- Russian
ecommerce still 80 percent reliant on cash
- Net
Element’s “PayOnline” payments platform to cash in on trend toward
non-cash
- Strategic
partnerships pave entry to Russian mobile and online payments market
In Russia, cash on delivery is not just a way to pay for
takeout; it’s how over 80 percent of online purchases are remunerated,
according to Ecommerce News Europe (http://ibn.fm/KXdrv). However, that is changing fast. In
2017, “financial cards and payments performed positively in Russia”, says
Euromonitor International (http://ibn.fm/vglew).
Russian consumers are changing their purchasing habits, it seems, as financial
literacy and cashless payment solutions, like those offered by Net Element,
Inc. (NASDAQ: NETE), come to market. A recent report from Zacks notes, “Net
Element is a growth company in the payments industry that should benefit from
the adoption of mobile and online payments in the U.S., Russia and Eastern
Europe.” In fact, Net Element is the only U.S. company listed on the Nasdaq
that stands to benefit from the Russian electronic payments expansion.
Russian consumers are a cautious lot, paying only for goods
when they are received. Merchants display an equal degree of circumspection;
they typically prefer cash-on-delivery (COD). COD in America was widely
employed during the heyday of mail order commerce but has since been superseded
by debit cards, credit cards and web-based payment systems. In other countries,
COD is still an option. In the Middle East, around 60 percent of online
transactions are completed by COD, prompting one commentator to lament (http://ibn.fm/glxox), “Cash on
delivery is the biggest challenge for e-commerce players in the region. There
are high return rates, a big lag time between order and payment and the need
for delivery people to carry cash is a major risk.” The same challenges beset
ecommerce in Russia. However, a payment platform like the one developed by Net
Element is catalyzing consumer acceptance of non-cash payment.
The potential of this emerging market is not to be
underestimated. Citing a recent report from Morgan Stanley, this column
discloses that in the five-year period from 2018-2023, the Russian e-commerce
market will grow by more than two-and-a-half times – to 3.491 trillion rubles
($53.15 billion) – from 1.292 trillion rubles ($19.67 billion) in 2018. In
2017, “the Association of E-commerce Companies (ACIT) estimated the volume at
1.04 trillion rubles ($15.83 billion).”
Net Element is on it. In 2017, the company’s PayOnline
subsidiary launched Apple Pay support in Russia (http://ibn.fm/vZqHy). The global
number of Apple Pay users is growing at a rate of over one million per week,
while transaction volumes are up 500 percent over the last year. Since
launching in Russia on October 4, 2016, the number of Apple Pay
users in the country has increased to an estimated 200,000 and continues to
grow. As a fully integrated electronic commerce platform, PayOnline is at the
forefront of the payments industry in the region and poised for expansion
into Russia. It is well positioned to capitalize on this developing trend
by enabling and supporting mobile and e-commerce merchants to accept Apple Pay.
PayOnline is also collaborating with Bank Sputnik to offer a
comprehensive multi-channel payment facilitator solution for SMB merchants in
the Russian Federation (http://ibn.fm/xluMR). This
unique solution offers a set of tools not available from any other transaction
processing company in the region and expands PayOnline’s offerings beyond
electronic commerce. Under the exclusive partnership, Bank Sputnik will offer a
fully compliant legal framework and bank sponsorship to enable PayOnline to
process transactions as a payment facilitator. By provisioning a single, master
merchant ID, PayOnline ensures that merchants and their clients benefit from an
automated, real-time and seamless onboarding experience. The API-driven
platform simplifies merchant account enrollment. A sub-merchant can be
enrolled, approved, boarded and processing payments in a few minutes.
Net Element offers a broad range of payment acceptance and
processing services that enable merchants of all sizes to accept and process
over 100 different payment options in more than 120 currencies, including
credit, debit, prepaid and alternative payments. The company also provides
merchants with value-added services and technologies, including integrated
payment technologies, POS solutions, security solutions, fraud management,
information solutions and analytical tools.
For more information, visit the company’s website at www.NetElement.com
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