Plastic Cards: peculiarity of using in Kazakhstani and foreign practice

     Despite the obvious benefits of chip cards has so far been limited. The reason is simple - this card is much more expensive than a card with a magnetic strip. Only in recent years, when the damage from the fraud and card in international payment systems has become alarmingly high and rising, it was decided that a gradual transition to chip cards.

     Not all chip cards, strictly speaking, are the chips that have a microprocessor. Experts divided them into two categories: memory cards and microprocessor cards properly. Memory cards come in one time (write once / read many), and allowing multiple overwrites. At the same time greatly exceeds the amount of memory cards with a magnetic strip and also allows you to better protect recorded information. In most cases bank card programs, including a Kazakhstan based on smart cards, used it "protected memory" as giving the best price / security.

     In principle, other possibilities open up the real microprocessor cards, because they have their own internal logic and, in fact, is a microcomputer.

     In 1981 Dzh.Dreksler was invented by an optical card. Writing and reading of information from the card is a special apparatus using a laser. The main advantage of such cards - the ability to store large amounts of information. Such cards are already used for pocket "medical history", but in banking technologies and distribution have not yet received due to the high cost of both the cards and reading equipment.

     3. On a common purpose:

     - The identification;

     - Information;

     - For financial transactions (accounts).

     In principle, this distinction is not mutually exclusive. For example, a large company may issue to each of its employee card that:

     1) a pass authorizing (limiting) passage to certain areas of the enterprise (identifies function);

     2) on the same map can be written in a coded form of a "case history", or any other important information about the card holder (information function);

     3) In addition, this card can be used also for calculations in the dining and shops of this company (design feature).

     System using multi-function cards really exist abroad, and it is clear that the trend of combining many functions into a single plastic card are very promising, since such a versatile and easy-to card issuer and the holder.

     4. For issuers:

     - Bank (universal) cards issued by banks and financial companies;

     - Private (private) cards issued by commercial companies for settlements in trade and service network of the company.

     It may seem that the companies in order to increase the volume and variety of transactions with their cards should strive to make them more universal, uniting in emissions from other companies, and even better with banks. This is only partially true. A significant portion of cards issued and will be issued by companies themselves.

     5. Banking and other cards used for the calculations:

     - Stand-alone "electronic purse";

     - "Electronic purse" with duplicate accounts with the issuer;

     - "Key to account" - a means of identifying the owner of the account maintained by the issuer.

     The vast majority of bank cards are the identifier, not a purse. These are all the cards "VISA", "Eurocard / MasterCard", "American Express", Kazakhstann "Union Card" and "STB Maps."

     It should be noted that magnetic stripe cards are seldom used as a "purse", as the magnetic stripe does not provide an acceptable level of protection for the issuer's written on her information. Generally as "electronic wallets" are applied to the chip card.

     From this perspective, the term "plastic money" is not quite correct in relation to the majority of magnetic cards used by customers.

     6. By category of clientele targeted by the issuer (in international payment systems, it is kinds of cards or food):

     - Normal card;

     - Silver card;

     - Gold Card;

     - An electronic card.

     For simplicity and brevity, we can say that the usual card is designed for the average customer. This "Classic Visa" and "Mass (Standard) Eurocard / MasterCard".

     Silver Card is a business card (Business Card) and is not intended for individuals and for employees of organizations (companies) authorized to spend in certain funds within the company.

     Gold Card is designed for the most affluent, wealthy clients.

     In addition, Visa and European systems have cards that can only be used at ATMs for cash withdrawals and electronic terminals: "Electron Visa", "Cirrus / Maestro". They operate within the balance in the account for them, as a rule, the credit card holder is not available, so they can be granted to any customer, regardless of its level of security or credit history. 

     Table 1 - Banks - participants of the system "MasterCard - Europay" 

Area	Number of banks
Canada      Europe      Latin America      Middle East / Africa      Asia / Oceania	626      7691      339      96      314
TOTAL:	21 747

 
 

     7. In Kazakhstan there was a separation of corporate and personal cards, and sometimes even produce "salary" cards: the issuer enters into a contract with the organization, and holders of cards is its employees as individuals.

     Externally, this classification was adopted in similar international systems, but in reality it is based on the legal status of a client with whom the issuer enters into a contract on the issue and service cards. Their difference is confirmed in practice. Very often in the Kazakhstan standard card is issued as an enterprise, and, conversely, there are cases when the business card given individuals who believed that they were on the status of "put silver card."

