Card Payment Systems

Main article: Payment systems

Russian payment systems

• National Payment Card System (NSPK) and World (National Payment System)
• Golden Crown
• Union Card
• Savings Card (closed in 2012)

International Payment Systems

• UnionPay (China)
• Visa (USA)
• MasterCard (USA)
• DinersClub (USA)
• American Express (USA)
• JCB (Japan)

Types of bank cards

• Payment card

Electronic Payment Systems

Main article: Electronic payment systems in Russia

Non-cash payments in Russia

• Non-cash payments in Russia

Bank card fraud

Main article: Bank card and payment fraud

History of development

2022

Russian banks occupied 10% of the global card payments market

At the end of 2022, seven Russian banks entered the world Top 150 in terms of the number of card transactions processed, and their share in the total volume of such transactions amounted to approximately 10.2%. For comparison, in 2021, this indicator was 10.4%. This is stated in the Nilson Report study, the results of which were released on October 23, 2023.

Nilson Report analysts take into account all card payments that pass through the network of POS terminals of banks. Of the Russian credit institutions, the rating includes Sberbank, VTB, Gazprombank, Alfa Bank, Russian Standard, Tinkoff Bank and Promsvyazbank. In total, in 2022 they processed 47.7 billion transactions, while a year earlier this value was 43.5 billion. The increase was at around 9.6%. At the same time, only three Russian banks showed an increase in the number of processed payments for the year - Sberbank, Alfa-Bank and Russian Standard.

The study says that Sberbank, the largest Russian acquiring bank, ranks third in the world ranking with a share of about 9%. In 2022, this credit institution processed 42.1 billion transactions, which is 11% more than the result of 2021. The most significant annual increase in the number of processed payments was shown by Alfa-Bank - plus 59.4%. In 2022, 1 billion payments passed through its POS terminals, while in 2021 - 638 million. Alfa-Bank ranks 65th in the world ranking. Over the year, the Russian Standard increased the number of processed transactions by 33.8%: 594 million payments and 81st place in the ranking in 2022 against 444 million transactions at the end of 2021.

The number of transactions processed by VTB decreased on an annualized basis from 2.5 billion to 2.2 billion. In the rating, the bank ranks 37th. Gazprombank in 2022 processed a little more than 1 billion payments - about the same as in 2021: in the world ranking it occupies the 62nd line. Tinkoff Bank reduced the figure by 25.5%, and Promsvyazbank - by 29%. They rank 93rd and 114th on the list, respectively.^[1]

Sharp growth of issued cards in neighboring countries due to card tourism of Russians

In April - June 2022, in neighboring countries of Russia, the number of cards in circulation increased more than a year earlier.

At this time, the peak of card tourism of Russians fell after leaving the Visa and Mastercard market in March.

The largest increase in the second quarter was recorded by the Central Bank: the Kyrgyzstan number of cards of international payment systems increased by 39% over the year banks Uzbekistan , the number of cards increased by 26.2% over the year Armenia , Visa and Mastercard increased by 16.2%, banks Belarus increased the number of cards by 11.52%, banks in Tajikistan May 2022 issued more than 4 million cards (+ 28% per year). A year earlier, the increase was 21%.

According to the Central Bank of Kazakhstan, the number of cards for the year increased by 7.86%, to 39.8 million units, but this is the minimum increase in recent years.

Japanese payment system JCB suspended operations in Russia

The Japanese payment system JCB will suspend operations in. Russia She could replace and Visa. MasterCard This became known on March 8, 2022. More. here

Visa and Mastercard suspended activities in Russia

Visa and MasterCard announced the suspension of activities in Russia. This became known on March 6, 2022. Read more here.

2021: Illegal pressure of foreign payment systems on Russian banks

On August 20, 2021 Russian , online retailer Wildberries issued a statement in which it announced the beginning of foreign pressure payment systems Russian banks on due to the company's decision to provide discounts when paying with cards, and WORLD Express Checkout through SberPay the publication of foreign system commissions. More. here

2020

Russian banks accounted for 10% of the world card payments market

In 2020, Russian banks accounted for 9.7% of the card payment market, according to Nilson Report, which was released on October 22, 2021. Compared to 2019, this share increased by 2.4 percentage points.

