NFC Prospects in Emerging Markets: case of Russia (English)

Victor Dostov

Russian Electronic Money Association

NFC Prospects in Emerging

Markets: case of Russia

CEESCA Meeting, Portoroz, 20-21 September 2012.

Russian E-Money Market: going upward

1000

1700

3000

6000

0

1000

2000

3000

4000

5000

6000

7000

2009 2010 2011 2012 (projection)

Millio

n e

uro

Russian E-Money Industry Turnover

Russian Electronic Money Association, 2012.

Russian E-Money Market: going upward

Russian Electronic Money Association, 2012.

Active ‘e-wallets’, mln.

20 30 34

2009 2010 2011

Basic technologies

E-Wallets for online transactions

Mobile phones for small payments

from pre-paid mobile account

Payment kiosks for offline

‘insert cash’ payments

Innovative offline interfaces

Payment kiosks

1. Choose a service 2. Deposit cash 3. Payment is done

Innovative offline interfaces

Payment kiosks

Installed virtually in every

retail shop, business

center and sometimes on

the street, number of

payment kiosks is

estimated around

250 000

Important note:

Customers are paying from their prepaid mobile account

and not from their bank account

Mobile Commerce in Russia

Topping-up

mobile phone

account

Money on mobile account

transformed into e-moneyE-Money may be used for P2P or

P2B transactions or forwarded to

money transfer system

Regulation environment growing strong

Pre-2009 era

• Regulation is mostly circumstantial

2009 • Law on Payment Agents

2011• Major Breakthrough:

• Federal Law “On National Payment System”

Federal Law “On National Payment System”

Legal Definition of „electronic money‟

Expansion of agents‟ functionality

Legal Framework for the sustainable evolution of the market

• Supposed to complement and substitute ID

• NFC-enabled

• Includes multiple applications:– Payments

– ID

– Driving License

– Access control

– Digital signature

– And many others…

Universal Electronic Card

• Limited distribution from 2013

• Distribution via Government Services

Centers, Russian Post

• 50/50 public and private financing

Universal Electronic Card

Universal Electronic Card

?Bank card

Electronic ID

State services website

credentials

Innovative projects

Government agencies started to compete with their

own electronic card projects.

Few are willing to cooperate.

Result: many ideas and no product (yet)

Interfaces and technologies complement each other

From diversification to hybridization

From hybridization to „cloud-ization‟

• Funds easily „migrate‟ between

instruments and can be

managed anytime, anywhere

Bringing part of the cloud to the offline world (which may still lack universal connectivity)

Where does NFC stand?

NFC-enabled

phones

NFC-enabled

cards

NFC-enabled

kiosks

NFC is more than payments

Identification vs. payment function

• Cloud and universal connectivity brings identification issue into

focus

• Getting reliable and remote answer to ‘Who You Are?’ question is a

key to the provision of innovative and comprehensive financial (and

other) services

Technological impetus

to the contactless ecosystem?

„Injecting‟ NFC into existing solutions

Making contactless experience matter

• Speed

• Security

• Convenience

St-Petersburg Underground: from magnetic stripe

to stored-value contactless Oyster-type card

Making contactless experience matter

Potential contactless hybrids?

Square PayPal HereiPay

Contactless ecosystem: where do we start?

Customers (NFC mobile, NFC cards)

Point-of-sale (POS terminals)Additional functionality

(transport, access, ID, loyalty, etc.)

Victor DostovPresident of the Russian Electronic Money Association

+7 921 963-85-15

greygato@gmail.com

www.npaed.ru