Keywords : smart card, debit card, transport card, bank card, prepaid card
The Russian secure transactions market is characterized by high penetration levels of SIM cards, a growing adoption of debit cards, and huge volumes of disposable tickets for Moscow Metro. Over the 2010-2016 period, this market will demonstrate a high dynamism, along with the adoption of innovative solutions such as the UEC (Universal Electronic Card), which will bring drastic changes in the market dynamics. In Russia, the telecom ma...
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The Russian secure transactions market is characterized by high penetration levels of SIM cards, a growing adoption of debit cards, and huge volumes of disposable tickets for Moscow Metro. Over the 2010-2016 period, this market will demonstrate a high dynamism, along with the adoption of innovative solutions such as the UEC (Universal Electronic Card), which will bring drastic changes in the market dynamics.
In Russia, the telecom market segment remains quite isolated from global operators, as international major players have not developed subsidiaries in Russia. The only exception is Tele2 from Sweden, which remains a second tier player. Major mobile network operators in Russia are evolving at their own pace, with the development of 3G, and are planning for LTE deployment in 2014. The Russian SIM card market is characterized by an extremely high penetration level. For instance, in Moscow, the penetration level is over 200%, meaning most users are actually owning two or more SIM cards. On a global basis, in Russia, the penetration level is over 150%. The major driver for this surprisingly high penetration level is the strong proportion of prepaid plans, leading users to churn from operator to operator in order to follow the best offers on this competitive market.
This subscriber pattern, characterized by a high churn level, leads to a heavy consumption of SIM cards, which will keep a steady growth over the 2010–2016 period. Besides the natural churn rate, this growth will be driven by a wider adoption of 3G, and, to a lesser extent, by the emergence of 4G (LTE). Smart Insights anticipates SIM card shipments will pass the 240 million mark in 2016.
Besides regular SIM cards, machine to machine (M2M) applications are bound to experience a fast growth over the 2010 – 2016 period. The fastest growing sub-segment in the M2M market will be the SIM cards dedicated to 2G / 3G / 4G modems. Smart meters, and fleet management / eCall applications will also represent 20% of the total NFC shipments. Fleet management / eCall deployment will be supported by the launch and wide-scale generalization of GLONASS, the Russian positioning system, comparable to GPS and Galileo.
The Russian payment card market is characterized by the wide and growing spread of debit cards, often given by companies to employees as a means to pay salaries. These cards are basically prepaid cards, which can be reloaded, and then become debit cards. Social benefits are paid on social cards, which often include a transport application. Credit cards are still marginal, but Smart Insights anticipates, that, due to the global economic growth in Russia, their share will be increasing significantly over the 2010–2016 period. In terms of technologies, the large majority of payment cards are still magstripe based. As payment organizations are trying to enforce the liability shift, smart cards, in the payment segment, will experience a growing adoption: Smart Insights anticipates smart cards (contact, contactless and dual technology) will represent 47% of the total number of payment cards by 2016.
The most significant factor in the Government ID segment is the launch by the Russian government of the UEC, the Universal Electronic Card, which will not only be an Identity Document, but also a means to access social services, a payment means (banking card), and a transport card (for mass transit). The Russian government announces first samples of the UEC by end of 2011, and a global deployment by 2014. The deployment of the UEC will limit growth in the payment card segment, and will trigger a steep decrease for the transport card segment. Smart Insights anticipates that by the end of 2016, 112 million UEC will have been delivered covering almost all the population over 14. Russia has launched its biometric passport program a few years ago, and this business will be experiencing a slow growth over the studied period.
Moscow metro is one of the largest subway systems in the world by the number of passengers. Most of them are using disposable tickets including a contactless chip. This single application represents the largest number of secure transaction objects on the Russian market with 2.5 billion units sold each year. However, the generalization UEC cards will reduce dramatically the number of contactless tickets used in Moscow. Other mass transit systems in Russia use reloadable cards, leading to much smaller volumes.
Russia is not among the pioneers for NFC (Near Field Communication) adoption. Mobile network operators are lunching pilots, generally in combination with mass transit operators, but, so far, none of them has showed any sign of generalization.
