Russian card base, ATM use growing -- but lag behind other countries

MOSCOW -- Bank card use in Russia has skyrocketed in the past year, but analysts say that Russians still rely heavily on cash.

According to a report in the Moscow Times, state-owned Sberbank issued 57 percent more bank cards over the past 12 months, for a total of some 5 million. Two-thirds of Russia's population maintains private accounts at Sberbank.

Andrew Keeley, an analyst at Renaissance Capital investment bank, said there are about 15 million cards in Russia and half of them are international Visa or MasterCards.

Banks issued Visa cards with "a frantic speed" over the past year, said Brian Huckett, deputy head of Visa International's development department. The number of Visa cards issued in 2002 doubled from 2001, reaching 5.1 million cards.

Yet for a country with a population of 145 million, "this is still just a drop in the ocean," said Maxim Bylov, a specialist on the issue for the Kommersant business daily.

While MasterCard and Visahold half of the Russian market, the other half belongs to domestic Russian cards, which are mainly used for cash withdrawals at ATMs.

Even that was a rarity until a few years ago, with Russians still distrustful of banks following the country's 1998 financial crisis and accustomed to keeping cash squirreled away at home. Russians are thought to be stashing an estimated $75 billion, according to the Timesreport, and most continue to pay for property and large purchases in cash. Banks hold $30 billion in private accounts.

Russian businesses, such as metals and mining giant Norilsk Nickel, often give their employees ATM cards to retrieve their salaries, aiming to simplify accounting practices and save money by eliminating workers who manned cash registers to hand out pay.

Baltiisky bank official Alexander Kazansky told the Times that this system is the main reason why card use in Russia has increased.

The government is also pushing citizens toward using cards, paying state workers directly and distributing student grants through bank accounts. However, most Russian cards are bank-specific and can be used only at the card issuer's ATMs.

Compare that to the United States, where there are 1,200 ATMs per million people, and to Western Europe, where there is an average of 550 ATMs per million people.