As RBC writes with reference to the Nilson Report study, it calculated the share in the total number of payment payments that  were processed by POS terminals of banks - devices for receiving cards at points of sale. At the same time, transactions within the country were taken into account using cards of international payment systems. These do not include cards of the national payment system "Mir" (25% of the Russian payment market). In total, banks from the top 150, according to the report, processed 354.8 billion transactions in 2020, which is 2.8% more than in 2019.

In 2020, Sberbank processed 30.3 billion payments against 20.6 billion in 2019. Its share increased from 6% to 8.6%. The bank retained third place. Ahead are only the global acquiring company FIS (34.2 billion payments) and the American bank JPMorgan Chase (35.6 billion). Their shares in the world ranking were 9.6% and 10%, respectively.

The rating includes six more Russian banks:  VTB , Gazprombank , Tinkoff Bank, Russian Standard , Promsvyazbank  and Alfa Bank. Over the year, the number of Russian banks in the ranking remained the same.

The head of the board of the National Payment Council, Alma Obaeva, believes that Russia's indicators in the world ranking are growing precisely because of the transition of cash payments to non-cash form, and not because cardholders have increased incomes.

Therefore, when the peak in the share of non-cash payments is reached, our growth in the world ranking may slow down, she added.

According to the Central Bank, in 2020, 50.2 billion bank card transactions were made in the amount of 102.8 trillion rubles.^[2]

Increase in the issue of bank cards in Russia to 19.2 million units

At the end of 2020, Russian banks issued 19.2 million settlement and credit cards, which is a record figure since at least 2014, when the Central Bank of the Russian Federation began to keep these statistics according to the new methodology. The previous maximum was dated 2017 - then the issuance of cards amounted to 16.6 million pieces.

By the end of 2020, the total number of cards issued by banks for the entire time amounted to more than 300 million pieces. At the same time, the number of active cards (for which transactions are made) reached 209.4 million units, an increase of 6.3%. That gain was the lowest in six years.

The Central Bank of the Russian Federation linked the increase in the number of cards in 2020 with the general popularization of non-cash payments in Russia, as well as the development of the Mir payment system. A slowdown in the growth rate of active cards in 2020 may indicate market saturation, when the holder already has several cards, but at the same time prefers to use one, a representative of the regulator explained to RBC.

Four main factors influenced the record growth in the issuance of new cards, said Alma Obaeva, head of the board of the National Payments Council:

• the COVID-19 coronavirus pandemic could force those Russians who used only cash until 2020 to switch to cashless use of funds;
• cards are now easily issued, and many banking users have a habit of opening multiple cards with different conditions;
• in 2020, the mandatory transition of recipients of budget funds to Mir cards continued;
• banks are increasingly opening cards to young people and teenagers.

In her opinion, the pandemic could have influenced the reduction in the growth rate of active cards. In 2020, due to closed borders, currency and travel cards turned out to be unclaimed, which simply now lie in the wallet of Russians until better times, Obaeva explained.^[3][4][5][6]

Key Trends in Bank Payment Protection

Financial institutions are the most secure economic sphere in terms of information security. The reasons are obvious - the risks of economic losses in the case of cyber incidents are direct and observed. At the same time, financial institutions have sufficient budgets and motivation for the qualitative development of IT and information security systems. Nevertheless, information security incidents related to illegitimate transactions are currently common and do not lose their relevance. The author of the article "The main trends in the field of bank payment protection" considers which processes are now at risk, and which are already quite thought out, and their risks are currently minimized. Read more here.

The number of credit cards issued decreased by 20% in January

The decline in card issuance is associated with regulatory changes in the Central Bank, which began to fight the unhealthy growth of consumer lending.

2019

More than half of payments in Britain are made by card

According to industry statistics, in 2019, more than half of all payments in the UK were made by card, as the use of cash has sharply decreased in the country^[7].

Against the background of the boom in card and especially contactless payments observed in the UK in recent months as a reaction to the COVID-19 pandemic, and a sharp decrease in the demand for ATMs, UK Finance data indicate that this is only about accelerating the trend that has already taken place.

