By mid-September, Russians using PayPal will be able to transfer money to Russian banks in local currency.
This was not previously possible for PayPal who had included rubles to its currency list in 2011 but was unable to initialize fund transfers into Russian banks owing to a constraining law, which required a Central Bank license for all e-commerce companies (one that PayPal did not have, but does now, since the license was granted by Central Bank in May).
Of course this is a triumph for the payment processing company, with Russia named the Eastern European leader in e-commerce development by the “Europe B2C E-Commerce and Online Payment Report 2013″ giving it access to a massive, growing, e-commerce market …or is it?
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According to PayPal competitors who are already entrenched in the market, “In Russia, PayPal doesn’t offer anything new,” said Asya Mulkumova Yandex.Money spokeswoman. Market related numbers show that Russian brands in e-commerce are ahead of international companies that provide similar services. For example, Google, with 26% market share in Russia, is lagging behind Russian search engine Yandex, with 62%. Also, Facebook has 13 million Russian users, while Vkontakte and Odnoklassniki (similar social media sites) have 44 million and 26 million users, respectively.
In addition, PayPal’s reliance on e-bay, its owner since 2002, is viewed as another challenge for the payment processing company. Yulia Mansurova, from PSP competitor, Qiwi, said, “eBay relies on a strong postal infrastructure, which Russia doesn’t have. If it improves, PayPal will have a chance. But eBay has been present in Russia for many years, and nothing has changed.”
I guess we’ll have to watch this space to see whether the underestimation of PayPal competition turns out to be an accurate estimation or a naive mistake.