Creating a national system of payment cards and other amendments to legislation regarding payment services
Below we examine the most important changes.
1. Creating a national system of payment cards
With a view to reducing dependence on foreign payment systems within Russia, a domestic national payment cards system (NPCS) is being created. Within the framework of this system, money transfers will be carried out using payment cards and other electronic payment methods that members of the NCPS offer to their clients (national payment instruments).
Provision is made for the operator of the NPCS to be incorporated as an open joint stock company, 100% of the shares in which will belong to the Russian Central Bank for the first two years from the date of its state registration. It is proposed that, subsequently, other persons will be able to acquire shares in the operator of the NPCS, but a single person (or group of persons, as defined in accordance with antitrust legislation) may own a maximum of 10% of the shares.
The NPCS operator will, on its own, determine its development policy, rules and tariff policy.
The members of the NPCS should be widely recognised payment systems of national significance as well as significant credit institutions on the payment services market. Other credit institutions may also be members of the NPCS, in the capacity of individual members, including if they provide services to other credit institutions. Payment systems may be system members.
Credit institutions and payment system operators that are members of the NPCS must guarantee that national payment instruments will be accepted by all companies and individual entrepreneursс with which such credit institutions have entered into contracts to make settlements under transactions in which payment cards or national payment systems are used.
Further, credit institutions that are members of the NPCS are obliged to provide their clients with national payment instruments when such clients receive various types of payments on account of funds from the state budgetary system of the Russian Federation or from state non-budgetary funds.
In relation to transfers between individuals and system members, an operating centre and payment centre of the NPCS will carry out operational services and payment clearing services. Settlement services will be provided by the Russian Central Bank.
2. Ensuring that there is no interruption to the transfer of funds within the framework of payment systems within Russia
An obligation is vested in payment system operators to ensure that there is no interruption to the provision of payment infrastructure services and to the functioning of the payment system. A unilateral refusal to provide the relevant services is not permitted, but if the provision of payment infrastructure services is suspended (terminated), an obligation has been set to inform the Russian Central Bank and payment system members of the relevant reasons on the date when such suspension (termination) occurs.
If the provision of payment infrastructure services is suspended (terminated) unilaterally, the officers of legal entities that are at fault for this may face administrative liability in the form of a fine ranging between RUB 100,000 and RUB 1 million.
A distinction has been drawn between payment systems that have national significance and those that do not. A payment system is regarded as nationally significant if: (i) in relation to such system, control by Russian Federation, the Russian Central Bank or Russian citizens is directly or indirectly established over the system operator and payment infrastructure service operators; and (ii) the system uses information technologies that meet the requirements stipulated by the Russian Central Bank.
From 1 July 2014, payment system operators which are not nationally significant have an obligation to contribute a security payment to a special account with the Russian Central Bank. The payment is in the amount of the transfers of funds undertaken in Russia within the framework of the payment system during two calendar days. It is made by way of quarterly payments of one quarter of the average value of transfers of funds carried out over one calendar day in Russia within the payment system for the previous quarter. The payment in question is designed to ensure that the Russian Central Bank is able to recover fines for a potential violation by such operators of the regime for providing services in accordance with the current legislation of the Russian Federation.
On 1 July 2014, fines of RUB 10 million will also come into force for an operator of a nationally significant payment system for each day on which provision of services is suspended (terminated). The figure for other operators that are not nationally significant is 10% of the security payment for each day on which provision of services is suspended (terminated).
The rules of a payment system, including tariffs, as well as any types of payments for services within the framework of a payment system, must be publicly announced. If new payments are introduced or the amount of payments is increased, it is mandatory for the Russian Central Bank to be notified beforehand, with a justification given for the increase in payments. Such notification must be given at least 120 days before the above items come into effect.
From 1 July 2016, it is forbidden for credit institutions to engage payment infrastructure service operators from abroad when such credit institutions carry out a transfer of funds within the framework of a payment system in order to provide services to members of the system. An exception to this is when there is a cross-border transfer of funds.
In addition, payment services operators may not pass over to a foreign state any information in relation to a transfer of funds carried out in Russia within the framework of a payment system. Nor may they allow such information to be accessed from within a foreign state, except for cases of cross-border transfers, or during an examination of clients' declarations that there has been unauthorised use of electronic means of payment.
3. An obligation to accept payment from consumers using national payment instruments
When goods are sold (work is performed, services are supplied), the seller (service provider) is obliged to ensure that consumers may pay for the goods (work, services) by using national payment instruments or cash settlements (according to the consumer's choice). This obligation does not extend to those involved in business activity with an insignificant volume of revenues or balance sheet value of assets. The Russian government sets the threshold amount of such revenues or asset value.
From 1 January 2015, provision is made for a failure to perform this obligation to entail administrative liability (fines for officers of companies ranging from RUB 15,000 to RUB 30,000 and for legal entities ranging between RUB 30,000 to RUB 50,000.
