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Smart Insights Reports

Russia Smart Card Market 2012

Smart Insights Report “Russia Smart Card Market 2012” provides a comprehensive analysis of smart card and secure transactions industry in the Russian Federation. It covers all smart card market segments, including telecoms, banking industry, eGovernment, transport sector, enterprise security, NFC (Near Field Communication), etc.


Russia has several unique features which all are studied and featured in this Smart Insights Report. Key market characteristics include:
• Telecommunication segment with double digit churn rates,
• Banking industry driven by social and salary projects,
• Transport smart card payments linked to social projects,
• Volumes in billion units of smart card based transport tickets,
• Universal Electronic Card (UEC) with many federal, social, transport and a banking application on-board.


The smart card market in Russia is expected to grow significantly due to several governmental projects. Based on a thorough qualitative and quantitative analysis, the “Russia Smart Card Market 2012” Smart Insights Reports comes to a conclusion that the UEC project along with M2M governmental initiatives and some other business models will spur the yearly smart solutions sales volumes in Russia. Graphs and tables are provided and bring further evidence to these conclusions.


For each market segment, the report covers the historical moments of the market evolution, obstacles and solutions for business development to be kept in mind. It does provide analysis and recommendations for future business development in Russia.


The “Russia Smart Card Market 2012” report includes a deep market analysis for 2011, and forecasts for five subsequent years from 2012 to 2016. Forecasts are provided not only in figures of the installed basis of smart card solutions, but also in yearly sales volumes.


The report includes a thorough analysis of smart card solution vendors in Russia as well. They are:
• Sitronics
• Orga Zelenograd (Morpho)
• NovaCard
• Rosan Finance
• INPAS Technologies
• Angstrem
• G&D Znak Card
• Rusnano
• Ambiq Technologies
• Svetlana-Kart


The “Russia Smart Card Market 2012” comprises business information about all major vendors of smart card solutions in Russia, their products, their market positioning, and business strategies.

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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. 

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 Group  44

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 issues  86

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