National System of Payment Cards: more independence (by Ambassador Yakovenko, for RT)
The today’s geopolitical environment made urgent the task of creating the national payment system in Russia. That issue leapt to the top of the national agenda last year when, shortly after U.S. 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% of all cardholders in Russia counting that economy is out of politics but it turned out that this was not the case. Economy has been submerged in politics and is being used as an instrument of political struggle and pressure. Given that fact, we made conclusions and Russian leadership promptly called for the creation of a national system of payment cards that would fence Russia 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 had to fully transfer their transactions inside Russia to processing 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 an establishment of a national payment card, which would appear in Russia by the 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, our planet's first modular space station constructed by Russia, which was assembled in orbit between 1986 and 1996 and had operated until 2001. This brand name was selected through 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 issuing 100 million cards over the next two years, some of them co-badged with Visa, MasterCard, JCB, American Express, UnionPay and maybe others 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 the proper and reliable way of using them on the 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 a mutually beneficial co-operation with other payment systems.