1. Evaluation of accessibility to
financial services provided via
bank and payment agents
Abbreviated version of the report
upon the results of the survey
Moscow, 2011

2. This survey was conducted within the framework of the Project
“Development of innovative regulation and supervision of bank agents to
enhance accessibility to financial services” conducted by the Ministry for
Economic Development jointly with the Alliance for Financial Inclusion (AFI)
to implement the provisions of Seoul Development Consensus, approved
by the Group of Twenty (G20) countries at the summit in Seoul in
November 2010, and provide for the development of innovative financial
tools. The Russian Microfinance Center (www.rmcenter.ru) acts as a
partner in the project implementation.
The Alliance for Financial Inclusion (AFI) is a global network of central
banks and other financial policymaking institutions in developing countries.
AFI provides its members with the tools and resources to share, develop,
and implement their knowledge of financial inclusion policies proven to
work. AFI connects policymakers through online and face to face channels,
supported by grants and links to strategic partners, so policymakers can
implement the most appropriate financial inclusion policies for their
country’s individual circumstances.
AFI is funded by the Bill & Melinda Gates Foundation and administered by
the GIZ (German International Cooperation).
If you want to learn more about the goals and objectives of AFI and the
principles of Seoul Development Consensus go to www.afi-global.org и
http://news.kremlin.ru/ref_notes/769
2

3. Policy of Russia aimed at enhancement of financial
inclusion. The goals and objectives of the survey
The policy aimed at the enhancement of financial inclusion is pursued by the
Government of the Russian Federation (RF) within the framework of international
obligations of Russia undertaken on 11-12 November 2010 at the G-20 Seoul Summit.
In order to raise stability of economic development, create job places and bring down
the risks, the G-20 adopted the so-called Seoul Consensus which spelt out the priorities
of the state policy with regard to a whole number of directions, including expansion of
accessibility to financial services. The obligations of Russia in this part in conformity
with the “Seoul Consensus” include:
 the development of the national action plan to enhance financial inclusion;
 participation in the Global partnership for financial inclusion;
 creation of a flexible system of financing SMEs.
The work in the above three areas should make a significant contribution to the
improvement of access to financial services and expansion of possibilities for
households, small and medium-sized enterprises.
Enhancement of financial inclusion should create a whole series of positive effects for
the Russian economy and society at large, specifically it will
 increase accessibility to various retail financial services with regard to territories
and client groups;
 develop technologies of financing, including microfinance of small business;
encourage and simplify the start up of entrepreneurial activity for broad strata of
the population;
 expand the taxable base by decreasing in the share of cash settlements in favor
of better controllable money flows;
 increase the savings activity of the population, create possibilities for savings and
investments;
 bring down the social isolation of low-income strata of society that have no social
connections and financial possibilities to improve the status thereof;
 decrease of the volume of informal loan markets (pawn brokerage);
 make a transition from the cost-based method of struggling with poverty
(subsidies and charity) to programs ensuring income and access to finance to
encourage self-employment and improve financial status of the most vulnerable
strata of the population.;
 educate the population and improve the financial literacy thereof.
3

4. This survey offers the results of the study of accessibility to various financial
services provided via bank and payment agents, and proposals are formulated to
further develop this model. The bank agency model is one of the priorities in the
development of the system of branchless banking all over the world, which actually
determined the choice of the topic for the survey.
The survey was conducted within the framework of a joint program aimed to develop
bank agency model in the Russian Federation that was carried out by the RF Ministry
for Economic Development, the Central Bank, the RF Ministry of Finance and the
Alliance for Financial Inclusion (AFI). The survey does not examine the regulatory and
legal framework for the regulation of bank agency model, since a special survey is
dealing with those issues.
The Goal of the Survey
The Survey sets a goal to receive aggregate information on the accessibility of financial
services provided by bank and payment agents on the basis of the data received from
major organizations that provide financial services or act as intermediaries in this
sphere, and also the consumers of such services.
Definition of a bank payment agent1
A credit institution has the right to retain an organization which is not a credit
institution, and an individual entrepreneur (hereinafter – a bank payment agent) to
accept money from individuals to be transferred to state power bodies, local self-
government and budget institutions that are in the jurisdiction thereof and exercise the
functions established by the laws of the Russian Federation, execute money liabilities of
individuals relating to payments for goods (work, services), or credit money to the
accounts thereof (hereinafter accepting payments from individuals), perform operations
with the use of payment cards, act on the instruction of individuals regarding the
settlements on their bank accounts, and issue documents confirming respective
operations which are not related to exercising entrepreneurial activity and private
practice by individuals.
In order to accept payments from individuals a bank payment agent should conclude a
contract with a credit institution on exercising activity on accepting payments from
individuals. Pursuant to the terms of the contract the bank payment agent has the right
in his own name or in the name of the credit institution and for the account of the credit
institution to accept payments from individuals; a bank payment agent shall be obligated
to exercise subsequent settlement with the credit institution in conformity with the
1
Federal law #121-FZ of 3 June 2009 “On incorporation of amendments to certain legal acts of the Russian
Federation in connection with the adoption of the Law “On the activity relating to the acceptance of payments from
individuals exercised by payment agents”, adopted by the RF State Duma on 22 May 2009, approved by the
Federation Council on 7 May 2009.
4

