,” Artyom Tuzov, executive director of the capital market department at investment company Univer Capital, told PRIME.

“To add costs of the unwanted pay systems to the prices of goods in the hope of getting paid via Visa or Mastercard means to lose clients. The marketplaces and merchants have the same goal to sell goods, not to pay a commission to the payment processors.”

Wildberries cut prices on August 16 by the size of the payment commissions that were earlier added to the price of goods. “The spread in the prices of goods results from much lower commissions when processing transactions with the national payment systems, while the international systems’ commissions reach 2%,” a marketplace spokesperson said.

The company reiterated that it introduced no extra charges because the tariffs are set by the payment systems. Wildberries now accepts payments via Mir, Visa, Mastercard, the Faster Payments System (FPS), and SberPay.

“We’ve always said that in Russia, the transaction fees for processing of online payments are excessive in comparison to the other countries,” the Wildberries spokesperson told PRIME.

The company said it knows that the offices of the foreign payment systems had sent official letters to the Russian banks threating penalties. “We view these incidents as attempts to pressure the local financial institutions that limit their independent activities. On our part, we’ve always said we’re open for talks and dialogue with both the payment systems and banks-partners,” Wildberries said.

The company is the country’s largest marketplace, which almost doubled turnover in 2020 to 437.2 billion rubles and the number of handled orders to 323.8 million.

Tuzov at Univer Capital explained that Wildberries charges different commission from its sellers, depending on the category of items – from 5 to 15%, while Visa and Mastercard’s commission amounts to 2%, which “accounts for a noticeable part of the mark-ups on the products sold on Wildberries.”

Visa earlier asked the banks-acquirers to investigate the additional amount charged for payments with Visa cards and waits for results till Tuesday. It also reminded the banks of a U.S. $25,000 fine if the rules are not respected and extra payments are still made, otherwise the fine will grow every month.

“Visa and Mastercard should bow to the reality that high commissions are in the past after the central bank of the Russian Federation had insisted on introduction of the Russian payment system. To decrease their commissions to the level of Mir and FPS is the only way to remain the leaders on the country’s card market in next three to five years,” Tuzov said.

“But such matters are not solved by international corporations without escalation of the conflict, this is why aggression toward Wildberries is the first step to lower commissions.”

With expansion of the national payment systems, Visa and Mastercard have lost their monopolistic footing on the country’s card market, and now it is only the issue of the customer’s habits that can change. “Most of Wildberries’ clients can get a Mir card within a couple of minutes and get a 2% discount,” the Univer Capital analyst said.

Investment company Freedom Finance analyst Yevgeny Mironyuk said that the U.S. payment systems can refer to the clauses of their rules forbidding sellers to charge extra from the cardholders and they theoretically can sue Wildberries.

“The companies will try to settle the matter out of court,” he told PRIME.

“If Wildberries comes to terms with the foreign payment processors and keep a 2% discount for some types of payments, other retailers, including marketplace Ozon, may follow suit.”

According to Wildberries, Visa and Mastercard were the two most popular ways of payment as of August 15 with Mir being the third, but since August 16, after introduction of the discounts and disclosure of the commissions, Mir became number one by volume of transactions as of August 20.

“We expect that SberPay could soon become one of Russians’ favourites when choosing the means of payment and take the second place after Mir on Wildberries. The third place will belong to FPS, demand for which is rising actively,” the marketplace’s spokesperson told PRIME.

Researcher Data Insight earlier estimated the country’s e-commerce market at 2.7 trillion rubles in 2020, up 58% on the year, with half of the sales done by the marketplaces, the largest of which are Wildberries, Ozon, AliExpress Russia, and Yandex.Market.

(73.9866 rubles – U.S. $1)

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