A Bankcard with Be­laru­sian Zest

Economy of Belarus - - FRONT PAGE -

The re­cent “card sanc­tions” of in­ter­na­tional card pay­ment sys­tems against Rus­sia made many Be­laru­sians re­con­sider their views on the de­ci­sion of the Be­laru­sian govern­ment to set up the coun­try’s own card pay­ment sys­tem 20 years ago. To­day BELKART is not only a safe­guard against sim­i­lar trou­bles but also is one of the most suc­cess­fully op­er­ated lo­cal pay­ment sys­tems in the CIS and a leading card pro­cess­ing sys­tem in Be­larus. BELKART ser­vices 45% (or 5.4 mil­lion) of all pay­ment cards is­sued in Be­larus. The be­gin­ning of the year was marked by a num­ber of in­no­va­tion projects and also the ad­vance­ment to the in­ter­na­tional mar­ket. BELKART Di­rec­tor Alexan­der SOTNIKOV tells the Econ­omy of Be­larus Mag­a­zine about his thoughts re­gard­ing the cre­ation of the Rus­sian na­tional card pay­ment sys­tem, the way the Be­laru­sian sys­tem is go­ing to grow and what ev­ery­one should take with them when go­ing on va­ca­tion abroad.

On In­ter­na­tional Busi­ness

Mr Sotnikov, how can a state ben­e­fit from hav­ing its own pay­ment sys­tem?

The main ad­van­tage is hav­ing con­trol over the sys­tem within the coun­try. There is no di­rect de­pen­dency on pay­ment sys­tems of other coun­tries. The cur­rent sit­u­a­tion in Rus­sia proves that Be­larus made the right choice to set up a na­tional pay­ment sys­tem.

Apart from other things, it al­lows the state and the govern­ment

to in­flu­ence busi­ness pro­cesses and to im­ple­ment nec­es­sary strate­gies through such in­stru­ments as a pay­ment sys­tem and plas­tic cards. This means that the na­tional pay­ment sys­tem can be used for de­posit­ing wages and salaries and other pay­ments such as so­cial ben­e­fits.

Be­larus has not started de­posit­ing ben­e­fits through the BELKART sys­tem yet, but as far as the wages and salaries are con­cerned, the pref­er­ence is given to our prod­ucts.

One more in­dis­putable ad­van­tage of the na­tional sys­tem is the prox­im­ity to the end user and un­der­stand­ing of the lo­cal mar­ket. For in­stance, an em­ployee of the par­tic­i­pat­ing bank can drop by to our of­fice in down­town Minsk to set­tle some is­sues. I doubt that the same can be eas­ily done at a re­gional rep­re­sen­ta­tive of­fice of an in­ter­na­tional pay­ment sys­tem.

Given the spe­cial role and sta­tus of BELKART we try to adopt the best in­ter­na­tional prac­tices and con­sider speci­ficity of the Be­laru­sian mar­ket.

When faced with the “card sanc­tions” this spring Rus­sia started se­ri­ously think­ing about cre­at­ing its own na­tional pay­ment sys­tem. Since BELKART has a long his­tory of oper­a­tion, have Rus­sian col­leagues asked you to share your ex­pe­ri­ence?

No, they haven’t done so yet, al­though we are ready to share our ex­pe­ri­ence with our col­leagues be they from Rus­sia or other coun­tries.

How­ever, in case with Rus­sia we have to un­der­stand the dif­fer­ence be­tween our people, ter­ri­to­ries, and state man­age­ment sys­tems. Be­sides, the Rus­sian bank­ing sys­tem is dras­ti­cally dif­fer­ent from the Be­laru­sian one. They have sev­eral ma­jor play­ers and each of them can claim the role of the key na­tional card pay­ment provider. In our case, the main share­hold­ers are ma­jor Be­laru­sian state-run banks. Yet, pri­vate banks func­tion per­fectly well within the BELKART sys­tem. We do not give pref­er­en­tial treat­ment to any­one.

The Rus­sian sit­u­a­tion is also ag­gra­vated by the fact that our col­leagues have not de­cided yet if they want to set up an in­de­pen­dent or an af­fil­i­ate pay­ment sys­tem. For in­stance, a pos­si­bil­ity of co­op­er­at­ing with China Union­Pay is be­ing con­sid­ered.