5. legislation of the Russian Federation, including the requirement on the disbursement of
cash received by the cash office of a legal entity or an individual entrepreneur.
The activity of an organization which is not a credit institution, or an individual
entrepreneur on accepting payments of individuals without concluding a contract on
exercising activity related to accepting payments of individuals which conforms to the
requirements of this article or the Federal Law “On activity relating to the acceptance of
payments from individuals exercised by payment agents” shall be prohibited..
In order to attain the goal set, the following objectives have been fulfilled:
1. The criteria of accessibility to financial services provided to the population via
agents in the Russian Federation have been developed;
2. Measurements have been taken of the level of accessibility to financial services
to the population via bank and payment agents in the Russian Federation;
3. The level of accessibility of financial services provided via bank and payment
agents to the population in the Russian Federation depending on the region has
been determined;
4. The level of accessibility to various kinds of financial services provided via bank
and payment agents in the Russian Federation depending on the kind of such
services has been determined;
5. The average cost of financial services provided via bank and payment agents in
the Russian Federation has been calculated;
6. The average amount of fee for financial services provided via bank and payment
agents in the Russian Federation has been determined.
The survey consisted of two parts: the first part analyzed organizations providing
financial services; the second part covered consumers of financial services.
- The first part of the survey studied 7,822 agents in all the Federal administrative
territories (okrugs) of Russia. The total number of points servicing the above agents
amounted to 419,021. Payment systems and credit institutions, members of the
Association of Russian Banks participated in the survey. The sample frame represents
bank payment agents in accordance with the organizational and statutory form, the
region of presence, kind of services provided, and type of the point of service. The main
method of the survey that was selected was the interviewing of representatives of banks
and payment systems offering the services thereof via agents. The standard survey
tools were used: the respondents were requested to answer questions to assess the
qualitative and quantitative data relating to retained agents, as well as the data on the
services provided by agents. The data was collected as of the period between 1
January 2010 and 31 December 2011.
Apart from that, the following methods were used for conducting the survey:
 The study of secondary data (the data of the Federal Service of State Statistics,
statistic data of the Bank of Russia.;
5

6.  Interviews with the working group experts of the Joint Project of the Russian
Microfinance Center, German Society for Technical Cooperation and the Alliance
for financial Inclusion “Development of Innovative Regulation and Supervision of
Bank Agents to Enhance Financial Inclusion”.
Key conclusions of the first part of the survey:
 Bank and payment agents are distributed across the Federal Administrative
territories (okrugs) in a more even manner (28% of all the agents are registered
in the Central Federal okrug), and they are not concentrated to the same degree
as credit institutions in the Central Federal Okrug (56% of all credit institutions
are located in the Central okrug), which means that they provide more even
access to financial services. The distribution of bank and payment agents
actually conforms to the demographic distribution of the population in Federal
okrugs.
Distribution of the number of credit institutions, agents and the population by Federal Okrugs (in
per cent)
 The bank payment agents’ infrastructure development is from an economic
standpoint a natural and justified way for the substitution of non-profitable bank
branches. At the same time, the bank payment agents’ network may be
developed by banks or with the participation thereof, which does not pose a
threat to the dilution of bank functions. This is a complex solution for enhancing
6

