" class="no-js "lang="en-US"> Trends to watch in 2020 - Yandex.Checkout insight - Fintech Finance
Thursday, March 28, 2024

Trends to watch in 2020 – Yandex.Checkout insight

Infrastructure for non-cash payments is rapidly developing in Russia and e-commerce market is savvy and advancing in accordance with global trends, yet, the acceptance by general audience is at the most times faster than in Europe or the USA. That is expected to continue in 2020, says Ivan Glazachev, CEO at Yandex.Money.

In 2019 the e-commerce market in Russia accounted for $31B, adding 23% from 2018, states the leading e-com research firm DataInsight. The fastest-growing markets in 2019 were Mexico with +35% ($9B in total), India with +32% growth ($32B in total), Philippines with +31% ($1B in total) and China with +27% ($738B in total). It is expected that Russian e-commerce market will grow by 16% in 2020, faster than South Korea (+5%), Japan (+6%), Great Britain (6%), Canada (+7%), France (8%), Germany (9%), China (11%) and US (12%).

Non-cash and e-wallets on the rise

Obviously, the share of non-cash transactions will increase year-on-year due to the convenience as per user experience and additional benefits for customers, such as cashback options. Development of fintech services and online-banking brings the opportunity for users to gain access to funds faster and to control financial flows, which are the key factors for e-payments popularity growth. For the past 20 years a major payment transformation has occurred in Russia – from cash to bank services and further to online payments. More than 100M people in Russia have opened an e-wallet and more than half of active internet users regularly use for payments. The growth of e-wallets’ popularity is a global trend – according to WorldPay, its’ share will account for 47% of total number of online-payments in 2022.

E-wallets can be opened from any location with internet access, there is no need to physically show up at the bank office (while traditional banks constantly shrink their presence in cities with less than 500K population) or wait for the delivery (that is at times a challenge in remote areas).

According to the EY report, in 2019 Russia is ranked 3rd by the level of adoption of fintech services, outperforming such countries as Sweden, Great Britain, Singapore. These results correspond with ambitious plans of Russian Central Bank to increase the share of non-cash transactions up to 65%.  The simplicity of opening an e-wallet makes it a pivotal social tool to increase the availability of financial services in case of emergency or when traditional banking services are not available due to various reasons – people living in remote areas, freelancers, people living abroad and financially disadvantaged people.

At the other part of world – in Mexico, traditionally cash country, the government-led effort to boost digital payments is accompanied by the rise of fintech offers – from world-famous Stripe to local AI-startups.

Ecosystem formation

Nowadays financial services expand further than money-related services only. The market is looking at China with comprehensive solutions like WeChat Pay and AliPay. These apps include messengers and financial services with all the necessary functions for every-day life. In Russia today the general trend suggests the creation of an ecosystem providing all the services via single app or interface. As we can see, banks and e-wallets include value-added and lifestyle functions to their apps.

Yandex.Money has also followed that path, we transform our solution into handy lifestyle-service with tickets purchases, fines and tax payments, discounts and coupons for purchases, investment portfolio and gamification.

Leading global and Russian companies aim at developing an all-in-one solution for users. As an outcome the competition is high, the functionality increases, and the aspiration for versatile solutions strengthens. Any merchant today strives to simplify the payment experience for its customers in order to reduce the path and time from choosing the goods to paying for them. SuperApp fever was widely covered last year with examples from India’s growing internet and smartphone market – local mobile wallet service Paytm was one of leaders of the diversification race, not to mention Google and Amazon initiatives.

AI embracement to continue

Further AI embracement in payments will be dominating the tech landscape. The present major function of fighting fraud will be enhanced by various market players, yet the development of AI will boost deeper automatization of payment experience. Strong security is a founding stone for successful financial service, which gains significant meaning at the aforementioned ecosystem formation stage.

Artificial intelligence and machine learning are key tools for marketing activities and loyalty programs, thus the market is making a bet on it regarding a conversion rate increase. Brazilian fintech and telcos, alongside with national traditional banking and financial institutions, aim at advancing AI-driven services as a crucial part of introducing open banking and instant payments in order to improve financial landscape. AI will spearhead not only customer assistance, but digital onboarding, credit risk models and automatic scanning of lawsuits, according to Brazilian banking association Febraban. AI will also be of great help for scaling businesses, especially at global demand for internalization. That means that onboarding process for merchants has to become more transparent, localization procedures have to be optimized and attracting customers at new locations has to be more effective.

O2O intersection

E-commerce widely spreads into casual purchasing and payments tend to include more value- added services around them, consequently, the line between online and offline and between different payment experiences blurs.

O2O intersection, as of the most common example now, can be executed in synchronization of offline and online loyalty programs. The same trend is gaining momentum in marketing activities, exploiting gamification mechanics in both realms – brick-and-mortar stores and in-app, for example, or within different apps of one ecosystem. Yet, the customer receives bonuses at one virtual account and can spend all of them for further purchases with no split by receive methods. That leads us to another challenge and trend – keep all the operations under the hood for greater usability and friendliness of payment experience.

Usability will be more important for customers than actual knowledge of where the money comes from, where it goes to and how many parties are involved in the operation. Furthermore, as alternative payment methods are on the rise, it is crucial to provide all payment methods via single interface or via single payment experience, which adds to usability again.

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