Non Bank Payments: America vs. Russia (part 2)

Non bank American consumers have fewer payment options than non bank Russian consumers. Once a U.S. person cashes a paycheck at Wal-Mart or a check cashing store, (for a fee) that person may need to drive over to the utility company´s office and make the payment in person each month.

Another U.S. non bank option is to purchase a paper money order (for another fee) and snail mail it to the utility company. A third option for U.S. consumers is to use a local payment agent. Utility companies maintain local payment agents at many popular walk in locations. Usually for a small fee these agents will accept the consumer´s payment on behalf of the utility company. This option is very popular in the U.S. and these agents are located at big retail locations, grocery stores and check cashing stores. This method of payment is more convenient than driving to the actual utility company, however, this option still requires a customer to physically visit the business during operating hours and usually requires a copy of actual bill. Typically there is also a small additional fee on top of the monthly bill and some locations cannot immediately notify the utility that a payment has been made. If the electric bill is paid through this type of agent the funds may take several hours to register with the utility company. As you can understand from these options, without a bank account or credit card the monthly payment routine in America can be expensive and time consuming.

Unlike Western countries, Russia´s local economy caters to cash customers. As a result of this cash model, the Webmoney team has developed software for the integration of cash payments into everyday life. In Moscow, receiving a cash payment from a Webmoney account is so convenient, even if you have a Russian bank account, you are still likely to use one or more of Webmoney's services each month.

It is very important to understand that Webmoney Transfer is an online payments software company and NOT a financial institution, bank, financial services or payment processing company. Webmoney´s entire online operation only involves designing and maintaining a software platform which integrates payment options. Webmoney Transfer is responsible for (1) creating this software and (2) integration of the software into the Russian consumer landscape. Webmoney does not accept payments, process payments or clear funds. Their software only makes it possible to send and receive payments.


Cash-in Terminals, Non Bank Russian Solution
Over the last decade, the Russian company Netto Pro has been developing new technology focused on servicing the heavy cash flow coming from non bank Russian customers.

As pictured here, Netto Pro has created electronic payment terminals which accept specific denominations of cash notes and instantly add credit to a Webmoney digital account. These terminals also permit other direct cash payments and even offer the convenient sale of retail goods. (They do not accept third party payments.)

The actual metal terminals are very small and can be placed anywhere indoors or outdoors. A secure metal frame houses the simple touch screen and below the screen is a slot which will accept Russian ruble notes. (cash-in on the right side, printed receipt comes out on the left side)

Depositing funds into a Webmoney account using these terminals is very easy. Customers simply type in their personal account information on the touch screen and then feed cash into the slot. These terminals are found everywhere, from airports to busy city street corners.

All that is required to install an operating payment terminal is about one square meter of floor space and a electric outlet! (no phone landline required or any sort of physical wire communications) Payment information from the consumer is encrypted and broadcast over a cell phone type radio signal. Payments are instantly received and credited by Netto Pro´s financial network software which is directly integrated with Webmoney Transfer.

The cash-in terminals are a practical solution for local Russian non bank consumers. The advantages of these Russian cash-in terminals over the old U.S. system include no more waiting in long lines, filling out forms or waiting hours for the money to be credited into the account. The Netto Pro terminals credit the instant cash payment within just a few seconds. If you are a Russian citizen with a verified Webmoney account, loading national currency into your digital account can be done in just a few seconds using one of the marvelous terminals. (this service is offered to verified account holders only)

Since the invention of digital currency, the intersection or transaction point where national money becomes a digital currency unit has always been the bottleneck for users and operators. In past years, these transactions generally occurred by wire transfer and could take several days.

With the Netto Pro cash-in terminals, this sublime act of changing cash into digital units is perhaps one of the greatest digital currency innovations of all time.

During my visit to Moscow, the Webmoney team arranged an afternoon meeting with a brilliant young entrepreneur named of Andrey Klyashtorny. Andrey is the General manager of JSC "NETTO Processing" and is an original developer of this unique terminal and software.

