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Russia to choose technological platform for payment system June 25

June 18, 2014, 23:49 UTC+3 GORKI
First Deputy Prime Minister Igor Shuvalov said the security deposit for Visa and MasterCard would be reduced but not abolished altogether
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GORKI, June 18. /ITAR-TASS/. The Russian Central Bank’s working group will choose the technological platform for the national payment system on June 25, First Deputy Prime Minister Igor Shuvalov said.

“We understand that the process will be completed on June 25 and we will know the technological platform on which our payment system will develop,” he said on Wednesday, June 18.

He said there was confidence that “there is no danger that if someone makes the decision [to suspend payment processing as Visa and MasterCard did in March], banks will not be able to make payments”.

Shuvalov said the security deposit for Visa and MasterCard would be reduced but not abolished altogether.

“The steps we are taking will calm them down, both Visa and MasterCard,” he said. “If they want to close down their businesses in Russia, it’s up to them, but we are doing our best for them to keep working here,” Shuvalov said.

“We think they are fully ready to carry out the processing through Russian companies and, as we understand, they are now engaged in talks on that,” he said.

He noted that the Russian government had no plans to impose restrictions on the work of foreign payment systems in the country.

“The government and the Central Bank have held meetings with representatives of the Visa and MasterCard systems so that they could continue working in Russia. We will do everything we can to create new opportunities for citizens and lending institutions and we will certainly not create any restrictions to force Visa and MasterCard out of the market,” Shuvalov said.

Deputy Finance Minister Alexei Moiseyev said Visa and MasterCard could be allowed not to make security deposits if they found local partners in Russia for domestic payments. However this would be possible only if the processing inside the country is taken over by a Russian partner.

On Tuesday, June 17, MasterCard announced a tender for the provision of inter-bank processing services in Russia, but Visa said it might leave the Russian market.

“The point is that …if they conduct a part of transactions, their deposits will be reduced accordingly, and if they conduct all operations, there will be no deposit at all,” Moiseyev said.

The change in the format of work for international payment systems in Russia was necessitated by the creation of a national payment system in the country following Visa’s and MasterCard’s decisions to turn off their processing services for several Russian banks affected by U.S. sanctions.

The Russian government and international payment systems have reached a compromise that the latter will create relevant structures in Russia and integrate them into the national payment system so that all domestic transactions could be processed by the national system and international ones by Visa and MasterCard as before.

President Vladimir Putin has admitted that with no payment system of its own Russia is dependent on its partners.

“We have always believed that our partners, both Visa and MasterCard, are depoliticised economic entities and companies. However, as it turned out, they, too, are under strong political pressure and influence and give in to it right away,” he said.

“From the economic point of view, this is a big mistake because MasterCard and Visa control 90% of the Russian market, which we gave to them of our own free will, and all payments inside the country go through these systems and to a large extent through serves located in the United States. But that’s nonsense! Why did Japan do it and can use a national payment system now, but we are using their [American] systems inside the country, I am not saying abroad where you go on a business trip or vacation,” Putin said

“This is a very big business for these companies. By acting the way they are acting in Russia, they are undermining trust in themselves and therefore will certainly lose the market,” he said.

At the same time, he noted that the Russian authorities were not planning any retaliatory sanctions against MasterCard or Visa. “However not only have we thought about it but we have also started creating our own national payment system,” Putin said.

Putin said in March 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.

The Central Bank of Russia is already 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% 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.

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.

Presidential adviser Sergei Glazyev has suggested creating a single processing centre for payments within the Commonwealth of Independent States and the Customs Union created by Belarus, Kazakhstan and Russia.

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