Moscow, 10 September, 2015 – Gemalto (Euronext NL0000400653 GTO), the world leader in digital security, has released the results of a survey that reveals the attitudes of Russia’s younger generation towards contactless cards, mobile payments and NFC technology. The quantitative research was conducted during the summer of 2015 via online polls in Moscow (500 valid responses) and St. Petersburg (500 valid responses). The target audience was young people aged 16-35 years who have a bank card or a smartphone.
Key findings of the survey include:
- Young people are enthusiastic users of contactless cards, but adoption is still low
- Two thirds are interested in using their smartphones for payments
- Almost 40% of respondents would leave their wallet and cards at home if they could pay with their smartphone, but awareness of mobile payments is still low among Russia’s 16-35 year olds
- One in six respondents would consider changing bank if their existing provider did not offer mobile payments
- Greater reassurance over safety and security may speed adoption of mobile payments
Contactless cards: users are enthusiastic, but penetration is still relatively low
48% of respondents in the survey are aware of cards with the potential for contactless payment, but only 17% actually have one. Almost everyone that does own a contactless card (92%) has used it for contactless transactions, mainly for payment for goods and services or transport. Given the opportunity, young people in Moscow and St. Petersburg are clearly happy to embrace the technology.
The study showed that the frequency of transactions with a banking card correlates directly with the age of the respondent: younger people make fewer purchases. Frequency of bank card usage increases with the value of the transaction: 54% of respondents make payments this way when the price is more than 5000 RUB. This falls to 25% for goods and services worth less than 500 RUB.
If more people were equipped with contactless cards these figures could be significantly higher. Gemalto’s experience demonstrates that card use is boosted when no PIN is needed and the card checkout process is quick and convenient, even for low value transactions. Experience from countries such as UK, Poland and Italy further shows that the usage increase even more when cards offer the possibility to use EMV contactless payment and transit on the same device. This educates the users and it becomes a natural gesture to tap for a ride, tap for a coffee.”
Mobile payments: untapped potential among the ‘smartphone generation’
In both Moscow and St. Petersburg smartphones are extremely popular. 40% of respondents use their smartphone for more than five hours per day, and another 26% for between three and five hours per day. Smartphones are most commonly used for making calls, sending messages, social networking, listening to music and watching videos. However, 51% also stated that they regularly use financial services such as Mobile Banking. Clearly the smartphone has become central to the way younger people in Russia manage their lives, and there is vast potential for new services to be offered via the mobile channel: almost two out of five respondents said they would not carry their credit cards or wallet if they knew they could pay with their phone.
Most of the respondents (66%) have an interest in using their smartphone as a payment instrument. One out of six might consider changing bank if their existing provider did not support mobile payment. A majority of the respondents (58%) said that, given the option, they would prefer to use their mobile phone to pay for transportation. Experience from other markets shows that transportation ticketing is typically the most effective means of helping end users become accustomed to using their phone when paying for a service. 45% said that they would prefer to pay with their smartphone without entering a PIN for purchases of up to 1000 RUB.
Among those keen to use their smartphone as a payment instrument or loyalty card, the main motivating factors cited were:
- Ability to earn bonuses while making a purchase with NFC – 71%
- Easy and convenient means of payment – 59%
- Faster transactions – 57%
However, this widespread enthusiasm only becomes evident when the potential for mobile payment is explained to young people. At present, awareness is still relatively low. More than two-thirds of 16 to 35 years old are not aware of the possibility of using a smartphone as a banking card. However, this is still higher than awareness of NFC technology, which demonstrates that even young, tech-savvy consumers do not appreciate that NFC is the enabling technology behind mobile payments.
Of those that stated little or no desire to use their smartphone as a payment instrument, the main reason given was concern over security and fraud: 59% of respondents in Moscow and 67% of respondents in St. Petersburg expressed such worries. In addition to simply raising awareness of the potential for mobile payments, it is clear that stakeholders need to address fears over security and highlight the inherent and proven strength and safety of solutions based on a Secure Element (SIM or embedded), Trusted Execution Environment (TEE) or Host Card Emulation (HCE).
The NFC eco-system: growing fast
Penetration of NFC-enabled mobile devices is increasing year-on-year. According to J’son & Partners Consulting, the market share taken by NFC-enabled smartphones in Russia increased from 7% in Q1 2012 up to 22% in Q4 2014. However, only 29% of survey respondents were certain if their smartphone or tablet was equipped with NFC.
In general, the survey showed that more than half of respondents would consider the presence of NFC technology in their future smartphone; only 15% said it would not play a significant role in their choice of handset. Certainly a step change in the number of NFC devices is expected in Russia. According to J’son, various experts predicts that 7.5 million people could be using NFC technology in Russia by 2016, compared with approximately 2 million today. Russia’s largest mobile phone retailer, Euroset, expects turnover in the contactless payment market of between 20-50 billion RUB in 2017. And the necessary POS eco-system is also well underway. The number of terminals with NFC support is projected to grow from 90,000 to 235,000 in 2016, representing 25% of the country’s entire POS terminal network.
About the survey:
Gemalto polled 500 citizens of Moscow and 500 citizens of St. Petersburg aged 16-35 using an online survey method (50% female, 50% male). The survey was initiated by Gemalto and was carried out in summer 2015 by J’son and Partners Consulting.
The full version of the survey can be downloaded here: http://communication.gemalto.com/gemalto-and-nfc
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