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access and Internet freedom, etc. And the Foundation to counter Russian influence will help European countries to resist the intervention of the Kremlin.
2.7 Russia’s CBR introduces, expands a P2P payment system designed to reduce Sberbank’s dominance
The Central Bank of Russia (CBR) has just introduced a Rapid Payment System (RPS) that allows Russians to send money to each other using only a telephone number, but already wants to expand the system, Interfax and Finanz.ru reports, citing the CBR’s First Deputy Chairperson and Head of the Fintech Association Olga Skorobogatova.
The move maybe the start of a CBR move to reduce the state-owned retail incumbent Sberbank domination of Russia’s banking business and to promote a more balanced sector by introducing more competition.
The plan is designed to be a key competitive pressure to lower the interchange/acquiring costs for merchants, as an alternative to direct capping or regulation of an interchange fees. The CBR has also asked the commercial banks participating in the system to offer the service for free.
The CBR launched a test version of the RPS on 28 January, with 12 banks participating. Peer-to-peer (P2P) payments within the system are to be launched to the public from 28 February. In 2H19, the CBR plans to expand services to payments to business-to-consumer (B2C). These transactions would include a QR code-based solution similar to AliPay in China.
“Interchange fees are likely to start coming under pressure from the CBR, which is evolving as a key competitor to Sberbank (controller of over two thirds of the segment). The extension of the P2P system functionality is logical and would basically see the CBR, through its 100%-owned subsidiary NSPK, which also runs the MIR card payment system and processes all domestic card transactions, launch an ‘AliPay of Russia’. Structurally for the market, we believe it means the evolution from a ‘Brazil model’, with an average acquiring fee of some 1.8%, to a US one, with fees of 0.8% – although not the tightly regulated European model, where fees are capped at 0.2/0.3% (Poland being a recent example). For Sberbank, it would mean a slowdown in F&C growth, to 7% YoY in 2020, on our estimates (vs. mid-teens guidance under current strategy). We have already reflected this shift in our forecasts,” Svetlana Aslanova of VTB Capital (VTBC) said in a note.
Analysts say that as part of its clean up of the sector the CBR is becoming less tolerant of Sberbank’s dominance – especially in fintech – and wants to broaden the market, introducing more competition.
The plans for changes to the RPS suggest that the CBR’s plans for Russia’s banking sector are moving into a new phase. The CBR is in the midst of a banking sector clean up that is coming into its end game as the number of banks in Russia fell below 500 in November. The unofficial goal is to reduce the number of banks to around 300 – similar to Germany’s banking system – but the emphasis has been on closing down dodgy and undercapitalised banks, as well as to stop the widespread stealing. As bne IntelliNews reported in 2017 “Russia’s great daylight bank robbery,” Russia’s banking sector has been plagued by owners helping themselves to depositors’’ money by making loans to themselves.
The introduction of the RPS seems to be the first volley in a new direction for the CBR where it is concentrating on increasing the competition between the surviving banks and building a more balanced sector, where traditionally the state-owned banks have been dominant.
16 RUSSIA Country Report March 2019 www.intellinews.com