When payment is made through a transfer of funds without a bank account being opened, the consumer is regarded as having fulfilled its obligations to the seller as soon as the consumer deposits the funds with a credit institution or bank payment agent. When payment is made by way of a transfer of funds in the context of non-cash settlements being applied, this occurs as soon as the credit institution serving the consumer confirms that the order to transfer funds has been executed.
4. Right of credit institutions to terminate a bank account (deposit) agreement with non-resident individuals
In view of the need to regulate the situation around the American Foreign Account Tax Compliance Act (FATCA), Federal Law No. 395-1 "On banks and banking activity" has been supplemented with a right of credit institutions to refuse to enter into a bank account (deposit) agreement, as well as to terminate a bank account (deposit) agreement with an individual who is a citizen of a foreign state or with a foreign legal entity legislation of the country of which requires Russian credit institutions to enter into a special agreement for the purposes of exercising control over the presence of accounts opened by taxpayers of the relevant state within the Russian Federation, and exercising control over transactions involving such accounts. Credit institutions assumed the right in question on 5 May 2014, the date when the corresponding amendments were published.
5. Requirements with regard to the use of depersonalised (anonymised) electronic means of payment
From 16 May 2014, the opportunity has been introduced to implement a simplified identification procedure for clients who are individuals in a range of cases established by the law. A simplified identification procedure means establishing in relation to an individual his/her identity and passport details, not only by way of inspecting the originals of those documents or duly certified copies of them, but also by using information from the information systems of state authorities and funds, as well as by using an encrypted and certified digital signature or a basic digital signature (if the individual's identity has been established in person).
As before, it is not required that an individual's identity be established if the amount transferred is RUB 15,000 or less. However, if, for example, the recipient of the transferred funds is an individual, a non-profit organisation or a company incorporated outside the Russian Federation, or if the credit institution's or bank payment agent's employees become suspicious that the transaction is being carried out for the purpose of legalising (laundering) proceeds of crime or financing terrorism, there is a requirement to identify in any event.
When implementing the simplified identification procedure, a depersonalised electronic payment method may be used as long as the balance of electronic funds at any time are RUB 60,000 or less, and the total amount of electronic funds transferred using such a depersonalised electronic payment method within a calendar month is RUB 200,000 or less.
If an identification procedure is not carried out, the requirement remains for the balance of electronic funds at any time to be RUB 15,000 or less, provided that the amount of funds transferred within a calendar month is RUB 40,000 or less.
A client who is an individual must have undergone a simplified identification procedure for such client to be able to use a depersonalised electronic payment method in order to make an electronic transfer of funds to another individual or to receive electronic funds transferred by another individual.
The law has expanded the list of persons to whom credit institutions may entrust carrying out the identification of clients based on a contract (including payment system rules) This obligation may now be delegated to another credit institution, a federal postal communications company, a bank payment agent, a telecommunications operator and a certifying centre.
6. The procedure for making electronic transfers of funds has been clarified
From 1 August 2014, provision is made on a legislative basis for prepaid cards to be used. A transfer of funds using a prepaid card is to take place within a maximum of three business days after the operator of electronic funds receives the client's instruction, unless a contract or payment system rules stipulate a shorter time frame.
The balance of the funds of a client who is an individual and who is using a depersonalised electronic payment method may, according to such client's instruction, be transferred to a bank account in favour of legal entities or individual entrepreneurs, or to such individual client's own bank account: if the client in question has undergone a simplified identification procedure. The balance of the funds may also be used to pay the client’s liabilities to the credit institution or may be issued to the client in cash if he/she is using a prepaid card; provided that the overall amount of cash funds issued is a maximum of RUB 5,000 during a single calendar day and RUB 40,000 within a single calendar month.
It is permitted to use a depersonalised electronic payment method if the balance of funds at any time is RUB 600,000 or less or an amount in foreign currency equivalent to RUB 600,000 according to the official exchange rate of the Russian Central Bank (such amount is currently RUB 100,000).
Help from your adviser
Pepeliaev Group's experts are ready to provide comprehensive assistance on matters arising in relation to the need to bring the activity of financial institutions and other companies as well as their internal documents into line with the new requirements of the law. They will also advise on other relevant matters resulting from current legislation being amended.
For further information, please contact:
in Moscow – Igor Marmalidi, Partner, at (495) 967-0007 or by i.marmalidi@pgplaw.ru;
Lidia Gorshkova, Head of Banking and Finance Practice, at (495) 967-00-07 or by l.gorshkova@pgplaw.ru;
Vladislav Korablin, Associate, at (495) 967-00-07 or by v.korablin@pgplaw.ru;
in St.-Petersburg Sergey Spasennov, Partner of Pepeliaev Group at (812) 640-60-10, or by e-mail;
in Krasnoyarsk Egor Lysenko, Head of Siberian office at (391) 277-73-00, or by e-mail