A new Federal draft law about a national payment system is ready for a second reading in the State Duma. Its intention is to provide for all information about non-cash payments to be processed within Russia and it has become the subject of heated debate
A key provision of the amended draft law would see processing centres prohobited from passing any details about money transfers effected in Russia to any other country, with international access to such information banned.In effect this would mean that Russians international payments systems, including Master Card and Visa, which service about 85 to 90% of all payments in Russia,will no longer be able to use it both within Russia and abroad, regardless of the bank issuing the card. This in turn will lead to a situation where Russians will be either forced to take cash on international foreign trips or open international bank accounts, causing a significant capital outflow from Russia.Presidential aide Arkady Dvorkovich replied to these concerns with a Twitter message stating that “there will be no norms restricting the ability to use Visa and Master Card.” He also added that the issue of transfer of data about payments inside Russia is now being under discussion with the payment systems, with the issue of tariffs for their services being the major question. According to Dvorkovich, Master Card and Visa could take part in creating a universal Russian electronic card.Russians will start using a universal electronic card from January 1, 2012, with all the government and municipal services becoming available electronically.The card is intended to replace all kinds of social cards, metro passes, and enable payments across Russia.However, Nikita Maslennikov, an advisor at the Institute of Contemporary developments, said the concept of internal payment processing would break the idea of a universal electronic card, as Russia didn’t currently have the necessary technology to do it alone.“The introduction of a universal electronic card scheduled for 2012 is among Dmitry Medvedev’s priorities, but today Russia doesn’t produce chips necessary for that. So, here we won’t be able to do without help of international payment systems. I think, some kind of a sound compromise will be found.”Maslennikov added that the current proposal would contradict plans to promote Russia as an international financial centre, and would lead to additional expenses by consumers for costly project implementation.“In this situation international payments will have to either leave Russia or set up a special local processing centre here, that will cost about $30 – $50 million – that’s according to moderate evaluations. If such decision is taken it’ll finally affect ordinary people, who’ll need to pay higher tariffs.”Michael Dmitriev, director of the fund of the Centre for strategic development, added that it would damage a number of efficiency indicators, with poorer service quality all round. “The services will become less available, the operations will be less reliable, a turnover speed will be lower, fewer services will on offer and the scale of operations will go down, which will result in a higher price for a final consumer.” Dmitriev also said Russia was currently not in a position to set up and develop its own processing centre.“It’s important to understand that the initial investment to set up a processing centre is nothing provided the volume of operations is huge enough. For Russia, a country with a comparatively small economy, financial system and underdeveloped technology, this wouldn’t be economically reasonable. For example Visa, the biggest payment system operating in Russia, told us that all Europe’s emerging markets including Russia provided for a bit more than 1% of all its operations in the world. The company invests its money into development and innovation in the market that about a hundred times bigger than Russia’s. So, the costs per one transaction are much lower than in our country.”
James Blake, Anastasia Kostomarova, RT