As a consequence of these market factors, the memory card segment (disposable Moscow subway tickets and prepaid phone cards) will decrease by close to 10% on a yearly basis. On the other hand, globally, the secure portable object market (microprocessor cards, ePassports, M2M secure devices) in Russia will experience a 19.8% CAGR (Compound Annual Growth Rate) for the 2010-2016 period.
Credit Card Industry in Russian Federation
Table of contents
1 OVERVIEW .. 13
2 TELECOM.... 17
2.1 OVERVIEW ..... 19
2.2 MAJOR MOBILE OPERATORS... 26
2.2.1 Mobile TeleSystems (MTS) .26
2.2.2 MegaFon ...33
2.2.3 VimpelCom (Beeline) .37
2.2.4 Tele2 Russia.....40
2.2.5 Svyazinvest (Rostelecom) ..43
2.2.6 SMARTS Group44
2.2.7 Mobile Virtual Network Operators (MVNOs) ......46
2.3 3G ..... 48
2.4 CDMA .. 50
2.5 LTE (LONG TERM EVOLUTION) ..... 51
2.5.1 Skartel (Yota) 53
2.6 M2M ... 54
2.7 MOBILE HANDSETS MARKET... 57
2.8 MOBILE COMMUNICATION MARKET FORECASTS ..... 61
2.8.1 Subscribers: SIM cards installed base .61
2.8.2 SIM card shipments ...63
2.8.3 Machine to machine (M2M).65
2.9 PUBLIC TELEPHONY ... 66
3 PAYMENT ... 67
3.1 BANKING INDUSTRY ... 69
3.1.1 Overview ......70
3.1.2 Russian credit cards market ....72
3.1.3 Russian three major payment systems .....73
3.1.4 Key findings...74
3.1.5 Bank cards ....75
3.2 EMV MIGRATION ...... 76
3.3 BARRIERS TO EMV MIGRATION ...... 77
3.4 VENDORS ...... 78
4 GOVERNMENT ID.. 81
4.1 ELECTRONIC PASSPORTS...... 83
4.2 UNIVERSAL ELECTRONIC CARD (UEC) ...... 84
4.2.1 UEC......84
4.2.2 Security issues86
4.2.3 Single Federal Information and Payment System for UEC ...87
4.3 SOCIAL SECURITY CARD 87
4.3.1 Moscow Social card.88
4.3.2 Sberbank Social Card......90
4.3.3 Uralsib Social Card .92
4.4 ID DOCUMENT SHIPMENTS .... 94
5 TRANSPORT 95
5.1 OVERVIEW ..... 97
5.2 MOSCOW METRO...... 97
5.3 ST. PETERSBURG TRANSPORT 99
5.4 BANK – TRANSPORT COMBINED FARE COLLECTION SYSTEM. 99
5.5 GOLDEN CROWN – SINGLE TRANSPORT CARD..... 101
5.6 OTHER TRANSPORT APPLICATIONS.. 103
5.7 MULTI-APPLICATION . 103
5.8 TRANSPORT CARD MARKET .. 104
6 MOBILE PAYMENTS.....105
6.1 MOBILE MONEY FOR UNBANKED USERS ..... 107
6.1.1 Overview .... 107
6.1.2 Remote mobile payment ...... 108
6.1.3 Prepaid top-up extension ..... 109
6.2 PROXIMITY PAYMENT: NFC.. 111
6.2.1 Introduction 111
6.2.2 NFC trials ... 111
7 PAY TV .....115
7.1 MARKET OVERVIEW... 117
7.2 DIGITAL TV COMPANIES ..... 118
8 ENTERPRISE SECURITY 121
9 SMART CARD MARKET .125
10 SMART CARD MAJOR STAKEHOLDERS .129
10.1 OVERVIEW .... 131
10.2 SITRONICS. ... 131
10.3 ORGA ZELENOGRAD (MORPHO) .... 137
10.4 NOVACARD ... 138
10.5 ROSAN FINANCE...... 140
10.6 INPAS TECHNOLOGIES...... 142
10.7 ANGSTREM.... 144
10.8 G&D ZNAK CARD .... 146
10.9 RUSNANO ..... 147
10.10 AMBIQ TECHNOLOGY..... 148
10.11 SVETLANA-KART .. 149
11 GLOSSARY ......151
Table of illustrations
Illustration 1 Russian regions by number of MNOs (2010) 19
Illustration 2 Russian market breakdown, by subscribers (Q1/2011).20
Illustration 3 Subscribers repartition evolution (2006-2011) ...20
Illustration 4 Market shares evolution, by subscribers (2006-04/2011) .....21
Illustration 5 Subscriber base in Russia (2009) ......21
Illustration 6 MTS new subscriber acquisition costs (2010-2016) .....22
Illustration 7 "Big Three" ARPU dynamics (2006-2010) ....24
Illustration 8 Dynamics of average ARPU of Russian operators (2007-2009) ......24