7. accessibility of financial services in the regions, which is particularly urgent today
in small towns and villages.
 In order to ensure the development of bank payment agents system and
enhance financial inclusion of the consumers, it is necessary to expand the
spectrum and functions of services provided to them to be comparable to those
of an additional bank office or a branch of a bank. Today a very important service
which is not provided in the regions is the opening of current and deposit
accounts for individuals. Provision of such services requires that the client
identification procedure at the moment of opening of a bank account be
delegated by banks to other entities, quite possibly with the introduction of certain
restrictions for such operations.
 The dominating number (over 97.5%) of bank and payment agents is SMEs.
 The low level of revenue per one agents’ point of service (RUR 5,037,24 which is
approximately USD 180) allows agents to conduct such business and provide
financial services with the assistance of hired labor (operator) only as an auxiliary
source of income in addition to their main business (commerce, services, other).
 In most cases profitability of providing financial services by bank and payment
agents makes it possible to conduct such business as a main source of income
only with the use of self-service devices (payment terminals) (78%).
 The main kind of financial services provided by bank and payment agents, both
with regard to the quantity, money turnover and profitability is yet the acceptance
of payments for mobile communication services in favor of mobile operators
(95.27% in quantitative terms and 75.82% of the money amounts of payments),
that is, the smallest payments (the average amount of payment for
communication services reaches RUR 94.11, about USD 3.4). Segments of
payments for housing services, due to the mass-scale thereof have a great
potential for growth. Repayment of loans and distribution of plastic cards via the
agents is also very promising. The expansion of the payment sector and raising
the average amount of payments is necessary for increasing profitability of
agents.
7

8. Payment
for housing Replenishment of Replenishment Other payments
‘electronic
services of payment cards 12.35%
Wallets”
0.89% 0.01% Budget
2.16% Payments (taxes,
collections,
State duties)
Repayment
of loans 0.09%
3.24%
Payments
for the Internet
& commercial TV
5.44%
Payments for
Communication services
75.82%
Break down of money amounts transferred by agents by kinds of operations
 Mainly small consumer credits (with the average amount of payment equaling
RUR2,571.38 / approximately USD 92) are repaid via agents. One of the reasons
accounting for it is that consumers of financial services provided by agents either
do not have large loan amounts (which is evidence of their low income), or they
prefer traditional ways to repay larger loans. Hence, agents most likely provide
services to the least financially protected strata of the population, which is
important to take into account from the social standpoint.
 Repayment of a loan, in its essence, is an operation similar to the replenishment
of the banking account, since the transfer of funds is made to the banking
account from which the loan is repaid later. In the event the spectrum of services
provided by agents is expanded, the amount of RUR 2,500-3,000 (approximately
USD 90-110) may be taken as a benchmark figure, as an average sum for the
replenishment of a bank deposit transferred via bank payment agents. .
 An average amount of payment (RUR 145.06 / approximately USD 5.2),
transferred by bank and payment agents (with the exception of loan repayments)
remains low for a number of reasons, specifically: insufficient level of financial
literacy of the population, lack of trust to new forms of payment, fear of high
commission fees to be paid to agents, insufficiency of information on the part of
providers regarding payment methods and poorly adapted systems of a number
of providers for accounting the overpaid amount, as well as the preference by
customers of traditional forms of payments;
8

9.  Indeed, the average amount of the commission fee (3.87%) for the financial
services provided by bank and payment agents is comparable to the bank
commission fee (3%) (with the exception of payments for mobile
communications)
Average amount of commission fee taken by agents for different kinds of
payments (in %).
5,00
3,01 2,97
2,00
0,44 0,50
communication
Replenishment
replenishment of
Payment for
Payment for the
Other payments
commercial TV
Repayment of
bank account
Payment for
of e-wallets
internet and
services
housing
loans and
services
Complaints of clients of agents mostly refer to errors in filling in the payment
details and failure to understand the specifics of services provided to them; among other
things claims are accounted for by the low level of financial literacy of customers of the
above organizations.
- The second part of the survey was conducted in the form of personal formalized
interviews at the apartment of a respondent. The size of the sampling is 1,600 people,
The sampling frame represents the adult (over 18) population of the Russian
Federation; the break down is given on the basis of gender, age, level of education,
type of the residential center where the respondent lives.
The number of constituent subjects of the Russian Federation where the sampling was
implemented is at least 40, the number of populated centers - at least 150; the error of
the sampling equals 3.4%
Time of the interviews: between 15 and 18 April 2011.
9

