November 2, 2015
Headquartered in Russia, Yandex.Money is the largest payment service in the country. The company recently partnered with Ebates.com, a pioneer and leader in online cash-back shopping. With this service, the customers can get a percentage of their purchases in cash, which will be sent directly to their e-wallets.
"We're delighted to be working with Yandex.Money as it now means their 22 million users can begin to enjoy cash-backs, online coupons and exclusive offers from hundreds of their favourite retailers like AliExpress!" Ebates.ru’s General Manager, Adrienne Down Coulson said in company’s press release.
The volume of the Russian e-commerce market has increased by 31% just in the last year and its total volume grew close to $12 billion, according to research by AKIT. In addition, AKIT estimated that almost every other Russian user has made some purchases online.
Russian stores make up almost 20% of stores offering cash-back rewards via Ebates worldwide. Among them, China’s AliExpress (part of the Alibaba Group) is the leader in Russian online retail. Currently, Ebates.ru works with more than 575 online stores, where users can earn cash-backs, according to the company’s annual report. To date, Ebates’ worldwide members have earned $427 million in rewards since 1998.
The LTP team also had the pleasure of meeting, Anna Kuzmina, Chief International Officer at Yandex.Money, at the Money20/20 2015 conference in Las Vegas.
The company shared their insights on how it helps Russian buyers buy outside of Asia, for instance, cross-border trade.
There are lots of exciting things happening with regard to Russian e-commerce and Russian buyer behavior. Over the past few years, the Russian e-commerce retail has changed significantly. Earlier, we had Russian local companies, a couple of cross-border merchants and foreign companies—mostly the US and European ones—the largest ones being Amazon and eBay. From the last two years, the situation started to change with Chinese companies like Alibaba entering Russia; a lot of middlemen appeared that were selling from Talbau’s website and Russians started to get the idea that you can buy something cheaper from China than locally. And then purchasing power became less and pricing became a touchy subject. The Chinese retailers Alibaba launched the brand of ‘AliExpress’ which became very successful; currently, its largest market is Russia. In addition, other Chinese retailers have also entered the Russian market which has completely changed the Russian e-commerce market.
Talking about the payments methods used in Russia, the CIO of the company Anna Kuzmina said, For online purchases, the usual payment behavior in Russia is to pay when the stuff is delivered and you pay by cash. That is how it works for the local sellers because you want to see what you have bought before you pay for it. So prepaid is not so common with local Russian sellers. But in cross-border e-commerce, there is no option of seeing the parcel before buying. So the credit cards started to have the largest share and the Russian market has special machines known as ‘Cash Kiosks’ that accept cash.
Russia’s economy is still cash-obsessed. Even those who have bank cards tend to withdraw their entire salaries in cash. Mostly, online purchases are paid by cash on delivery, but online merchants who don’t want to risk rejected orders should offer the option of cash prepay through payment kiosks. After a customer completes her order, she receive a unique payment code, goes to the nearest payment kiosk (they’re all over the country and Russians are used to using them for topping up their mobile phones), types in the code and deposits cash straight into the kiosk.
When asked about the latest regulatory changes in Russia, Anna said, The process has started some time ago. There are some new regulations coming up regarding e-wallet/electronic payments. What it does is getting closer to European/US regulation. Two or three years ago, e-wallet users can be unanimous completely, but now, to pay large amounts, you have to follow the whole identification procedure. Other than that, e-commerce itself is growing. Online purchasing is picking up as lots of people are going online for purchasing purposes. Lots of people—even old age people—are discovering the Internet as an option for purchasing. Also, online payments are going into the prepaid mode. For local retailers, cash still holds the majority, but for cross-border trade, people are getting used to online payment methods like electronic wallets and cards.
Talking about Yandex’s payment venture Yandex.Money, she said, Yandex.Money is a joint venture of Yandex (YNDX) and Sberbank, the largest bank in Eastern Europe. Our infrastructure is 75% Sberbank and 25% Yandex where most of the technology and innovation comes from Yandex. Sberbank has a lot of companies and projects that they invest in. They are also working on lots of innovating payments products.
On the company’s future plans, she said, We are working on many pilots and some innovative payments products in conjunction with Yandex. We are working on payment products together with Sberbank and we are also looking into ways to expand our operations in Europe. So if there is an announcement, it might come soon.
Elaborating on Yandex’s interest in Asia she said, We have a huge interest in Asia, but it’s not in our current roadmap. We are more focused on becoming the payment provider for Asian companies and we are quite successful at that.
Yandex.Money is the largest electronic payment service in Russia, according to a 2015 survey by TNS. Yandex.Money offers online stores Yandex Payment Solution for accepting online payments by all the methods most popular among residents of Russia and other CIS countries: credit cards, Yandex.Money and WebMoney e-wallets, mobile billing through the top Russia/CIS providers, and cash via over 170,000 cash-acceptance points all over Russia. Currently, over 76,000 online stores use Yandex Payment Solution. Yandex.Money also offers consumers easy, safe, and reliable methods of paying online on its own site and mobile app. The service hosts about 22 million user accounts with about 12,000 new accounts created daily.
The company started its international expansion with Canada and then made a move toward Asia (China, Korea, and Singapore). Russia became the first European country, where Ebates operated on a substantial level, launching a website, adopting local currencies and collaborating with online merchants. In 2014, a Japanese online retail giant Rakuten acquired Ebates for $1 billion.