Illustration 9 MTS key facts .26
Illustration 10 MTS mobile business revenue evolution, US$ (2005-2010)..28
Illustration 11 MTS mobile business revenue evolution, EUR (2005-2010) .29
Illustration 12 MTS subscribers base evolution (2005-2010) ....29
Illustration 13 MTS market share evolution, by subscribers (2005-2010)...30
Illustration 14 MTS penetration evolution (2005-2010) ...30
Illustration 15 MTS churn rate evolution (2005-2010).....31
Illustration 16 MTS churn rate, company’s forecast (2009-2015) .....31
Illustration 17 MTS ARPU evolution, US$ (2005-2010).....32
Illustration 18 MTS ARPU evolution, EUR (2005-2010) ....32
Illustration 19 MegaFon key facts 33
Illustration 20 MegaFon subscribers base evolution (2009-2011) .....35
Illustration 21 MegaFon ARPU evolution, RUB (2010-2016) .....35
Illustration 22 MegaFon ARPU evolution (EUR) ......36
Illustration 23 Beeline key facts ..37
Illustration 24 Beeline subscribers base evolution (2006-2011) 38
Illustration 25 Beeline prepaid subscribers share evolution (2010-2016)...39
Illustration 26 Beeline churn rate evolution (2006-2010) 39
Illustration 27 Beeline ARPU evolution (2006-2010)40
Illustration 28 Tele2 Russia key facts ...40
Illustration 29 Tele2 Russia subscribers base evolution (2006-2011).41
Illustration 30 Tele2 Russia prepaid subscribers share evolution (2010-2016) ...41
Illustration 31 Tele2 Russia churn rate evolution (2010-2016) .42
Illustration 32 Rostelecom key facts ....43
Illustration 33 SMARTS key facts..44
Illustration 34 SMARTS Group subscribers base evolution (2006-04/2011) .45
Illustration 35 MVNOs market share, by subscribers (2008).....47
Illustration 36 MVNO subscribers base evolution (2010-2016) ..47
Illustration 37 3G USB modems repartition (Q2/2010)....49
Illustration 38 MNOs 3G presence in cities, by category of population (2010) ...49
Illustration 39 3G presence, by number of regions (2010) ......50
Illustration 40 WiMax operators market share, by subscribers (2010) ......51
Illustration 41 WiMax subscriber base (Q2/2009-Q2/2010) .....52
Illustration 42 LTE subscriber base forecasts (2010-2016) ......52
Illustration 43 Skartel key facts...53
Illustration 44 Yota subscribers, by connection tool (2010) ....54
Illustration 45 M2M market structure, by number of units (2010) ....56
Illustration 46 Mobile handsets market volume (2009-2016) ...57
Illustration 47 Mobile handsets shipments market shares, by producers (H1/2010) ...58
Illustration 48 Smart phones shipments, in million units (2004-3Q/2010) .58
Illustration 49 Smart phones market shares, by producers (Q1-Q3/2010) .59
Illustration 50 3G handsets shipments (2005-2010) 59
Illustration 51 2G & 3G handsets shipments repartition (Q1-Q3/2009).....60
Illustration 52 3G handsets shipments (2005-2010) 60
Illustration 53 Total installed base of SIM cards (2010-2016)...61
Illustration 54 Total installed base of SIM cards, in millions (2010-2016) ..62
Illustration 55 Total installed base of SIM cards' growth rate, year-on-year (2010-2016) ....62
Illustration 56 SIM cards net additions (2010-2016) 62
Illustration 57 SIM card shipments (2010-2016) .....63
Illustration 58 SIM card shipments, in millions (2010-2016) ....63
Illustration 59 SIM card shipments growth, year-on-year (2010-2016)......63
Illustration 60 SIM cards shipments, in % by producers (2010) .64
