National System of Payment Cards: More independence
The issue leapt to the top of the national agenda last year when US sanctions forced Visa and MasterCard to stop servicing some Russian banks. Such cutoffs obviously present a national security threat.
It is necessary to stress that previously we allowed our western partners in the field of electronic payments to provide services to more than 90 percent of all cardholders in Russia, under the expectation that the economy is kept out of politics. However, it turned out that this was not the case.
The economy has been submerged in politics and is being used as an instrument of political struggle and pressure. Given this fact, we drew our own conclusions, prompting the Russian leadership to call for the creation of a national system of payment cards that would fence Russia off from the risks of service “blackouts” in the future.
In May 2014, President Putin signed into law legislation establishing a national payment system that was called the National System of Payment Cards (NSPC) and was designed to ensure the smooth operation of electronic payments across Russia and beyond. Its introduction decreases Russian users' dependency on foreign analogues and provide a viable alternative.
The new act stipulates that payment system operators and service operators, in addition to participants of the payment system, are not entitled to unilaterally abandon the provision of services necessary for the successful execution of any transfers in Russia. Thus, international payment operators Visa and MasterCard have had to fully transfer their transactions to take place inside Russia so that they can be processed in the National System of Payment Cards instead of being routed through data centers in other countries. The system currently processes 12-14 million transactions a day and operates without any disruptions.
As we can now see it was the forced choice but surely the right one: Switching to a National System of Payment Cards was done in the interests of all users inside Russia and is intended for implementation of the operations within the international payment systems regardless of external factors.
The NSPC project also stipulates that a national payment card be established, which would appear in Russia by new year 2016 and will operate both inside the country and abroad. Its acceptance coverage will be very close to that of other major payment systems by the end of next year.
Russia's new national payment card has been given the name “Mir”, a word translating into English as both “Peace” and “World”. This term is also associated in our country with the “Mir” space station, the planet's first modular space station constructed by Russia, which was assembled in orbit between 1986 and 1996 and which operated until 2001. The brand name was selected via a nationwide online vote on the card’s design entries submitted by companies and individuals across Russia.
According to the National System of Payment Cards’ department of the Russian Central Bank, we will be able to begin switching to the new payment cards later this year. It is planned that 100 million cards will be issued over the next two years, some of them co-badged with Visa, MasterCard, JCB, American Express, UnionPay and perhaps other systems.
The establishment of the Russian national payment system and payment card is designed to foster investors’ trust and Russian citizens’ confidence in the country’s financial stability and sovereignty. The idea is not to become fully independent from MasterCard, Visa or American Express but to secure a proper and reliable way for using them on Russian territory for the benefit of all interested parties.
We are trying to make our business environment more attractive for all the participants and therefore welcome mutually beneficial co-operation with other payment systems.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.