How Russia Remittance and Bill Payments Market Is Positioned in Russia?
The Russian remittance industry has witnessed growth at a decreasing rate over the years. The outbound remittance from Russia dominates the Russia Remittance Market. With around USD ~ million of total outbound remittance, in 2016 Russia was ranked ~ largest country in the list of remittance sending countries. In the year 2016, the share of outbound remittances was USD ~ million as compared to a minor share of USD ~ million for the inbound remittances.
Remittance fund sent by migrants in Russia to their families help them meet their daily expenses. Better job opportunities with high salary and better standard of living are the main reasons for the overall growth of the remittance and the bill payment industry. However there was a sharp decline in the growth rate of international remittance market in 2014-2016. This abrupt fall was majorly contributed by the decline in commodity prices, especially oil in the remittance sending countries and the high exchange rates.
The Russia Remittance Industry has been dominated by five major players having a lion share of ~% in the total remittance market. Traditionally the Russian population used only cash transfers but the expansion in online methods and mobile based services have encouraged people to use electronic modes also. In the past few years the growth in the bill payment market size has been over ~% in Russia. The Bill Payment market in Russia increased from USD ~ million in 2011 to USD ~ million in 2016 on account of the tremendous progress in the areas of utilities, entertainment, health and education. Grocery bills and utility bills has been dominated the bill payment market. In the recent years the number of mobile subscriptions increased from ~ in 2011 to ~ in 2013 and the electricity generation increased from ~ kilowatt in 2011 to ~ kilowatt in 2013.
Which Channel of Remittance is Preffered in Russia the Most?
International remittances from Russia are generally done through two major channels such as banks and MTOs. Banks are the highly preferred channel for the cross-border remittances. The share of banks has been dominating the market with more than ~% share in the market consistently over the past five years. The share of banks has been high in both outbound and inbound remittance transactions. Though the process of transferring money through banking channels is complex in the country due to enforcement of law regarding Russian Payments systems the channel accounted for the higher share. The major factor attracting people towards the banks include the low remittance fee and faster transfers.
They provide direct money transfer and remittance services internationally through correspondent accounts in foreign banks.
When a migrant remits money from a bank in Russia to the United States or to the Western Europe, the correspondent account of the commercial bank is first credited by the remittance amount and then the bank account of the recipient is credited or a money order payment in the name of the recipient is issued. Funds can be transferred on cash to cash, cash to account, or account to account basis. The wide presence of banks in the country in numbers in both urban and rural areas also supports the domination of banks in the international remittance market of Russia.
MTOs represent money transfer organizations in the country that enables the migrants to transfer money from Russia to their origin destinations.
The geographical presence of MTOs within Russia is smaller in comparison to the banks. MTOs lack in number of branches. The trend visible in the market is that the transaction volume derived, both outbound and inbound have been declining over the past five years.
On the basis of transaction volume the market presence of MTOs have declined at a CAGR of ~% during the period of 2011-2016. The major MTOs include Western Union, MoneyGram, Unistream and Contact. People in the country generally prefer remitting money in cash and they trust banks more for the same.
Moreover, the MTOs in the country do not have a differentiation in the services offered to the customers in comparison to the banks that acts as a weakness for them. Lack of penetration, promotional efforts, balanced presence in rural-urban areas acts as factors restraining the growth of MTOs in the international remittance space. Obtaining MTO license in Russia is also difficult that restrains from the channel to maintain an active presence. The share of MTOs in the international remittance market declined from ~% in 2011 to ~% in 2016.
Which Type Of Service is Used the Most For Remittance in Russia?
In the Russia Remittance Market the majority of the share in terms of transaction volume is dominated by cash transfer. The total market size captured by cash transfers has grown from ~% in 2011 to about ~% in 2016. There has been constant growth in the market share of cash transfers from the past five years on account of the security conscious population in Russia. All the banking and non-banking channels in the country prefer cash transfer to remit funds to the Non-CIS countries. The low growth of digital market in the country does not encourage transfer of funds through electronic mode. Mostly the low and middle income group prefers to remit funds through cash. New law passed in order to restrict cross border transfer of funds to countries barring Russian Payments System (RPS) has also made cash transfer more common. Electronic transfer has only contributed ~% in 2016. The reason is the low development of digital methods and internet access in the country. Mostly the middle and higher income group prefers to remit funds electronically. The share has increased a little from ~% in the year 2015 to ~% in the year 2016 due increasing awareness about internet access among the middle aged groups. Moreover, the other reason was introduction of electronic transfer services like Bank cards, NEFT and RTGS by the developing financial institutions.
Which Type Of Bill Dominates the Bill Payments Market in Russia?
The volume of transactions made for the purchase of groceries dominated the bill payments market of Russia with a share of ~% as of 2016. The quantity and the frequency of the groceries purchased by the people supports the domination of this category. The share of utilities followed grocery bills in the total bill payment market. Utilities include bills for electricity, water, gas and others. These are the basic necessities which are used for day to day activities in every household. The major share in utility bills is occupied by electricity bills accounting to ~%. Mobile Recharge is the second largest contributor in the country in the bill payment segment. The mobile recharge bill payments have witnessed a robust growth from the past one decade. The use of mobile phones by every age group of people and the surging demand of smart phones in the country has contributed in rising mobile recharge industry. In 2016, there were ~ online consumers in the age group 16-55 years. The mobile 3G and 4G subscribers have increased from ~ million in 2011 to ~ million in 2015. The increase in the penetration of broadband internet service has coupled with the growing popularity of DTH services. The broadband internet subscribers increased by~% to reach ~ million in 2016.
How the Competition is Prevailing in Russia Remittance Market
Russian remittance market is fragmented in nature on account of the presence of small, medium and large companies in Russia. The Russia-Ukraine is the second largest migration corridor in the world and the Ukraine-Russia is the fourth largest corridor in the world. These corridors facilitate large scale migration and rise in competition among the players in Russia in terms of offering services for remittance flows.
The Russian remittance industry is traditionally dominated by companies including Korona Pay, Contact, Western Union and MoneyGram. The competition among the companies is in terms of the special customer satisfaction services provided and the transaction fee charged per transaction to remit the funds.
The transitional phase of preferring digital methods to remit funds is still in the infant stage of development which accounts for a major share of the traditional money transfer companies in the overall remittance market.
What is the Future Outlook for Russia Remittance and Bill Payments Market
International remittance market of the country is expected to showcase a tremendous growth in the coming years. The market is estimated to USD ~ million for the year 2017 and USD ~ million in the year 2022. The main force will be the infrastructure development activities of the government that will increase job opportunities. The Global events to be held in Russia will attract migrants in search of small scale jobs involved in infrastructural development.
The domestic remittance has been estimated to grow from USD ~ million in 2017 to USD ~ million in 2022. The anticipated increase in the use of technology and rise in the number of MTOs will positively affect growth in remittance amounts.
It has been anticipated that the bill payment market will grow at a CAGR of ~% during 2017-2022. The increasing per capita household disposable income, rising standard of living, increasing salaries, emerging bill payment companies, Expansion of bill payment services and others will surge the size of the bill payment industry of Russia.
Companies Cited in the Report
List of Companies Companies Covered in the Report
KoronaPay Major Players in Russia Remittance and Bill Payments Market
Key Factors Considered in the Report
Comprehensive analysis of Russia Remittance and Bill Payments Market and its segments
Listed major players and their positioning in the market
Identified major industry trends in last few years and assessed the future growth of the industry
SWOT analysis on Russia Remittance and Bill Payments Market
Value chain analysis of Russia Remittance and Bill Payments Market
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Ankur Gupta, Head Marketing & Communications