In 2019, debit cards were used to make 17 billion payments, of which 7 billion were contactless. Also in 2019, the use of credit cards increased by 7%, to 3.3 billion, of which 1.3 billion were contactless.

Meanwhile, the country continued to see a decline in cash payments, which fell by 15% to 9.3bn transactions, although cash was still the UK's second most popular payment method behind debit cards.

UK Finance says changing trends in retail, to trade including the increasing adoption of online shopping, have been a factor in, on the one hand, the decline in cash use and, on the other, the rise in popularity of card payments.

In addition, consumer preferences are changing: the number of consumers who did not use cash or used it only once a month has more than doubled in two years: from 3.4 million in 2017 to 7.4 million in 2019. Although the tone here is set by young people, in 2019 7% of those aged 65 and over used cash only once a month or less.

In terms of banking, in 2019 more than 80% of UK adults used banking online, using a mobile or regular phone, up from 75% in 2009.

Russian retail rebelled against Visa and Mastercard

Trade associations have submitted to the Federal Antimonopoly Service (FAS) a request to initiate proceedings against Visa and Mastercard payment systems, RIA Novosti reported in February 2019. According to the agency, the request indicates that the systems use their dominant position in the market and violate Russian antitrust laws^[8].

The initiators of the appeal to the FAS were the associations of Internet and retail trade AKIT and AKORT, respectively, as well as RATEK - the Association of trading companies and manufacturers of household and computer equipment. The antimonopoly service received the application on February 25, 2019, and according to the law, it must be considered within three months from the date of filing.

RATEK, AKIT and AKORT are unhappy with the size of the interbank commission, the size of which is controlled directly by payment systems. Interchange averages about 70% of the total cost of acquiring - the commission that the seller pays the bank to maintain the outlet. Trade associations spoke out strongly against the fact that Visa and Mastercard payment systems set different sizes of interconnection when paying with different cards at different outlets. In addition, the initiators of the appeal themselves consider it excessively high for the Russian market.

According to statistics from the Central Bank and Rosstat, Russians used cards in 46% of cases when paying for goods and services for the period from January 2018 to September 2018. The average commission of acquiring banks was 1.5-2.5%, and the average interchange varies from 1.6-1.8%. For comparison, the Mastercard and Visa interchange in Europe, according to the systems themselves, ranges from 0.2% to 0.3%.

The association statement provides an example based on Mastercard's activities. In this payment system, according to the assurances of RATEK, AKORT and AKIT, the interbank commission rate is higher for non-food retailers compared to stores of other formats with a similar assortment. As the authors of the statement noted, with this approach, stores with a lower banking commission acquire "unreasonable competitive advantages."

2018: The number of cards issued in Russia exceeded 270 million

Each resident of our country has an average of 1.84 bank cards.]]

2017

267 million cards were issued in Russia (+ 6% per year )

According to the Central Bank of Russia in 01.10.2017, 267,219  million payment cards were issued by Russian banks. The annual increase was 6.4% compared to 01.10.2016 (250,957 million cards), while it is more than the annual increase in 2016 (4.5%). In total, the Russians had 265 million cards in their hands, of which 150.1 million cards were active. Compared to 01.10.2016 data, these indicators increased by 6.3% (249.5 million cards per 01.10.2016) and 7.8% (139.2 million cards), respectively. Notable is the fact that the share of active cards is also growing - 56.64% (2017), compared to 53.54%^[9] of the^[10].

Of the total issue of 235,956 million cards, debit (settlement) cards accounted for 88.3%, credit products accounted for 31,263 million cards - 11.7% of the issue. At the same time, the share of debit cards in the structure of issuing payment cards in the Russian Federation increased by 0.1%, and the share of credit cards, on the contrary, decreased by 0.1% compared to last year's indicator for the same period. Note that the decline in the share of credit cards in the issue structure has been going on for the second year (in 2015 , their share decreased by 1%). However, according to the Joint Credit Bureau (OKB), banks increased credit card issuance by 14% for the third quarter of 2017 . In total, in July-September 2017, banks issued 2.31 million cards with a total credit limit of more than 145.96 billion rubles, for the same period last year, 2.02 million cards with a limit of more than 106.88 billion rubles were issued. Experts believe that the main reason for the growth in the number of credit cards issued in the third quarter was a consistent decrease in the key rate of the Central Bank and the subsequent decrease in interest rates on loans.

