Central Bank makes plans for national payment system in Russia

MOSCOW, March 27 (Itar-Tass) - The Central Bank of Russia is making plans for creating a national payment system in the country. “We should create a system that will ensure uninterrupted domestic payments that make up about 90 percent of the total. We are preparing measures that should be realistic, unburdensome and gradual. At the initial stage we should ensure technological compatibility between processing and operating centres of major banks so that they could switch over quickly,” Central Bank Chair Elvira Nabiullina said on Thursday, March 28. A draft law ensuring uninterrupted money transfers within Russia will go to the State Duma, lower house of parliament, next week. It bans all participants from terminating transfers unilaterally. Clearing centres will not be allowed to provide information abvout money transfers outside the country or make such information accessible from other countries. In 2011, several MPs called for creating a domestic processing centre. The relevant law was adopted but processing operations were not transferred to Russia despite the risk of losing access to international payment systems for Russian banks. This is precisely what happened on March 21, 2014 when Visa and MasterCard, both headquartered in the United States, suspended operations for several Russian banks. The blocking of access to the SWIFT inter-bank payment system makes online payments in any currency, except the national one, impossible. However, opinions about a national payment system differ. Dmitry Kalantyrsky, president of SMP Bank, thinks that there is no need to create such a system and that inter-processing agreements between banks would be enough. A network of 50 local processing centres within the country would protect transactions with bank cards inside the country as effectively as a national payment system but would take less time. Denis Taradov, a partner at the audit and consulting group BDO, believes that the consolidation of processing centres does not rule out a national payment system and would supplement it. Sberbank CEO German Gref advocates the creation of a national payment system and insists that it be based on the universal electronic card, a project launched by Sberbank some time ago. In his opinion, a national payment system can be created within two months after the relevant draft law has been prepared. “There has lately been an upsurge of interest in this topic. Our PRO100 system [Russian payment system] based on the universal electronic card is fully ready. I think we can speak about its implementation within six months or so,” Gref said. He believes that the payment system can be launched within two months after the relevant draft law was prepared. Several years ago, the Russian authorities started introducing the electronic card system intended for providing a wide range of services to the population in electronic form across the country, including public and municipal services, such as social welfare, transport, health care, financial and commercial ones. The universal electronic card is also a tool for confirming its holder’s right to receive such services and can be used for remote transactions as provided for in Russian laws. The system will provide different electronic services to the population, including social, transportation, medical, financial and commercial ones. The universal electronic card will become a unified federal standard and will replace all social cards that have been issued in regions up to date and other documents such as mandatory medical and pension insurance cards, student's IDs, travel passes, and bank cards. New universal electronic cards will be issued to all Russian citizens over 15 years of age. At the initial stage, some 10,000 cards were planned to be issued in Tatarstan, Bashkiria, Komi, St. Petersburg, Astrakhan, and Krasnodar. Presidential adviser Sergei Glazyev suggests creating a single processing centre for payments within the Commonwealth of Independent States and the Customs Union created by Belarus, Kazakhstan and Russia. President Vladimir Putin reiterated earlier in the day that Russia would create its own payment system. “These systems work successfully in such countries as Japan and China. They started off as national systems for domestic needs only but are now becoming increasingly popular,” he said. The Japanese system now operates in 200 countries. “Why shouldn’t we do the same? We should and we will,” Putin said at a meeting with the leadership of the Federation Council, the upper house of parliament. Federation Council Chairperson Valentina Matviyenko stressed the need to step up this work and adopt a law banning the placement of processing centres outside Russia. She recalled that about 200 million bank cards had been issued in Russia and 95 percent of them were serviced by foreign payment systems. “Russian banks use foreign infrastructure and cannot control it. We should accelerate the passage of the law which has already been submitted to the State Duma and which bans the placement of processing centres outside the Russian Federation,” Matviyenko said.