10. The key conclusions of the second part of the survey:
 The use of “traditional” channels for making payments, such as bank branches
and the Post of Russia offices, are dominating among the RF population.
Please, say how you usually make payments (payments for housing and utility
services, telephone, fines, repayment of loans, etc.)
In % to all the respondents (N=624)
Methods of payment %
“Traditional”
Via the cash desk in a bank branch 68
Via the post of Russia 33
Via ATM 35
Via payment terminals (Elexnet, Kiwi, etc) 35
“Transitional”
At the office of mobile communication provider via the operator 15
At the cash desk in a store 8
With a bank card via the Internet 3
From the mobile telephone account 2
“Innovative” With e-money (Web money, Yandex-money, etc. 1
Via personal Internet account of the Internet-bank system 1
Via Mobile banking <1
Other 4
Difficult to say <1
Note: “Web-money” and “Yandex.Money” is the Russian equivalent of “PayPal”. These are the Russian e-
money systems.
 The next channel for the execution of payments is payment terminals, which fall
into the category of “transitional” payment channels. In all types of residential
centers at least three thirds of the population is using these channels. By
“transitional” channels we understand payments made out of the bank office, but
on condition that payments are made at the time of visiting the point for placing
funds on the account or receiving cash.
 Major barriers for the use of payment terminals are lack of trust and knowledge.
 Branchless banking (no visit to a bank or agent’s office is made) relates to a
limited number and kind of payments
 An active Internet user means a user of “innovative” channels to receive financial
services.
10

11. Over the past 12 months have you paid for goods or services using one of the
following ways?
In % to the total number of recipients
All Russia Internet Panel
Kind of financial services
(n=1600) (n-3134)
Payment with a bank card for goods, services via the
Internet
3 50
Payment with e-money (Webmoney, Yandex-money,
etc)
1 43
Payment from the mobile telephone account
2 33
Payment via the personal account of Internet banking
1 22
system
Payment via Mobile banking <1% 10
 Low level of financial literacy, “conservative” mind-set of the people
 Most people in Russia (69%) do not keep any records of their household income
and expenses
 Only one third of the population (30%) compares the terms of different
companies prior to purchasing a financial service. Only 35% of the population
sign contracts after thoroughly studying them.
 Only a quarter of the Russian population is able to see a financial pyramid (26%).
 In the event of a conflict with a financial institution relating to the services that
have been provided, only 12% are sure that the dispute will be resolved quickly
and fairly, while 25% have a 50/50 attitude towards the possible outcome of the
dispute resolution.
11

12. Indicators of accessibility of financial services provided via
bank and payment agents in the Russian Federation
The survey studied the aspects of accessibility of financial services provided via bank
and payment agents on the basis of quantitative, qualitative, geographical and price
indicators, and also from the standpoint of kinds of the services used. Below there is a
detailed description of the indicators that were used.
Indicators
I. Infrastructure
The total number of agents
Number of points providing financial services
Organizational and statutory forms of agents.
II. Clients and services
Number of users of different services:
 Payments – by type
 Money transfers (remittances)
 Repayment of loans
 Issuance of loans
 Replenishment of a bank account
 Payments in favor of insurance companies
 Other
An average amount of payment
Break down of payment amounts by type
III. Geographic coverage
The number of agents and points of service by regions
IV. Price
Cost of agent’s services for the clients
Cost of various kinds of services for clients – by type
Cost of services by regions
Data on the changes in the cost of services
V. Quality of services
Number of claims from clients
Number of non-received payments
Other problems relating to provision of services via agents
It should be noted that the above indicators are the first attempt of an integral approach
to measuring accessibility of financial services provided via bank and payment agents, a
12

13. specific category of providers of financial services. In future it is necessary to develop a
national methodology for measuring financial inclusion, on the basis of which monitoring
of the current status of financial inclusion will be conducted and the progress in
enhancement of accessibility of financial services will be evaluated.
.
The indicators system should conform to the UN Fundamental Principles of Official
Statistics and meet international standards with regard to integrity, accessibility,
reliability, timeliness and comparability. The Russian system of indicators of financial
inclusion should be also harmonized with a set of indicators of international
organizations. At the same time, it should be independent and wholesome, in order to
ensure fair decision-making in the field of economic policy. It is necessary to ensure
monitoring in several directions: accessibility with regard to financial products, territorial
and infrastructural accessibility, and monitoring of aggregate indicators of financial
inclusion which allows comparison at the international level. At the same time, the whole
monitoring system should include indicators of financial literacy and protection of the
rights of consumers of financial services.
In order to harmonize indicators, it is necessary to fall upon methodological
recommendations and consulting assistance of international institutions aimed to assist
the enhancement of financial inclusion. Such institutions are the Alliance for Financial
Inclusion (AFI), Consultative Group to Assist the Poor (CGAP), International Finance
Corporation (IFC). Together with G-20 the above development institutions form the
Global Partnership for Financial Inclusion (GPFI). Thus, such indicators will be
perfected in future along with the publication of respective recommendations by the
above international structures.
13