Buy Now, Pay Later has global implications. The trend is more than Australia, US, and Europe. In Russia, some estimates expect USD 2 billion by 2021.
Tinkoff, a top digital bank in the Russian market indicated an increase in credit card spend, contrary to falling card receivables in other markets.
- In 2Q 2021, Russia’s credit card market continued to set records and reached RUB 1.78 trillion as of 1 July 2021. Year-to-date, the credit card portfolio has increased by 9.9%, or RUB 161 bn in absolute terms, an increase greater than that recorded for full year 2020, when the size of the market remained virtually unchanged due to the pandemic.
- In 2Q 2021, the market grew by RUB 92 bn, a third more than it did in 1Q 2021. In April, it rose by RUB 14 bn and in June — by RUB 32.1 bn. May saw the highest monthly growth of RUB 45.5 bn, which was also the largest monthly change registered year-to-date.
Sberbank is the big dog in Russia. There are 20 banks, but Sberbank enjoys a 41.1% share. Sberbank receivables are 716 billion rubles, which convert to USD at the rate of 0.0137.
Tinkoff launched Dolyame.ru, which follows the standard order of BNPL, with one payment down at the point of sale, followed by the remainder being billed to a payment card, according to Finestra. (If your browser does not convert Russian to English, go here.)
But, just as any major move by a credit card issuer will likely to spawn another, the new Sberbank Mastercard sets a new bar. One might see it as a variation of Australia’s NAB card, which models after a Sharia-compliant product, with fees but no interest, but a deeper look proves otherwise.
Qualified Russian consumers have access to a 120-day grace period, almost three times longer than the typical Pay-in-Four product that requires ¼ up front, with three payments over the next six weeks. According to Market Screener:
- The card has a new option, a grace period of 120 days that works in the clearest and most convenient way for a user. You can buy for a whole month and then have three more months to repay the interest-free debt.
- The rate is unprecedentedly low for all transactions in the health category and online purchases on SberMegaMarket, standing at 9.8%.
- All other transactions will be subject to a 17.9% rate, and the borrowing limit is RUB 1 million.
- You can have the card issued online in two minutes, and this will not require any service payments or SMS notifications.
Low rates, instant access, and extended grace period. You can apply here, but again, use Google Translate so you can understand the terms.
The new card is interesting because it illustrates BNPL’s global impact. More importantly, Comrade, it shows that banks and payment networks are evolving the definition of a credit card, not to be outdone by digital innovation.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group