Illustration 61 Total installed base of M2M, in millions (2010-2016) .65
Illustration 62 M2M solutions shipments (2010 – 2016) ...65
Illustration 63 M2M shipments, in millions (2010-2016) ..65
Illustration 64 M2M shipments, by category (2010-2016).66
Illustration 65 Top 10 banks by installed base of bank cards, in thousands (2009-2010).....69
Illustration 66 Top 10 banks' cards yearly issuing volumes (2009-2010) ....69
Illustration 67 Payments and cash withdrawal operations ratio (2005-2010).....70
Illustration 68 Credit cards market (2003-2011) ....72
Illustration 69 Total installed base of bank cards (2010-2016).75
Illustration 70 Total installed base of bank cards, by technology (2010) ..75
Illustration 71 Bank cards producers' market share (2010) .....79
Illustration 72 Universal Electronic Card, UEC ......85
Illustration 73 Social Card of Moscow...89
Illustration 74 Social Card of Bashkortostan..93
Illustration 75 Biometric passport shipments (2010-2016) ......94
Illustration 76 UEC shipments (2010-2016) ...94
Illustration 77 Moscow Metro cards, by type (2008)98
Illustration 78 Number of entries by access means per year (2008) .98
Illustration 79 Express Card ..... 100
Illustration 80 Management scheme of Express Card project 100
Illustration 81 Express Card open fare collection system promotional document .... 101
Illustration 82 Golden Crown Transport cards number (2007-2010) 102
Illustration 83 Number of journeys by Golden Crown Transport card (2007-2010) ... 102
Illustration 84 Moscow transport card shipments (2010-2016) ...... 104
Illustration 85 Reloadable transport card shipments (2010-2016) .. 104
Illustration 86 Bank cards market statistics (2009)...... 108
Illustration 87 Mobile commerce landscape, prospects 109
Illustration 88 Bladox Waver .... 112
Illustration 89 Bladox Waver installed in Nokia phone.. 112
Illustration 90 Aeroexpress NFC payment scheme 113
Illustration 91 MegaFon NFC sticker... 114
Illustration 92 Top 5 Russian pay-TV operators, by subscribers (2009) ... 119
Illustration 93 Top 5 Russian satellite TV operators, by subscribers (2009) .... 119
Illustration 94 Satellite TV development.... 120
Illustration 95 Smart USB tokens market repartition (2010).. 123
Illustration 96 Microprocessor smart secure devices (2010-2016) .. 127
Illustration 97 Memory card shipments (2010-2016) .... 127
Illustration 98 Sitronics key facts...... 131
Illustration 99 Sitronics' financial results (2010) .. 133
Illustration 100 Sitronics Microelectronics financial results (2010). 133
Illustration 101 Sitronics Microelectronics revenues (2009-2010) .. 134
Illustration 102 Key products, in % of segment revenue (2010) ..... 134
Illustration 103 Sitronics company geographies, in % of the segment revenue (2010) ....135
Illustration 104 Integrated circuits market volume (2010-2016).... 136
Illustration 105 Sitronics value chain positioning . 136
Illustration 106 Orga Zelenograd value chain positioning ..... 137
Illustration 107 NovaCard value chain positioning 139
Illustration 108 Rosan Finance value chain positioning. 141
Illustration 109 INPAS Technologies value chain positioning . 143
Illustration 110 Angstrem value chain positioning 145
Illustration 111 G&D Znak Card value chain positioning 146
Illustration 112 Ambiq Technology value chain positioning... 148
Illustration 113 Svetlana-Kart value chain positioning.. 149
