Is Russia’s Cashless Economy Good for Yandex?


Dec. 18 2018, Updated 7:31 a.m. ET

Yandex is already big in Russia’s online search market

Russians are moving away from cash payments, according to a study by Sberbank, the country’s largest state-run bank. The study shows cashless payments accounted for 39% of all payments across Russia in 2017, up from 4.0% in 2008. In 2018, cashless payments are on track to account for as much as 50% of Russia’s total payments for goods and services. What could the rise of the cashless economy in Russian mean for Yandex (YNDX)? It’s mostly good news.

Yandex is the dominant online search engine company in Russia. The company is building a bigger funnel to tap Russia’s cashless payments boom. The company has created an array of products and established partnerships in an effort to capitalize on the rise of digital payments in Russia.

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Yandex establishes partnerships to enhance checkout service

Yandex.Checkout allows merchants to offer their customers different payment options to make completing a purchase easy. Yandex has partnered with the likes of Tencent (TCEHY) and Google (GOOGL) to include their respective mobile payment services in Yandex.Checkout. The partnership with Tencent has allowed Yandex to enable merchants in Russia to accept WeChat Pay, one of the popular mobile payment services in China. More than 1.0 million Chinese people visit Russia annually. The partnership with Google has brought Google Pay to Yandex.Checkout.

In addition to Yandex.Checkout, Yandex operates a digital wallet called Yandex.Money and runs an installments payment service that lets merchants sell goods on credit and consumers to spread out payments for expensive items.

Yandex isn’t running alone

But Yandex is not running alone. PayPal (PYPL) and Alibaba (BABA) are also in the race for revenue in Russia’s cashless economy. In addition to processing payments for merchants, PayPal also extends loans to small businesses and consumers. For its part, Alibaba is taking advantage of Chinese tourists’ flow to Russia to establish its Alipay service in the country.

Yandex generated $496.6 million of revenue in the third quarter. The company currently relies on advertising for most of its revenue. A break in the payments space could help Yandex diversify its business.


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