Regulation of non-bank payment service providers: Bank of Russia proposals

Source: Central Bank of the Russian Federation in English

The Bank of Russia has elaborated legislative amendments whereby not only banks will be entitled to render payment services, but also fintech companies, non-financial organisations, and non-bank financial institutions (insurance, brokerage and microfinance companies).

Introduction of the institution of non-bank payment service providers (NPSPs) is stipulated by the National Payment System Development Strategy in 2021–2023. This will improve the quality and accessibility of services for people, reduce the cost of services, and streamline the customer journey, in general. Businesses will be able to develop their own payment services and integrate them into customer services, thereby cutting their payment costs. Moreover, the implementation of the initiative will foster competition in the payment market.
It is planned to have two types of providers and to establish for them requirements for market access, activities, and also for supervision and oversight by the Bank of Russia. Such regulation will ensure level playing field for NPSPs and other payment market participants, and also help avoid the regulatory arbitrage.
NPSPs of the first type will only initiate funds transfers at the instructions of customers. Their net assets must be no less than 5 million rubles. In addition to initiation, NPSPs of the second type will be entitled to actually effect payments and open electronic wallets. Their net assets must be no less than 50 million rubles.
Also, requirements will be set for the business reputation of officials and founders (participants) of NPSPs and information protection, as well as for risk management and AML/CFT arrangements.
The initiatives concerning the regulation of NPSP activities will be discussed with market stakeholders.
Preview photo: KanawatTH / Shutterstock / Fotodom