National Payment System Given Green Light
Published: April 17, 2014 (Issue # 1806)
A national payment system will be created by a new company controlled by the Central Bank, a Cabinet meeting decided Wednesday.
The system will be built from scratch over six months using technology from two existing Russian payment systems, said VTB 24 chief Mikhail Zadornov, who attended the meeting, Itar-Tass reported.
Since MasterCard and Visa abruptly stopped processing the payments of three Russian banks last month, the country has been wringing its hands over the dependence of its financial system on U.S. forbearance.
The companies quickly restored services to two of the banks, but the incident woke Russia up to the fact that if Russia's standoff with the west over Ukraine spikes, Visa and MasterCard, which dominate the Russian payment systems market, could be forced by the U.S. government to abandon Russia, leaving banks and customers in the lurch.
Visa and MasterCard blocked the banks after either they or their co-owners appeared on a U.S. sanctions list on March 20, drawn up to punish Russia for annexing Crimea from Ukraine.
In response, the creation of an independent Russian national payment system has become an issue of national security, its advocates say. President Vladimir Putin called for its creation last month, and amendments obliging banks and payment terminal producers to use it have been submitted to parliament.
On Wednesday, a Cabinet meeting chaired by Prime Minister Dmitry Medvedev delegated responsibility for creating the system to the Central Bank. Adding another line of protection, Zadornov said that by the end of May, Russian banks would create an interbank network to defend themselves against the actions of foreign payment systems.
"The payment system is undoubtedly necessary — not only for banks, but for the country. The risk of bank cards failing due to the will of any other state is absolutely unacceptable," said Yury Bozhor, head of the bank cards department at Otkritie Bank.
But the burst of defensive energy may be misplaced, said another banker. The furore is reminiscent of the French obsession with the Maginot Line in the run-up to World War II, said Maxim Osadchy, head of the analytical department at Corporate Finance Bank. The French built massive fortifications along their border with Germany, but in 1940, when the Germans invaded, they simply outflanked the line by going through Belgium.
Pages:  [2 ]