Japanese conglomerate Mitsui & Co. Ltd. has acquired 14.9% stake in Qiwi Ltd., a Russian company registered in Cyprus that specializes in instant-payment kiosks, the two companies announced Jan. 18. Terms were not disclosed.
The partnership should help the companies enter new payment markets, Qiwi spokesperson Natalia Kuskova tells PaymentsSource. “In 2011, we plan to enter the markets of at least seven new countries,” she says. “Among them are Brazil and the United States.”
Qiwi, Russia’s leading instant-payment kiosk operator, plans to install payment machines in the U.S. that accept both cash and bankcards for payment of utility and other bills, according to Kuskova.
“We plan to offer the broadest possible array of services in our terminals,” she says. “We are convinced that our services will become as popular in the U.S. as they are in Russia and other countries were we currently operate.” Qiwi operates in 15 countries in Eastern Europe, the former Soviet Union and other emerging markets.
Since its founding in 2007, Qiwi says it had shipped about 160,000 point-of-sale terminals through the end of June. The company offers electronic payment services for public utility charges, telephone bills, funds transfers and e-commerce transactions through its terminals and online.
Among Qiwi’s customers is Ukash, a United Kingdom-based company that sells prepaid vouchers for online shopping (see story).
About 80 million Russian consumers use the company’s payment services each month, representing 45% of Russia’s payment-service market, the company says.
With the deal with Tokyo-based Mitsui, Qiwi management will own 63.7% of the company, and Russian Internet giant Mail.ru Group will own the other 21.4%
International expansion was the primary reason for the deal, Andrei Romanenko, Qiwi president, said in a press release.
“Mitsui’s long experience in international business will allow us to strengthen our position in the countries where we currently operate and to enter new markets,” he said in the release. “When considering the deal, we based our decision on the fact that Mitsui’s support will open up broad growth opportunities for us.”
The U.S. is not an emerging market like the other countries where Qiwi operates, but it does have a substantial unbanked population that could use alternative payment services, David Potterton, vice president of global research at IDC Financial Insights, tells PaymentsSource.
“It depends on how people would see the value of dealing with an automated machine, how comfortable people would be with that,” he says.
According to a September report from the Federal Deposit Insurance Corp., approximately 8% of U.S. households have no bank accounts, and 18% are underbanked. Many of those individuals use alternative financial services, such as money orders or check-cashing stores.
The most commonly used alternative financial products are transaction services, according to the FDIC, which says approximately 29% of U.S. households use nonbank money orders. Such consumers are likely to be more comfortable with in-person transactions and might even go to utility offices to pay their bills with cash, according to Potterton.
Brazil is likely to be an even tougher market to enter.
“The Brazilian banks are actually going after that segment because they see growth there in the future,” Potterton says.
However, Qiwi specializes in micropayments, which are neither a focus nor a profitable area of business for large financial institutions, according to Qiwi’s Kuskova.
“We are confident that we will be able to occupy a niche in the Brazilian market in which we offer to the customers the opportunity to make convenient payments for a wide variety of goods and services at a convenient time using our kiosks, point-of-sale terminals, the Internet, and mobile-phone applications,” she tells PaymentsSource.
Read full article at PaymentsSource (paid subscription required).