Regulation Of Payment Systems And Market Of Payment Services

According to the National Bank of the Republic of Kazakhstan, two national payment systems currently operate in the Republic of Kazakhstan (RK): Interbank Money Transfer System and Interbank Clearing System, other than local systems such as Altyn Card of National Bank of Kazakhstan JSC and local card of Citibank Kazakhstan JSC. Besides, payment cards of international payment systems such as Visa International, MasterCard Worldwide, American Express International and UnionPay International are issued in the RK. Visa and MasterCard payment systems account for more than 95% of all performed transactions and issued debit and credit cards. In any case, performance of payment or money transfer via any payment system, both local and interbank, is conducted via a bank. However, IT developments brought about various means of payment, represented by numerous payment system operators and this required legislative regulation. The former Law of the RK, "On Payments and Transfers", did not fully regulate interrelations of all subjects of the payment services market. Therefore, on 26 July 2016, the President of the RK signed the Law of the RK, "On Payments and Payment Systems", (the Law) which came into force on 10 September 2016.

Background

The Law was adopted to effectively regulate public relations arising in the sphere of payment systems operation, regulate the payment services market, as well as improve the practice for performance of payment and money transfer in the RK.

The new regulatory act puts completely new participants into the payment services market, namely, non-bank suppliers of payment services like payment organizations, payment agents and subagents.

What is the payment system?

Upon conclusion of agreement of participation in a payment system with a payment system operator, payment organizations, payment agents and subagents become participants of said system, which is defined by the Law as an aggregate of relations, securing payments and/or money transfer by cooperation of payment system operators and actual payment system participants, by applying procedures, infrastructure and rules, established by payment system operators.

It's common knowledge that any system must be governed. As you can see, a payment system is operated by an operator, a legal entity carrying out activities to secure payment system operations while performing operational and technological functions. For example, Visa Inc. corporation governs the payment system...