Russian food retailer Magnit announced that it is expanding the functionality of its payment service, now giving customers the opportunity to pay for mobile, internet, TV and transportation services. 

As followed by bne IntelliNews, Magnit is trying to catch up with its rival X5 Group that emerged as the largest e-grocer in Russia in 2020. Magnit's recently outlined 2021-2025 strategy includes building a leading e-grocery platform capable of handling 5%+ turnover with integration into an omni-channel consumer experience.   

Magnit, in co-operation with Russia's second-largest bank VTB, launched its Magnit Pay service with a virtual card in September 2020 as part of its loyalty programme, Sova Capital reminded on March 26.

The payment services allow bonus points to be accrued, as well as services outside the company’s ecosystem to be paid for, with more payment options to be added in the future such as utility payments, fines and taxes.

"The news shows that Magnit continues to move towards creating a super app that covers a wider range of consumer needs outside traditional food shopping, e.g. payment services, mobile services," Sova Capital analysts write. 

The analysts believe this could result in insignificant investments for the retailer, potentially enhancing customer loyalty while having a positive effect on like-for-like (LFL) sales. Sova affirmed a Hold rating on Magnit Global Depository Receipts (GDRs) and a Buy rating on local shares.

As followed by bne IntelliNews, X5 Group also reportedly plans to set up a new unit providing financial services as rivalry in the fintech segment in Russia intensifies.

At the same time, for Magnit optimisation efforts in the traditional offline segment have also paid off, with the retailer showing a surprising pick-up in sales and lower costs in 2020, and the analysts are improving their outlooks on the company.