by Alina Lobzina
Russia’s proposed Universal Payment System has triggered fears that Visa, MasterCard and other foreign plastic might be barred from the country.
While presidential aide Arkady Dvorkovich was quick to quell rumours of a deeply unpopular visa-free regime, there are on-going negotiations about the future of payment cards.
Experts agree that card holders shouldn’t worry about the coming need to swap for a Russian equivalent, but they also warn that commitment to international brands is likely to become more expensive.
New rules, new costs
Suggested changes to the terms and conditions for credit cards would require companies to increase their operation costs, which is likely to hike prices for ordinary users, believes Ivan Kachkovski, a banking analyst at Metropol.
According to amendments, no payment data should be transferred abroad, which will require companies to open Russia-based processing centres.
“This will automatically lead to additional expenses,” Kachkovski told the Moscow News.
“And its very likely that the costs will be paid by people,” he concluded.
Fears of cards being banned would make more sense if the national payment system was already up and running and could replace international competitors immediately, Kachkovski said.
Currently Visa and MasterCard hold 85-90 per cent of the Russian electronic payments market, experts say, Kommersant reported.
And even if Russia remains principally a cash-based economy – especially outside of the big cities – neither of the global giants plans to leave.
“Russia is an important country for our company, and we are ready to assist in forming the most advantageous opportunities for further market development,” head of MasterCard in Russia Ilya Ryabov said.
And Visa representatives said the company has the infrastructure all around the world.
Medvedev’s mega card
The creation of the Universal Payment Card, has been backed by country’s top officials, including President Medvedev.
The bill “On the national payment system” has been approved after the first reading, and is currently being prepared for its second trip through parliament.
The Duma’s committee for financial markets should have collected proposals from banks by Sunday, RBC reported.
However, not everyone likes the idea: protestors, including Orthodox clergy, have objected to harvesting of personal information and its storage in electronic databases.