It should be noted that Russian banks also issue prepaid cards, the total number of which in circulation is quite significant, according to various estimates, significantly exceeding the number of credit cards issued.

Analysts NAFI predict that in 2017-2018. the number of bank cards will continue to grow by an average of 3-5% per year, slowly entering the saturation phase.

How much cash Russians withdraw from bank cards

Credit Card Clones

In March 2017, it became known that a group of hackers called CC Buddies began openly selling a malicious device for contactless reading and cloning credit cards equipped with RFID chips. The new device is capable of copying 21 credit cards per second^[11].

In 2016, the same attackers sold a similar device, but with more modest characteristics: their Infusion X5 allowed cloning up to 15 cards per second. For successful cloning, it was necessary that the device be located very close to the map - no more than 8 cm. The new version, called X6, works from a distance of 15 cm.

Card reading requires close contact with a potential victim; however, on public transport during rush hour, when people are forced to press together, intruders armed with such devices have a chance at a rich catch. This chance was already good when the devices worked from a distance of 8 cm, and the more good it turns out when the working distance doubles.

The device itself is small and equipped with a fastener on the hand, so that it can be easily hidden under the long sleeve. This makes it doubly dangerous: the probability of detecting it tends to zero.

But even with the capture of the attacker, proving the fact of the crime will not be easy, since the X6 is equipped with means enciphering of stored data.

The collected card data is stored directly in the device's memory, they can be transferred to the computer using a USB cable.

Cloned card data is a running commodity in the cybercriminal market. With their help, criminals make fake debit cards, which CC Buddies themselves are actively engaged in.

X6 is offered for 1.5 bitcoins, which roughly corresponds to $1,700 at the moment. For additional cards, it is proposed to pay another 0.1 bitcoin.

"Speaking of protection against such devices, it is worth recalling the theory of waves from physics. Judging by the technical descriptions of the predecessor of this device, it operates at a frequency of 13.5 MHz, which is a short wave. Short waves are characterized by a small long wave, but at the same time high frequent fluctuations, which affects their penetrating ability through obstacles, "says Georgy Konstantinovich Lagoda, technical director of the Security Monitor company. "However, it should be understood that the declared copying distance of 15 cm most likely takes place in a homogeneous air environment without obstacles (including clothes, wallet, other cards, etc.), therefore, the greatest probability of a successful copying of someone else's card by an attacker appears when this device is in direct contact with the victim's card."

2016

Boom in the growth of bank card payments in Russia

The volume of non-cash payments in Russia is growing from year to year. At the same time, an increasing share of non-cash payments falls on payment cards: in 2016, according to the Central Bank of the Russian Federation, operations to pay for goods and services using bank cards accounted for 80% of the total number of non-cash transactions.

Not only the share of operations in the percentage ratio is growing, but also their total volume - moreover, it is growing at a rapid pace. The data for the first quarter of 2017 indicate that compared to the same period in 2016, the volume of transactions using payment cards issued by Russian banks increased by 31% and reached 3.5 trillion. rubles.

Progress in this area will look even clearer if we turn to earlier statistics. So, in 2009, only in 21 cases out of 100 bank cards were used for a non-cash payment. By 2016, card transactions had risen to 71 out of 100. During the same period, the share of payment for goods and services with cards in the total volume of retail trade increased from 3.5% to 30.5%, that is, almost 9 times.

A significant increase in the share of non-cash card transactions over the past years has also been confirmed by the data of the Central Bank. According to Olga Skorobogatova, Deputy Chairman of the Central Bank of the Russian Federation, annual growth is 6-8 percentage points, which is "a very good indicator."

Not only the number of non-cash card transactions is increasing, but also the number of active payment cards. In the first quarter of 2017, there were 140 million of them, which is 7.7% higher than in the same period last year. As for the issue itself, the number of cards for individuals reached 251.7 million units, which is 4.3% more than in the first quarter of 2016.