I be­lieve that Rus­sia has all nec­es­sary busi­ness cases, tech­no­log­i­cal po­ten­tial and po­lit­i­cal will to set up its own pay­ment sys­tem. I am a pro­po­nent of a man­age­able pay­ment sys­tem. Be­sides, draw­ing from my ex­pe­ri­ence, I can say that the vast ma­jor­ity of people do not use in­ter­na­tional trans­ac­tions in ev­ery­day life. There­fore both Rus­sia and Be­larus have all the pre­req­ui­sites to keep the do­mes­tic trans­ac­tion traf­fic in­side the coun­try.

At the same time the ex­te­rior traf­fic can be han­dled on the base of part­ner­ships with in­ter­na­tional pay­ment sys­tems.

What coun­tries can be an ex­am­ple of suc­cess­ful de­vel­op­ment of the na­tional pay­ment sys­tems and can a na­tional sys­tem grow into an in­ter­na­tional one?

A good ex­am­ple is China Union­Pay which was set up as a do­mes­tic pay­ment sys­tem of China and now is a leading is­suer of plas­tic cards in the world. How­ever, this can be at­trib­uted to nu­mer­ous Chi­nese ex­pa­tri­ates and sig­nif­i­cant eco­nomic and geopo­lit­i­cal in­ter­ests of this coun­try abroad.

As far as Rus­sia is con­cerned, I do not rule out that their sys­tem may be­come in­ter­na­tional and grow to cover at least the CIS coun­tries. Putting pol­i­tics aside, I even think that in the fu­ture it could go be­yond the post-Soviet area to Europe. It is not a se­cret that even now in­ter­na­tional pay­ment sys­tems have op­tions to choose the Rus­sian ru­ble as a trans­ac­tion cur­rency, for in­stance, in France.

By the way, pay­ment sys­tems sim­i­lar to BELKART op­er­ate in many for­mer Soviet republics such as Ar­me­nia, Ukraine, and Uzbek­istan.

On Break­ing Stereo­types

When BELKART was get­ting its sta­tus of le­gal en­tity in late 2013, a lot was said about the ne­ces­sity to break stereo­types in re­spect to na­tional cards. What

progress has been made in this area since then?

Since the be­gin­ning of 2014 we have passed sev­eral mile­stones on the pay­ment cards mar­ket thanks to BELKART. For in­stance, Be­larus­bank is­sued the first co-badg­ing card in Be­larus, namely BELKART-Mae­stro which is ac­cepted abroad and on­line. In fact, the Be­laru­sian pay­ment sys­tem has en­tered the in­ter­na­tional mar­ket. The new prod­uct is the re­sult of co­op­er­a­tion with MasterCard.

In ad­di­tion, the first pre-paid BELKART card was is­sued in part­ner­ship with Pri­or­bank. By the way it was launched on the oc­ca­sion of the 2014 IIHF Ice Hockey World Cham­pi­onship. In co­op­er­a­tion with Alfa-Bank we have launched a pre­mium rate card.

This means that since the be­gin­ning of the year we got rid of the stereo­type that BELKART is used ex­clu­sively for salary de­posits and do­mes­tic trans­ac­tions. I do not claim that we have changed the mar­ket or made a revo­lu­tion. Yet, our com­pany has its voice in the mar­ket and does not stand still. We did not co­erce any­one to do busi­ness with us! All our part­ner­ships are based on mu­tual ben­e­fits.

What are your plans for the fu­ture?

In short, we plan to pro­mote our brand re­ly­ing on tech­ni­cal in­no­va­tions and new prod­ucts.

In par­tic­u­lar, right now we are look­ing to set up loy­alty pro­grams and an­a­lyz­ing sub­mit­ted pro­pos­als. I think that if ev­ery­thing goes well we will be able to of­fer our cus­tomers some loy­alty pro­grams by the end of the year.

The is­sue of reg­u­lat­ing BELKART trans­ac­tions in the Be­laru­sian seg­ment of In­ter­net is at the same stage. We have given this op­tion to banks and they can ei­ther use it or leave it. There was no such a pos­si­bil­ity be­fore.

We also plan to launch a num­ber of new prod­ucts. In par­tic­u­lar, we be­lieve that pre-paid and pre­mium-class cards have great po­ten­tial.

Be­sides, I think that we will con­tinue de­vel­op­ing co-badg­ing projects, first of all, from the tech­ni­cal point of view. We rec­om­mend all banks to con­sider is­su­ing this type of cards with the use of touch­free tech­nolo­gies. Our agree­ment with MasterCard al­lows do­ing so.

