Cash anachronism: how Russia became the leader in bank card payments

In mid-October 2021, it became known that at the end of 2020, seven large Russian banks processed about 9.7% of the global number of non-cash payments by bank cards through specialized POS terminals at retail outlets. This data was cited in its research by Nilson Report. A year earlier, it showed an indicator of 7.3%.

For comparison, the share of the population of the Russian Federation in the same 2020 was only about 1.9% of the total population of the world. Thus, using modern Russia, it is carried out by one of the global leaders in managing individuals in the system of cashless payments from bank cards. Moreover, such leadership tends to strengthen.

Coronavirus as an engine of progress

A few years ago, it was widely believed that Russians are very fond of cash and do not plan to abandon such a familiar traditional means of payment. Meanwhile, revolutionary changes in this area have taken place rapidly and routinely. This is also indicated by the results of a special sociological survey for 2020 published by the Bank of Russia.

According to the Central Bank, the share of the population used to pay for goods and services mainly decreased in 2020 to 30% against 74% in 2014. At the same time, the main reason for choosing a cash payment method for Russians is the habit of such a calculation. However, psychologists and sociologists are well aware that habits change. Moreover, changes in consumer preferences very often occur unconsciously, that is, imperceptibly.

By the way, used with the global outbreak of COVID-19 was the widespread introduction of various restrictions and hygiene standards associated with the global outbreak. It so happened that the non-cash form of payment is ideal for existence in conditions of self-isolation, social distance, as well as the widespread use of personal protective equipment.

Representing misophobia, representing the fear of contamination or infection, accompanied by a desire to avoid contact with surrounding objects. It is a well-known and well-studied mental disorder. However, in the current realities, it is beginning to approach the daily norm. One way or another, the World Health Organization (WHO) quite diplomatically acknowledged that cash can act as a transmission channel. However, she did not give clear recommendations on this topic.

The technology of wireless data transmission of a small radius (NFC) in this regard came in time just in time. At first, bank cards with a built-in chip for contactless payments began to spread widely. And now no one can be surprised by paying for a purchase or service using a smartphone, smart watch or other devices.

Improving existing

Along the way, it should be noted that the widespread use of non-cash payments in Russia was due to the availability of telecommunications infrastructure. Despite the fact that the Russian Federation is a very large country, it is included in the segment of world leaders in terms of the cheapness and availability of mobile Internet. I will also add about the relatively low cost of high-speed home Internet access in fairly populated areas.

Meanwhile, digital financial technology has already gone much further. For example, from October 15, 2021, at all stations of the Moscow metro, a form of fare payment using the Face Pay face recognition system. It is very likely that progress cannot be stopped. However, in this regard, legislative and moral restrictions are still in force. For example, the European Parliament recently adopted a resolution on the need to ban automatic face recognition in public places in the EU.

Another very advanced and enjoyable modern technology is the Russian Fast Payment System (FPS). The days when a domestic interbank transfer could be processed in a few days ended by the end of the 2000s. However, the SBP introduces new standards in this area. Through it, you can make payments almost instantly, around the clock, even on holidays and weekends. In addition, at present, transfers through the Fast Payment System between individuals in the amount of up to 100 thousand rubles per month are carried out free of charge.

Unbeknownst to myself

The next interesting statistical fact was that the average number of cash settlements per day per capita in the Russian Federation in 2020 was 0.88 for the first time. In other words, the average citizen of Russia now pays in cash less than once a day. With this average amount of one-time purchases for cash, it is steadily growing. In 2020, it amounted to 858 rubles against 583 rubles in 2015. These data clearly indicate that non-cash payments are increasingly used in the case of small purchases. A good example of such a transaction would be the aforementioned payment of public transport fares.

An additional advantage of this form of payment is that there is no need to change bills and receive change in coins. Moreover, in the modern world of compact gadgets and smart items, a large wallet with small change is already becoming an inconvenient anachronism. In 2020, about 7.5% of Russians did not pay with coins at all.

Paper bills for utility bills and other services are also becoming a technology lagging behind the times. They are still massively distributed to mailboxes, but at the same time they are often duplicated in electronic form. These receipts contain a machine-readable code that can be scanned with a smartphone and passed through a mobile banking application. In such a scheme, there is simply no place for cash.

Yet many Russians still carry a small amount of cash with them. In 2020, 46% of the interviewed respondents kept banknotes in the amount of 300 to 1,000 rubles in their wallet. Exactly the same percentage of the population carried with them coins in the amount of 20 to 50 rubles. A slightly smaller number (30%) kept with them a larger stock of paper money in the amount of 1,000 to 3,000 rubles.

Obviously, that gives the amount a certain reserve stock in case of malfunctions of the cashless system, which, although they do happen, are infrequent. This money is often not spent if it is possible to make a non-cash payment. According to statistics, only 23% of citizens prefer to withdraw cash through an ATM in order to pay for goods or services.

New forms

One way or another, but at present about 90% of the adult population of the country act as a bank card holder. At the same time, 74% of the surveyed citizens use debit bank cards as the main payment instrument. The least popular forms of non-cash payments are transfers from a mobile phone (19%) and payments from electronic wallets (18%). Presumably, this is due to the preliminary preliminary decision of crediting money to them.

The digital ruble should become an additional official payment system in the country, testing of which is planned to begin in the coming months. This form of payment is positioned as a cross between cash and non-cash payments. However, from the user’s point of view, it will still be a non-cash payment option, which can be made even if there is a temporary lack of access to the Internet.

The digital ruble will resemble the currently fashionable cryptocurrencies. At the same time, it will not become a direct analogue of a decentralized payment system with an automatic emission algorithm embedded in it. Rather, it will be the so-called stablecoin, or electronic currency pegged to the non-cash ruble and capable of replacing it. Apparently, the digital ruble will also further reduce the volume of cash turnover in the Russian Federation.

In conclusion, it is worth recalling that a few years ago in Russia the issue of the advisability of reducing cash and even the hypothetical possibility of their future abolition was widely discussed in Russia. The state introduced consistent restrictions for individuals and individuals in the field. But at the present time this is no longer so necessary. Cashless payments in retail trade and in the provision of services have become the dominant form of post-facto payments.