In total, in 2016, our fellow citizens made 17.9 billion transactions in the amount of 51.2 trillion rubles. On average, each Russian made 120 operations totaling 349.7 thousand rubles, while a year earlier - 90 operations in the amount of 283.8 thousand rubles. At the same time, with regard to payment for goods and services, there is a tendency to reduce the average check: in the first quarter of 2017 it amounted to 839 rubles, in the first quarter of 2016 - 917 rubles, in the first quarter of 2015 - 960 rubles. That is, credit cards are actively used to pay for regular small purchases, which is facilitated by the development of a network of POS terminals.

Growing issue volumes indicate that bank cards are a sought-after product. At the same time, the number of actively used cards is growing faster than the volume of issue. And the fact that at the same time the number of card transactions and their total volume are growing suggests that cards are in demand precisely as a payment tool. All this allows us to conclude that the Russians were able to see a number of advantages that the use of payment cards in calculations gives.

251 million cards were issued. 88% of them are debit

The number of bank cards issued by credit institutions (except prepaid cards) is about 251 million cards as of October 2016 (the same indicator last year was exceeded by 4.5%). As before, the bulk of card products come from debit cards (88%).

2000-2008: Bank card boom in Russia

The rapid development of consumer lending in 2000 - 2007 led to the fact that in many large stores banks began to place small offices in which a credit card is issued and issued to customers of the store within 15-20 minutes.

Tariffs for receiving and servicing all types of cards have significantly decreased (at least an example with Electron class cards is indicative - within the framework of salary projects, and not only, they have long been issued for free). Secondly, the grocery range expanded (full-fledged credit cards appeared and took a solid place). Thirdly, the scope of cards has expanded - banks began to issue cards as part of joint programs with non-bank companies - chains of retail stores, airlines, restaurants.

1990s: Microchip Cards - "Savings Card" and "Golden Crown"

• Development of solutions for building payment systems based on chip cards (Scantek, BGS SmartcardSystems AG, CFT and a number of others). On the other hand, there was a problem - the lack of a single standard. As a result, cards of each payment system were accepted for payment only within one payment system. Among payment systems based on cards with microchips, two have succeeded in their development - (Savings card project) and. Sberbank Golden Crown Employees with the help of such cards could not only receive salaries at ATMs, but also pay for meals in factory canteens, for utilities and even in stores for everyday goods.

After the 1998 crisis, first STB Card and later Union Card lost their leading positions in the banking payment systems market.

• Tourists have become potential cardholders in modern Russia. After former citizens of the Soviet Union got the opportunity to travel abroad, there was a demand for cards of international payment systems. At the initial stage, Russian banks issued cards of international payment systems with great discretion. In the tariffs for issuing and servicing a bank card of the international payment system of any bank, there was necessarily such a position as "insurance deposit," or "guarantee cover" (the amount placed on a separate customer account, the amount of which depends on the payment limit on the card). In fact, these were additional funds of the client attracted by the bank.

Quite high (2-3%) was at the initial stage and the commission for cashing on the card. The annual service fee was also rather big. So, for Visa Classic or a product of the same series of Master Card Mass, the annual fee was at the level of $40-50, and for card products considered elite, such as Visa Gold or Master Card Gold, at the level of $100-120. Very soon, Russian banks - full members of international payment systems discovered a new business for themselves - the distribution of their cards through agent banks. When distributing cards according to the agent scheme, the agent bank, having concluded a special agreement with the issuing bank, received the right to distribute cards of this bank to its customers. Agent banks, as a rule, did not advertise their intermediary role to customers.

In the process of developing the agency business, some banks went to create special partner programs (for example, the Alliance program of Most Bank). In this case, agent banks were able to issue neutral design cards containing the name of the program and indicating the name of the agent bank. At a certain stage, the rapid development of agency schemes in Russia began to cause concern for Visa International. This payment system began to carry out systematic targeted work to identify such unofficial "issuers" and give them official status within its payment system. Firstly, Visa's legitimate concern was caused by the growth of unofficial participants in the payment system, who actively used the prestigious international brand and actually paid nothing for it. And, secondly, which was also significant, this growth of "defaulting banks" led to a real decrease in the level of service of cardholders.

