14:03, 15 December 2015 Page views 36651 views

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Russian Payment Market on the move

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In 2015 the Russian market of retail banking continued to demonstrate steady growth across quite a number of key indicators, despite the impact of unfavorable external and internal factors. And the segment of payment cards did not become exception. Thus, as of 01.07.2015, Russian banks issued 234,110,000 payment cards (annual growth of 6.44% compared to 219,945,000 cards as of 01.07.2014).

The penetration rate of contactless cards and the frequency of their use in Russia are growing rapidly. According to MasterCard, the number of MasterCard PayPass contactless transactions in Russia increased more than fourfold within the year. Along with that, according to estimates by Gemalto and Ingenico, the number of NFC-enabled POS-terminals in Russia more than tripled in 2015 to reach the milestone of 100 thousand units.

One of the most important events of the year was the establishment of the National Payment Card System of (NPCS) and the issue of the first national card “Mir” (“World”) anticipated before the beginning of 2016.

In 2015, MasterCard, and later VISA, transferred Russian domestic transactions for processing to the NPCS according to the new requirements of the Russian law “On the national payment system.” The final migration of the intra-Russian traffic of other IPS (JCB, UnionPay and American Express) to the NPCS is scheduled for January 01, 2016.

By now, a pool of banks has been determined, which will become the first issuers of the national card product – the card “Mir”, a number of vendors has been selected, including suppliers of cards, among which the majority of domestic card manufacturers, and the NPCS rules and fee schedule has been published.

NPCS intends to issue about 120 million Mir-branded cards by 2019. This will certainly change dramatically the structure of the Russian card market, where slightly more than 234 million payment cards of all types and systems are circulating today, of which the share of MasterCard is 35%, and Visa– over 50%.

Herewith “NIIME and Micron” the Russian manufacturer of bank chips thinks to increase their market share after the beginning of the mass issue of “Mir” cards relying on their ability to supply domestically made chips as well as the final product – bank cards.

Developing not only a bank chip, but also an operational system for it, “Micron” can quickly hand in hand with NPCS settle problems on changing of payment application specification at the stage of project pioneering. The first bank cards with domestically made chip of “Micron” have already been functionally tested in NPCS and received positive conclusion. Along with preparing to the serial manufacturing “Micron” is working on modernization of its chip and plans to launch the updated version with native realization of the payment application in the spring time of 2016.

It should be noted that domestic production of bank cards meets the needs of issuers in the Russian Federation almost completely (except for some niche projects).

Particularly noteworthy are intentions of NPCS to enter the international market. Joining EMVCo as business and technological partner last summer, NPCS will be able to actively participate in EMVCo working groups for the creation, development, promotion and implementation of international standards in the field of modern technologies of payment systems. This step seems quite logical, given that at this stage the promotion of the “Mir” card to the international market is one of the main strategies of NPCS, including the implementation of a number of co-badged projects with IPS, such as, for example, the initiative of issuing Mir-Maestro cards together with MasterCard.

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