Lydian Payments Journal - PYMNTS.com

ATMs to withdraw cash, and then, armed with cash, to the stores. Whatever spectacular growth the credit
card market was undergoing, it was not involving the merchants, and therefore instead of a classic twosided
market development, the Russian card market was developing in a one‐sided (really, lop‐sided)
fashion. Through salary projects, banks managed to coerce individuals to have cards, but they could not
make them use cards in lieu of cash.
Figure 2: Volume of Total Card Transactions and Purchase Volume Only, 1996­2008
Source: Data from Platezhi. Sistemy. Kartochki (1998, p. 10; 1999, p. 6­7) and Central
Bank of Russia (www.cbr.ru). Data are missing for 1999 and 2000.
While salary projects dominated the Russian card market in the 1990s, in the past several years Russian
issuers have refocused their energy on mass‐issuing cards to Russian consumers in a rapidly growing retail
sector. Following a decade‐long recession and a devastating financial crisis of 1998, Russia experienced a
steady growth of the economy, increase in incomes, and increase in consumer purchasing power. GDP grew
6.4% in 1999, and since then has averaged 6.7% annually (Figure 3). Real incomes have been rising
by an average of 11% annually, and the consumer sector as a whole has doubled in size over the last
decade. The growth in retail was accompanied by the growth in consumer lending (Figure 4). With
consumption and consumer credit taking center stage, banks turned their attention away from employees
and towards consumers as the preferred group for marketing cards, and from salary cards to cards issued
in connection with express loans. For the first time Russian banks have mass‐issued cards that come with
credit lines, the possibility of revolving the portion of the credit line that was unused or repaid, and
sometimes even with grace periods.
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