Moscow Metro Pilots Homegrown Faster Payments, As Russia Eyes Payment Alliance

June 29, 2022
Authorities in Moscow have launched two pilot projects using Russia’s homegrown Faster Payments System (SBP), while President Putin sets his sights on an anti-sanctions alliance among non-aligned countries.

Authorities in Moscow have launched two pilot projects using Russia’s homegrown Faster Payments System (SBP), while President Putin sets his sights on an anti-sanctions alliance among non-aligned countries.

This month, Moscow Mayor Sergei Sobyanin signed an agreement with Vladimir Komlev, head of the National Payment Card System (NSPK), for a limited rollout of SBP on the Moscow metro.

On the day of the agreement, SBP was launched at all stations on the Big Circle Line, including at about 80 ticket offices.

The launch was highly anticipated after the loss of Google Pay and Apple Pay in February this year, both of which pulled out of Russia in protest against the war in Ukraine.

“Passengers will again be able to use contactless payments using their smartphone,” said Maxim Liksutov, deputy mayor of Moscow, as quoted by Russia’s RBC news.

“Moreover, they can access technology that is no less convenient than it was before.”

When buying tickets using SBP, passengers must first scan a QR code using their camera or banking app.

They will then be asked by the banking app to confirm the payment, after which the funds are instantly credited to the recipient’s account.

In addition to the metro, Moscow has introduced SBP for Parking Russia, the official application for paid parking throughout the capital.

Going forward, the Moscow authorities plan to connect all ticket offices to SBP by the end of 2022 and equip all metro turnstiles with QR code scanners.

By mid-2023, Moscow plans to introduce SBP payments for land-based public transport, and will also add the option to top up Troika cards using SBP. Troika is a contactless reusable travel card that can be used across Moscow’s public transport system.

Outside public transport, Russia’s retail sector is also warming to SBP. Earlier this month, X5, the parent company of the Pyaterochka supermarket chain, announced that it will launch SBP at 9,000 self-checkout services.

By the end of 2022, X5 said it wants SBP to be available at all locations and all checkouts across every region.

Invention by necessity

Although highly disruptive at first, the loss of Google Pay and Apple Pay has given Russia a strong incentive to improve its homegrown payment options, and so far SBP is emerging as a preferred alternative.

Since the outbreak of war in Ukraine, the largest Russian banks have seen a rapid increase in the volume of transactions being made using SBP.

In May this year, Rosbank said it processed six times more SBP transactions than during the same period last year.

Speaking to Russian news site, Dmitry Smirnov, director of Rosbank’s small business department, said that acceptance fee subsidies were one of the main drivers of SBP adoption.

From July 1, 2021 to July 1, 2022, small and medium-sized businesses will be compensated for the costs of bank fees for accepting payments using SBP.

Normally, a commission of 0.4 percent or 0.7 percent would be charged: 0.4 percent for consumer goods, medicines and transport; and 0.7 percent for everything else.

Similar to Rosbank, Credit Bank of Moscow (MCB) said it processed 13 times more transactions using SBP in May this year compared with May last year.

Irina Kuzmina, head of Delobank, also credited the government’s commission compensation scheme for the success of SBP.

However, she also pointed out that even without the compensation, acceptance fees for merchants would still be 2.5 to 3 times lower than acquiring fees for card payments.

Likewise, among Russian consumers, the appeal of SBP appears to be growing.

According to a survey from Home Credit & Finance Bank, 35 percent of Russians believe that SBP could completely replace card payments in the country.

Wooing the BRICS

Russia’s success in maintaining its payment system without Western influence will also appeal to other non-aligned countries, and could lead to future alliances between Russia and the rest of the world.

Last week, while speaking at the BRICS Business Forum, President Putin said that the BRICS countries are already working on a plan to create a new international reserve currency that each member would pay into.

"Together with BRICS partners, reliable alternative mechanisms for international settlements are being developed,” he said, as quoted by RGRU.

“The Russian financial messaging system is open to connecting banks from the five countries. The geography of using the Russian payment system Mir is expanding.”

As of this month, ten jurisdictions accept Russian cards on the Mir payment system, namely Turkey, Vietnam, Armenia, Uzbekistan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, South Ossetia and Abkhazia.

Last month, Reuters also reported that the Russian and Chinese central banks were planning to discuss the use of their respective card payment systems, Mir and UnionPay, on a reciprocal basis.

Elsewhere in his BRICS forum speech, Putin stressed that despite the war in Ukraine, Russia still grew its trade with the BRICS countries by 38 percent (or $45bn) in this year’s first quarter alone.

Russia also pushed for BRICS to expand and to become a financial and payments alliance in its own right, as a counterweight to SWIFT.

Yury Ushakov, advisor to President Putin, said the BRICS countries should devise a criteria for acceptance to the alliance, and should also rally around Russia’s System for the Transfer of Financial Messages (SFPS).

Launched in 2017 in response to previous Western sanctions on Russia, Ushakov said the SFPS could provide a “sanctions-free” alternative to SWIFT for the non-Western world.

Already, Iran and Argentina have applied to join the BRICS alliance, according to Maria Zakharova, a spokesperson for Russia’s Ministry of Foreign Affairs.

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