Apple Pay to Launch in Russia

By Marina Romanova

10 Russian financial institutions including VTB 24, Alfa-Bank, Tinkoff Bank and Raiffeisen bank are planning to launch Apple Pay following the market leader, state owned Sberbank, which has launched Apple contactless payment service since last week, Russian media reports.

According to the appleinsider.com, at launch, participating retailers include ATAK, Aushan, Azbuka Vkusa, BP, Magnit, Media Market, M.Video, TsUM and authorized Apple reseller re:Store. Touchless payments are expected to roll out at Electronics store Eldorado and Burger King in the near future.

A user has to add their card details to the Apple Pay app to be able to pay in store and online with the service. Customers can then use either their iPhone (or linked Apple Watch) to pay at retail stores equipped with point-of-sale registers supporting NFC (near-field communication) technology, which enables frictionless payments between smartphones and registers. People simply place their phones or watches near the point-of-sale register sensors for a payment to be made without swiping a card.

Apple Pay works with iPhone SE, iPhone 6 and later models, and Apple Watch.

Customers of Sberbank who are MasterCard holders will be the first to have access to the new service. Apple Pay payment system will start working with Visa bank cards in the Russian market in December, a source close to the talks between California-based Apple and Russian representatives of banks and payment systems told TASS on October 10th.

The arrival of Apple Pay in Russia is the latest development in a measured international rollout. Apple Pay is now available in ten major markets around the world: the United States, the United Kingdom, China, Australia, Canada, Switzerland, Hong Kong, France, Singapore and Russia. The service will arrive in New Zealand and other markets later this year.

According to the company website, the new payments service was activated in Switzerland in July. A month earlier, Apple expanded backend integration to incorporate each of Canada’s “big five” banking institutions, and before that Apple Pay gained support from five major banks in Singapore.

The endgame, according to Apple Pay chief Jennifer Bailey, is to deliver the service to every major market in which Apple products are sold.

First introduced in its home country in October 2014, Apple Pay is gaining traction in the U.S. with, chief executive Tim Cook claiming earlier this year, the service accounts for three out of four of all contactless payments made in the country which represents 75 percent of all contactless payments in the U.S. According to researcher eMarketer Inc, the value of in-store transactions by people paying with their mobile phones, known as proximity payments, is expected to reach US$210 billion by 2019 in the U.S.

However, according to the Russian market participants, advancement of the Apple contactless payment service will largely depends not on Apple, nor on the quality of its mobile wallet app, but Russian retailers and their customers.

“Prospects for Apple Pay in Russia largely depend on the willingness of retailers to accept payment from their customers through Apple Pay. I mean there must be specific point-of-sale register sensors and other devices offered to the customers. As far as I know, not all the stores (in Russia) accept ordinary cards for payment yet, there is also an issue with availability of NFC-chip readers. In other words, everything will depend on retailers. If retail will see a certain number of customers willing to pay using Samsung Pay, Apple Pay, or any other technology, they, of course, would install all necessary devices. As for now, such technology penetration is not very high,” Ruslan Galka, head of sales and marketing for the Parallels, said to the radio Kommersant FM.

One week ahead of Apple, Samsung Electronics also has launched its mobile wallet app Samsung Pay in Russia with support from Alfa-Bank, MTS Bank, Raiffeisen Bank, Russian Standard Bank, Yandex, mobile network operator MTS and MasterCard.

According to the company, in the fourth quarter of this year “another major bank” will also begin backing the mobile payments system with the planned number of supporters increasing “at least twice” by 2017, NFC World Knowledge Centre reports. “This will cover about 65 percent of private investor banks and 80 percent of Russia’s urban population,” the company adds.

As of the first quarter of 2016, Samsung remains the leader of the Russian market by number of smartphones sold with a share of 20.6 percent. Apple is on the second place with a share of 10.4 percent, the third leader Lenovo (9.0 percent), according to Euroset, the country’s biggest retailer of mobile phones.

Though, in monetary terms, Apple came out first with a share of 33.3 percent, Samsung holds the second place and 24 percent market share, Lenovo occupies 6.7 percent of the Russian market.