Given the rec­om­men­da­tion of the Na­tional Bank to switch to chip cards, we are con­sid­er­ing the fea­si­bil­ity of de­vel­op­ing our own soft­ware sup­port for these cards. At the mo­ment there is only one chip card in the BELKART line us­ing the Visa sys­tem.

You have men­tioned pre­mium prod­ucts. Does that mean that BELKART Pre­mium is an ana­logue of Visa Gold in the VIP line of Be­laru­sian cards?

Per­haps, BELKART Pre­mium can be called that. In any case, this prod­uct is of a higher level as com­pared to BELKART Stan­dard.

The card has en­hanced se­cu­rity due to a holo­gram and em­bossed per­sonal iden­ti­fi­ca­tion of its holder. Its holder also en­joys zero li­a­bil­ity. This prin­ci­ple does not ap­ply to other cards in Be­larus. Al­though the Na­tional Bank rec­om­mended Be­laru­sian banks to stick to this prin­ci­ple, it is not manda­tory and many banks choose to opt out of it.

We are not ready yet to of­fer the same dis­count pro­grams as some in­ter­na­tional pay­ment sys­tems do. But this is the next stage of our de­vel­op­ment and we are work­ing on it very hard.

How likely is that we will see more pre­mium-class cards in the near fu­ture?

As I said, we see great po­ten­tial in the VIP seg­ment. We pin great hopes on the launch of new pre­mium-class cards within the cobadg­ing project with MasterCard. Sev­eral Be­laru­sian banks have al­ready launched such pay­ment

projects and we can be sure that soon BELKART Pre­mium Mae­stro will ap­pear in the mar­ket.

An op­tion to trans­fer money from one card to an­other tops the wish list of BELKART cus­tomers. How can you com­ment on this?

This op­tion is al­ready of­fered by sev­eral banks ser­viced in the Bank Pro­cess­ing Cen­ter. Other banks that have their own pro­cess­ing cen­ters are now in the process of set­ting it up. I be­lieve that by the end of the year we will have a bal­anced in­fra­struc­ture in Be­larus when ev­ery BELKART client will be able to trans­fer money from one card to an­other.

An­other hot ques­tion among BELKART hold­ers is whether we will see for­eign cur­rency cards soon?

Ac­cord­ing to BELKART rules, in­ter­bank for­eign cur­rency trans­ac­tions are not al­lowed. It is a na­tional pay­ment sys­tem and the of­fi­cial cur­rency of Be­larus is the Be­laru­sian ru­ble.

I do not see any eco­nomic or pub­lic ne­ces­sity to le­gal­ize in­ter­bank for­eign cur­rency trans­ac­tions. Hon­estly, how of­ten do we have to use for­eign cur­rency on the ter­ri­tory of Be­larus? Very rarely.

At the same time the in­fra­struc­ture of many is­su­ing banks al­lows some trans­ac­tions in for­eign cur­rency. For in­stance, you can buy for- eign cur­rency by us­ing BELKART in ex­change of­fices of the bank that is­sued the card.

By the way, our co-badg­ing card is also de­nom­i­nated in Be­laru­sian rubles, which does not cre­ate any prob­lem for us­ing it abroad. The money is con­verted au­to­mat­i­cally in line with the rules of the is­su­ing bank and the in­ter­na­tional pay­ment sys­tem.

On Se­cu­rity and Go­ing Abroad

It is not a se­cret that many people still do not trust elec­tronic pay­ment sys­tems re­gard­less the fact that their se­cu­rity is con­stantly grow­ing. What steps can a card­holder take to min­i­mize pos­si­ble risks?

As a mat­ter of fact, the per­cent­age of fraud in the over­all num­ber of trans­ac­tions within the BELKART sys­tem is close to zero. In the ma­jor­ity of cases the bank re­im­burses the stolen funds to a card­holder. It is enough to take rea­son­able pre­cau­tions such as not to use an ATM if there are some sus­pi­cious ap­pli­ances at­tached to it, not to write down the PIN ei­ther on the card or on a piece of paper and keep it with the card in your wal­let, not to share the card with other people.

How­ever, one should be more care­ful when us­ing cards abroad or on­line. Al­though the se­cu­rity of such trans­ac­tions is quite high, I would highly rec­om­mend hav­ing sep­a­rate cards for on­line bank­ing, mo­bile and SMS bank­ing. This way it will be pos­si­ble to min­i­mize losses in case of fraud. Never use credit cards to pay on­line or abroad, only debit cards!