1993: Launch of Union Card and STB Card systems in Russia

In Russia, such payment systems were created on cards as STB Card (settlement bank - Stolichny) and Union Card (settlement bank - Avtobank), which quickly became the leaders in the plastic card market. In a sense, the Russian market was divided - Union Card prevailed in the regions, and STB Card - in Moscow. The cards of these two payment systems were magnetic striped at the time . The prospect of mass release of cards with a chip (chip cards) by international payment systems was not yet clear.

1991: Credobank unveils first Visa cards it issued

On September 26, 1991, at the Oktyabrskaya Hotel, Credobank presented the first Visa cards issued by him. From that moment, cards of international payment systems became available to ordinary Soviet and later Russian citizens. The first transaction on the Visa Credit Bank card was made a little earlier - on September 21 at the Kalinka-Stockman store in Moscow. Not being sure of success, Igor Lipanov, head of the Credobank plastic card department, made a presentation of the first card only after it became clear that^[12] system was working].

Thus, of all Russian commercial banks, it was Credobank that was the first in Russia to issue a card of the international payment system. Her "father" can equally be considered Igor Lipanov, who directly oversaw the card program of Credobank, and the head of the bank Yuri Agapov. But if for Igor Lipanov the card business was the main occupation, then Yuri Agapov, as he later admitted to Money, initially considered plastic cards a unprofitable project.

Such a strange position for the head of the bank, who was the first to issue plastic cards for the general consumer, raises a completely natural question: why then was it even involved in the card business? Yuri Agapov explains this strangeness very simply: the bank needed a currency license and the cards turned out to be one of the main arguments that helped knock it out from the Central Bank. Thanks to the promise to start issuing international cards, Yuri Agapov managed to convince the Bank of Russia to issue a currency license# 1 to Credobank. And Igor Lipanov, having read in Kommersant that Credobank received a foreign exchange license and is going to issue plastic cards, offered Yuri Agapov his services.

True, at that moment Visa Credit Bank cards were available to a simple Soviet person only theoretically. Indeed, in order to become the owner of the card, its potential owner had to make a down payment, which was $10 thousand, and an insurance deposit - another $10 thousand. Later, when other banks entered the plastic card market - Most Bank, Inkombank and Mosbusinessbank, the conditions began to change. At first, the down payment and the insurance deposit were halved, then the banks stopped taking the latter altogether. And only ten years after the release of the first card, banks began to distribute cards for free, limited to an initial payment of $100-200.

But nevertheless, this was a breakthrough in the development of the plastic card market in the USSR. Indeed, after September 26, 1991, it became irrelevant where a person works, whether he is a member of the party, whether he has the right to travel abroad. The main criterion for obtaining a card was the availability of money. This is precisely the main difference between Credit Bank cards and cards issued before it by Vneshtorgbank of the USSR, which was transformed into Vnesheconombank in 1987.

1990: The law "On Banks" was adopted in Russia

Adoption of the Law "On Banks and Banking Activities"|the Law "On Banks and Banking Activities." After the beginning of the formation of a system of commercial banks in Russia, bank cards as a payment instrument aimed at private holders, a great future appeared in Russia.

1989: Plastic money. Beginning

"The Savings Bank of the USSR and the cooperative "AKTIV-S "have released the first batch of Soviet credit cards, which will replace their owners with savings books. The owner of the credit card must insert it into the device and select only the known code and the amount that he would like to receive. After that, the device counts new bills. Will it be possible to pay for purchases or services with the help of a card? In the future, yes! We received orders for the mass production of plastic money from the Council of Ministers of Estonia, from the management of VAZ and other large industrial enterprises, where people spend a lot of time standing in queues for salaries when paying for dinners in canteens "

1988: USSR Olympians in Seoul issued Visa cards

For the first time, athletes of the Soviet Olympic team heading to participate in the Olympic Games in Seoul were issued cards of the international payment system - Visa International. But international maps did not receive much distribution then.

1970s: Creation of Visa and MasterCard

• The creation of Visa International and MasterCard, two American card payment systems that eventually became the largest in the world.

1969: Diners Club appearance in the USSR

• Appearance of the Diners Club payment system in the USSR. It was these cards that began to be accepted in the Berezka store system.