The first machine appeared in a Moscow shop back in 2002. Today around Moscow, there are somewhere between 150,000 and 300,000 of these "cash-in" terminals in operation. While not having a bank account in the United States can be a costly problem for everyone with monthly bills, that is definitely NOT the case in Russia. Bright young Russians like Andrey are busy providing everyday solutions for Russian consumers.

Terminals
Because a majority of the non bank Russian population does not have a credit card, online banking or a checkbook (which might normally be used to pay monthly bills) these "cash-in" terminals serve as an excellent monthly payment solution. Terminals are now in operation throughout Russia and the surrounding countries of Ukraine, Georgia, Kazakhstan, Moldova, Latvia & Estonia. This operation is constantly expanding and the company is now targeting markets in China, South Africa and other regions of the world were credit card penetration is low and consumers favor cash.

The $$ Numbers
In discussions, Andrey, the general manager of JSC "NETTO Processing", revealed there are approximately 170 million Russian cell phone users and about 80% of them pay their monthly bill in cash at this type of payment terminal. With the average payment (converted to USD) of around $6 per user the estimated total cash income each month through these terminals is more than $1 Billion U.S. Dollars. (that is just the cell phone payments, these machines accept utility bills, Webmoney deposits and much more)

It is also interesting to note that most Bank ATM machines will also accept a similar type of cash payment. However, the average bank ATM machine in Russia costs around $55,000 USD while the average cash-in terminal from Netto Pro costs just $2500 USD.

Today´s Russian banking regulation on this type of cash-in transaction permits anyone to feed into the machine up to a $900 USD equivalent of rubles for any one transaction. Once the transaction is completed, only moments later, another $900 USD equivalent in rubles can be added. There are currently no limits on how many of these payments the verified account holder may transact over any 24 hour period through their own account, however, like any financial transaction in Russia, a source of funds can be required at the $10,000 USD equivalent level.

More strict bank regulations have recently been passed in Russia and by early 2010 there will be additional limitation on cash deposits. These type of Webmoney cash-in deposits are only allowed for Russian citizens with a personal Webmoney passport or higher. (https://wiki.wmtransfer.com/wiki/show/Passports) Verified users with a personal Webmoney passport, have previously submitted a certified copy of their Russian passport and the identification, address, phone may be verified. No third party payments are permitted from such cash-in terminals. It is also worth noting that for Russia citizens, the government issued passport is the primary form of identification required for all financial transactions. (they don´t use a drivers license a passport is the norm and everyone has one)

In Russia, there are usually small fees on each terminal transaction, however some companies have moved away from charging customers. As an example, cell phone operators in Ukraine do not charge a terminal deposit fee, a 100 Ukrainian Hryvnia (UAH) payment gets entirely credited to your cell phone account and no fee is charged. Russian machines generally charge about 5%.

Why is Netto Pro so important to the Webmoney discussion?
Netto Pro is a Webmoney partner. The touch screen terminals, all 150,000+ of them which accept cash notes and instantly credit a digital account function as an instant deposit method for Webmoney Transfer accounts. The more accessible and convenient any payment method is...the more it´s used by consumers. A major speed bump in today´s Internet world is the point at which national currency becomes digital. You could perhaps call this the "point of conversion" and it is the real nexus of the universe for any digital currency operation. Generally, funding ANY digital currency account this is a two, three or four days process involving a hefty fee and often a different time zone. Those companies such as Webmoney, which have created convenient technology for speeding along the funding process are destined to be the global payment giants of tomorrow.

Receiving these deposits through the Netto Pro software, Webmoney is able to instantly credit a WMR (ruble) purse. Since the money is instantly credited digital units are immediately available in the online account.

THIS IS AN AMAZING PROCESS.

Can you imagine 200,000 cash-in terminals throughout New York City that would accept cash and instantly credit a PayPal account, or pay a utility bill?

This type of payment terminal is far superior to anything found in the United States.