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. Last Updated: 07/27/2016

Cash: Don't Leave Home Without It

What do Russians have against plastic cards?" was a question put to me recently by a British colleague of mine. We were discussing a story on the employees of a certain company who were unwilling to have their salaries wired to bank accounts and then use debit cards to get at the cash, rather than taking it home in an envelope as previously was the case. "What is the difference," he wondered, "between stuffing it under your pillow and taking it out of a bank machine and then stuffing it under your pillow?"

The answer I gave was, "Three hundred years of development of the banking system in Britain." That's all.

The collapse of many of the oligarchs' banks following the financial crisis of 1998 was only one key episode in a long, sad tale of the Russian financial system. Another — and one of the most bitter locally — chapters concerns the St. Petersburg-based Severny Torgovy Bank (Northern Trade Bank), which unexpectedly went under in the summer of 1995, dealing a major blow to the region's financial reputation.

This is why the phrase "banks are not trustworthy" has become such a cliche for the Russian population, or at least that bit of it that has had any contact at all with banks and banking services.

As for plastic, I remember a story I heard several years ago about a Russian and an American who decided to travel throughout the most desolate parts of Siberia. The American, who bore the trip's expenses, wasn't overly worried about the planning, and the expedition began in a "we'll-just-follow-our-noses" manner.

No thought was spared for where and when their cash might run dry, and when the travelers — hungry, tired and rubleless — reached the next village, the American triumphantly waved his American Express card. "We're saved!" he said.

Of course, he didn't understand that about the only places you can use Amex in Russia are Moscow, St. Petersburg and maybe a couple other cities. Eurocard/Mastercard, Cirrus Maestro and Visa have more outlets, but really only one or two percent of the population use banks.

As a result, many valuable and effective marketing instruments do not work here. The director of a St. Petersburg theater once related how Western colleagues advised him to analyze regular patrons of the theater by looking at the data on credit-card ticket purchases at the box office.

Dozens of companies in St. Petersburg now transfer their employees' salaries to debit accounts. But most people continue to prefer to do what my British colleague suggested — withdraw the entire amount in one go and keep the cash at home.

Not only is this because of a general mistrust of banks, though. Convenience and cost also play roles. Two St. Petersburg banks, which each have 100 ATM machines, lead the city in card services. All the rest have fewer than 10. At the same time, banks here are brazen enough to charge commissions of between 0.5 percent and 0.7 percent, even for withdrawals from their own machines. Some may charge for getting a receipt, a fee that nets the bank about 100 rubles for every meter of paper they spit out.

So, the man on the street reckons banks are liable to collapse at any moment; banks don't really care about the needs of those with small accounts; and out of the 1,500 registered banks, only a few dozen offer retail services anyway, because it is not as lucrative as corporate banking or servicing state budgets. I think my friend has his answer.

Anna Shcherbakova is the St. Petersburg bureau chief of Vedomosti.