• Following the Diner Club, American Express successfully entered the mass American market, and then many American banks with their local card products (including the two largest US banks at that time - Bank of America and Chase Manhattan Bank).

1949: Diners Club card launch for lunch fees

The meeting of the grandson of the founder of one of the largest American department stores Alfred Bloomingale, the head of the small financial company Hamilton Credit Corporation Frank McManara and the lawyer of this company Ralph Schneider is a symbolic point of report in the world history of plastic cards. As a result of the meeting, a Diners Club card was born (originally the purpose of the card was to pay for meals, hence the name) - the first mass payment card in the world, according to many researchers.

Key institutions of the card payment system

In its most general form, the infrastructure supporting the work with payment cards is as follows:

1. Central administrative body
2. Issue center (issuing bank)
3. Acquiring Center (acquiring bank)
4. Processing Center
5. Internet Payment Service Provider (IPSP)
6. Card Acceptance Points:
   1. Trade and Service Enterprises
   2. Cash Release Points
7. Individuals - cardholders

Central Administrative Authority

The central administrative body provides general management of the payment system both in terms of current activities and in terms of system development, namely:

• defines and develops a unified concept of payment system construction: maintains the organizational and legal base of the payment system, develops and modifies a set of rules, regulations and other regulatory documents for system participants;
• organizes technical and technological support of the payment system: development and modification of requirements for information carriers and devices for their processing, to protocols of interaction of technical means, ensures the introduction of new technical and technological solutions;
• selects promising directions for the development of the payment system business to prepare new and modify existing card products, develop agency programs, expand the number of participants and increase the customer base of the payment system;
• audits and monitors the activities of system participants, certifies participants in accordance with the adopted rules and requirements of the payment system;
• conducts arbitration of conflict situations, imposes sanctions for violations of the rules of the payment system.

Issuing bank

The issuer in this case (since payment cards are considered) is a credit institution - a bank. The main task of the issuer is the organization of customer service - cardholders, namely:

• registration and record keeping of cardholders (customers);
• issuing cards for customers and maintaining them - personalization, reissue, blocking operations, etc.;
• opening special card accounts of customers, the movement of funds on which customers manage using cards;
• maintaining a special card account in accordance with the terms of contracts - accrual of deposit interest, debiting interest when using a credit scheme, replenishment/debiting of funds for transactions not related to cards;
• card transactions - processing of avtorizatsion¬nykh requests from card receiving points through the protsessin¬govyi center, debiting from a special card account and perechis¬leniye funds in favor of the seller, returning funds to a special

card account in case of refusal of the card holder from the product/service;

• analysis of conflict situations in accordance with the established rules of the payment system;
• technological interaction with the processing center.

The number of bank cards in Russia as of July 1, 2008 reached 111.467 million units against 103.497 million at the beginning of the year. The increase was 7.7%. If such growth rates of cards continue in the second half of the year, then over the year the increase will be 15-16%. In 2007, the growth of bank cards amounted to 38.4%, and in 2006 - 36.7%. According to the Central Bank, as of July 1, 2008, 80% of cards issued in Russia belong to international payment systems - 96.778 million units. Russian payment systems account for 16.647 million units. Nevertheless, the highest percentage of active cards - 60-70% - among Russian payment systems. The Visa system, according to the Central Bank, has more than 55.2% of active cards: 29.3 million out of 53.1 million issued, MasterCard has 14.5 million active out of 43.4 million issued (33.4%).

Bank-ekvayr

Acquire ensures the crediting of funds to trading enterprises and services for operations, the payment of which is made using a payment card, and also serves cash issuance points upon presentation of the card. Here is a typical list of functions of the acquiring bank:

• registration and maintenance of card receiving points in its accounting system;
• registration of card receiving points in the processing center;
• maintaining bank accounts of trade and service enterprises in accordance with the terms of contracts - accrual of deposit interest, crediting funds received from the issuer on card transactions, debiting and returning funds to the issuer in cases of refusal to pay for goods/services, debiting service fees, etc.;
• servicing ATMs and other cash outlets;
• analysis of conflict situations in accordance with the established rules of the payment system;
• technological interaction with the processing center.