Since ev­ery­one is in the va­ca­tion mode right now, would you rec­om­mend us­ing cards, cash or both?

Any risks can and should be di­ver­si­fied. I would not wish any­one to be left with no money in a for­eign coun­try. There­fore I would rec­om­mend play­ing safe and tak­ing both.

Prob­lems can oc­cur with cash as well as with plas­tic cards. Per­son­ally I al­ways have some part of the money saved for a trip in cash. As a rule, no more than 25-30%.

Many tourist des­ti­na­tions, es­pe­cially trop­i­cal coun­tries, do not have well-de­vel­oped card pay­ment sys­tems. That is why the prob­a­bil­ity that your card will not be ac­cepted there is very high.

I pre­fer to put the main ex­penses on my card, such as pay­ment for ac­com­mo­da­tion, plane tick­ets, car rentals and food. Note that I use sep­a­rate cards for do­mes­tic and for­eign trans­ac­tions.

On Cash and Plas­tic Cards

How many plas­tic cards do you think a per­son should have?

To en­hance se­cu­rity and man­age­abil­ity of your fi­nances I would rec­om­mend hav­ing at least four cards: a sep­a­rate card should be used within Be­larus, on­line and abroad. The fourth card should be for sav­ings.

Do you fol­low your own rec­om­men­da­tions?

When my kids ask me how many cards I have, I tell them “About 15”. But I am afraid I have more. Of course, I have all the cards that I rec­om­mend oth­ers to have. My chil­dren also use var­i­ous cards for var­i­ous pur­poses.

Cards of what pay­ment sys­tems have taken per­ma­nent res­i­dence in your wal­let?

All of them, I have all the cards is­sued in Be­larus, such as MasterCard, Visa and, of course, BELKART. There was an an­nounce­ment of the Amer­i­can Ex­press launch in Be­larus. How­ever, I do not think I will use this card as I am not so fond of shop­ping abroad.

I spend most of my money in Be­larus. I try to use the cards that have the max­i­mum se­cu­rity here, i.e. BELKART. I have never had any prob­lems de­spite com­plaints of some of our crit­ics. BELKART is ac­cepted in ev­ery store where ter­mi­nals are in­stalled and we have a 100% pen­e­tra­tion of the re­tail mar­ket.

Al­though I ad­mit that our cards are not ac­cepted in ev­ery ATM. So far 22 out of 31 Be­laru­sian banks have be­come mem­bers of the pay­ment sys­tem and their num­ber is con­stantly grow­ing. Be­sides, in­ter­na­tional pay­ment sys­tems can also face the same prob­lem, so it would be wrong to por­tray it as an ex­clu­sively BELKART’s weak point.

Mr Sotnikov, with 15 plas­tic cards in your wal­let, is there any room left for cash?

Good ques­tion. I usu­ally have about Br50,000 just in case. In fact, when you live in a cash-free world it is very dif­fi­cult to go back to us­ing cash. Now it is much eas­ier for me to make a money trans­fer than to find some pocket money on me.

Cards are ac­cepted al­most every­where in Minsk. Of course, you can­not use your card at a mar­ket­place, but I tend to plan such vis­its in ad­vance and pre­pare ac­cord­ingly. If I can­not use a card in a store I start ex­press­ing my dis­sat­is­fac­tion and de­mand a com­plaint book (smiles).

There­fore I adamantly sup­port strate­gies pro­mot­ing non-cash pay­ments among people of all ages and so­cial back­ground. There is a stereo­type that the el­derly are not able to learn how to use plas­tic cards. They are as smart as their chil­dren and grand­chil­dren; they just need to be shown how to do that!

I al­ways cite my mom’s ex­am­ple. When she learned about BELKART, which is used for de­posit­ing pen­sions pay­ing high in­ter­est on sav­ings (plus there is an SMS no­ti­fi­ca­tion ev­ery time the money is de­posited to the ac­count), my mom be­came an avid card user. She uses it every­where she can and en­joys the process, al­though there were times when she could not com­pre­hend how to buy some­thing with no cash in the wal­let.

It goes with­out say­ing that people should be ready to shift their pri­or­i­ties from cash to plas­tic cards. Yet, ev­ery­thing that has been hap­pen­ing re­cently is push­ing them in the right di­rec­tion. The mere fact that the so­ci­ety has be­come more open to non-cash pay­ments speaks vol­umes.

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