Booming consumer spending and the rapid development of electronic payment methods made 2002 the best year ever for Visa International in Russia.

The company issued 1.6 million cards to Russians in the first nine months of the year, the most since 1988, when the first Visa charge card was issued here. The company says it is now on pace to double the number of Russian cards it has in circulation this year to more than 4 million.

Russians used their Visas to make $5.7 billion worth of transactions in the January-September period, versus a volume of $2.8 billion in the same period last year.

"Due to the active work of our member banks, Visa cards have taken the leading position on the Russian market in terms of volume and transactions," said Lou Naumovski, head of Visa's Moscow office.

Naumovski said 194 Russian banks are currently members of Visa International, and analysts attribute their leading position to having been aggressive. Visa was the first consumer credit lender to enter the market 14 years ago.

According to a recent survey by independent market research agency International Research Group, most plastic cards in Moscow carry the Visa logo, followed by Maestro/Cirrus, STB-card, Eurocard, Union Card, American Express and Diners Club.

"Visa has built a strong position in the market since [1998] and has always had quite an aggressive strategy," said Troika Dialog banking analyst Andrei Ivanov. He estimated Visa's market share in Russia at about 50 percent.

"For many Russians, 'plastic card' is synonymous with Visa," said Dmitri Alenouchkine, the IRG analyst who conducted the study. "Also, the word 'visa' for Russians is associated with traveling abroad, which is more convenient to do with plastic cards."

For Visa, Russia ranks second only to Poland among East European countries in terms of transaction volume.

Holders of Polish Visas used their cards in $15.9 billion worth of transactions in the first nine months of the year, compared to $4.6 billion in the Czech Republic and $3.8 billion in Hungary.

IRG, however, found that there are still major drawbacks to using the cards in Russia, including the limited number of stores that accept them. Where they are accepted, payment procedures are often lengthy, with customers needing to show their passports.

Another negative incentive is the commission fees charged by member banks.

Russian banks that are part of the Visa system last week rejected Visa's recommendation to lower transaction fees for cardholders using automated teller machines that don't belong to the bank that issued their cards. Visa wanted that fee cut from $1.50 to $1 per transaction. The banks did agree, however, to raise the ATM withdrawal limit for other bank's customers to $200 from $100.

(The Moscow Times 16.xii.02)