Processing Center

The processing center carries out information technology interaction between all participants of the payment system:

• registers issuers and acquirers;
• maintains stop lists with payment card numbers for which transactions are prohibited for various reasons, and checks the stop lists of all operations passing through the processing center;
• routes authorization requests from payment card receiving points to issuers;
• receives from acquirers financial confirmation files for transactions and sends them to issuers for arrangement of mutual settlements;
• participates in the analysis of conflict situations in accordance with the established rules of the payment system.

Often, the acquiring bank has its own processing centers. Examples include the following processing centers:

1. First Data (First Data Bank)
2. UCS (Usies Company) (Rosbank)
3. Multicard (VTB 24)
4. Sberbank (Sberbank)

Internet Acquiring: IPSP

When performing Internet acquiring, another participant appears - Internet Payment Service Provider (IPSP). Usually IPSP features include:

• transaction capture and device management - primary processing of communication and transaction traffic, transformation of the family of application protocols, implementation of client interaction scenarios based on the capabilities of devices and protocols
• transaction routing - determining the network or processor (financial institution) serving the transaction and sending the transaction to the appropriate network (processor) interface or authorization module;
• calculation of online fees - calculation of commission fees included in the transaction amount;
• authorization - making a decision to allow or reject a transaction based on checking a set of parameters: the status of the card available for authorization of the client's balance sheet, the status of the issuing financial institution in the limit control system, etc.;
• risk management - analysis of authorization traffic in order to minimize financial losses of the bank from fraudulent transactions on customer cards (fraud monitoring systems) and unscrupulous issuers (system for controlling the limits of financial institutions - participants in the payment system).
• interfaces for working with banks and processing centers - providing online transactional interaction with settlement participants with conversion of requests into formats of application protocols supported by these participants;
• Accounting of customer transactions - recording in the information about the transactions carried out by the customer (change of limits, accrual of interest and fees, etc.); Maintain a transaction history file in some cases, accounting for transactions with plastic cards according to accounting rules and generating transaction files for the banking system;
• clearing - consolidation of data on transactions based on the results of the business day to carry out the procedure of mutual settlements between the participants of the payment system (banks, enterprises of the trading network, etc.), the settlement bank, preparation of clearing files;
• maintenance of contracts and settlements with trading enterprises - based on the data obtained at the close of the business day, consolidation of transactions in the context of the serviced product range, calculation of commissions and formation of payment orders for the transfer of compensation to trade and service enterprises;
• preparation of reports - generation of reports for counterparties based on the results of the business day (amount of operations, commission) in the context of issue and acquiring;
• claim work - support of the arbitration cycle in accordance with the rules of payment systems. Generation and processing of complaint cycle files (chargeback, representation, etc.)
• participates in the analysis of conflict situations in accordance with the established rules of the payment system.

IPSP can be a structural unit of the bank. However, often due to the economic inexpediency of developing its own services, this part of the activity is given to outsourcing third-party EPS companies. Examples of such companies are:

# PayPal # Google Checkout

1. ChronoPay (Chronopay)

# Assist # CyberPlat # eComCharge

Card Acceptance Points

Trading and service enterprises () merchant account are enterprises that accept cards as a payment tool for settlements for goods/services sold to cardholders. In terms of card operations, the functions of such enterprises are as follows:

• customer service - receiving a card from the buyer and its control, generating an authorization request for the amount of the paid goods/services, performing other technological operations;
• organizational and technological interaction with the processing center, IPSP (in the case of Internet acquiring) and the acquirer;
• analysis of conflict situations in accordance with the established rules of the payment system.

Cash issue points - structural divisions of acquirers (cash desk of a credit institution, cash desk of a credit organi¬zatsii branch, cash desk of an additional office of a credit institution, opera¬tsionnaya cash desk outside the cash desk of a credit institution, an exchange office, ATMs, etc.), issuing cash on a payment card.

Cardholders

Cardholders are individuals, clients of the issuing bank, who received payment cards from it on the basis of concluded agreements (agreements). At the same time, it is stipulated that the card itself yavlyayet¬sya the property of the issuer, and the card holder does not have the right to pere¬davat it to a third party, and is obliged to keep the card PIN code secret.

Tax Service

Can the tax office see the card account of an individual

Notes