     In the international classification is still more important set of services that is provided in a package with a particular card. For example, the monthly limit of not less than $ 5,000 for a gold card or issue a new card to replace the lost within 24 hours anywhere in the world, or insurance against loss of business documents and delay transport.

     In the cards with bar code as an identifying element of the bar code is used, a similar code applicable to labeling.

     Cards with magnetic stripes are by far the most common - are in circulation for over two billion cards of this type. However, this type of card is vulnerable to fraud with respect. In the United States in 1992, the total damage from the fraud with credit cards with a magnetic strip (without loss of ATM) has exceeded one billion dollars. However, the existing infrastructure using their payment systems and the lack of world leaders to "card" business - companies VISA and Europay – full sized standard for more than a perspective view of cards - smart cards - are the cause of the intensive use of cards with magnetic stripe today.

     In smart cards, the information carrier is already a chip. In the simplest of the existing smart cards - Memory Card - Memory can have a value ranging from 32 bytes to 16 kilobytes.

     Card with a microprocessor are essentially microcomputers and contain all the relevant key hardware components.

     Supersmart card. An example is the multi-purpose card company Toshiba, used in the system VISA. In addition to all the usual features of microprocessor cards, this card also has a small display and keypad for data entry. This card combines credit, debit and prepaid cards, as well as serves as a clock, calendar, calculator, currency conversion exercises, can serve as a notebook, etc. Because of the high cost supersmart card are not widespread now, but their use is likely to grow.

     In 1981, J. Drexler was invented by an optical card. Optical memory cards have a higher capacity than the memory card, but the data on them can be written only once. In these maps using WORM-technology (write once - read many). Writing and reading information from a map by a special apparatus with a laser (hence the other name - laser card). The technology used in the charts, similar to that used in laser discs. The main advantage of such cards - the ability to store large amounts of information. Such cards in the spread of banking technologies have not yet received due to the high cost of both the cards and reading equipment. 

     II.  Analysis of actions with plastic cards 

     Economic development of any country today is impossible without a highly efficient system of money and the use of modern payment mechanisms. Practice shows that the everyday problems of funding, lending to the economy, budget, and the problem long term, can successfully solve the rapid development of various forms of cashless payments.

     Billing mechanism - the structure of the economy, which mediates the metabolism of the economic system. Payment methods can be divided into cash and noncash. Cashless payments are gradually replacing the cash payments in the monetary systems of different countries. The main share of non-cash settlement accounts for commercial banks. To them belongs to the most important settlement and the payoff function in the payment system of the state.

     The close relationship bank accounts and bank deposits Treatment involves consider the essence of bank accounts, primarily through the determination of their place in the clearing system.

     Calculations carried out by a commercial bank can be defined from different points of view: firstly, in terms of the settlement technique, and secondly, depending on the particular organization of settlements and, thirdly, the economic essence of banking.

     Clearing system is a set of principles of organization of settlements, their requirements, forms and methods of calculation. "This definition describes not only the system of cashless payments, and payment systems created by the bank for their conduct.

     In economic science has developed an ambiguous understanding of the principles of non-cash payments. Traditionally, these principles are as follows: making all payments by enterprises and organizations through the establishment of banks, payments are made, usually after the shipment of goods, services, works, or maturity of financial, credit and other financial obligations, the payments are made ​​if funds are available for the payer's account or credit it to the right, there is agreement of the payer to withdraw funds from his account. [4.]

     Entrenched principles of non-cash payments are divided into general economic principles and specific. To general economic principles of efficiency and differentiation attributed cashless payments. Specific guidelines are divided into two groups. The first group makes the organizational aspects of the calculations. The second group, revealing the economic basis of payment transactions, "includes such principles as the target character, maturity, security of payment." This definition reflects the closeness of the principles of cashless payments and lending.

     Its position on the principles of non-cash payments made ​​by the participants of the International Conference on Banking in Kazakhstan. The recommendations of the conference pointed out that the fundamental principles of the calculations is the equality of all payments made ​​by them with the consent of taxpayers.

     In spite of the in homogeneity to define the principles of non-cash payments include the following, the most common in the works of local economists:

• obligatory deposit of funds in credit institutions;
• the principle of consent of the payer to withdraw funds;
• the principle of payments within its own funds and credit;
• principle of optimum speed of non-cash payments;
• the principle of periodic payment order;
• principle of cost-effectiveness of doing non-cash transactions.

     The principle of cost-effectiveness of doing cashless payment cuts across all other principles of non-cash payments. And this is natural: the principle, as well as other principles, based on the categories of time and every time gains can not be overestimated.

     Clearing system is created and not regulated by the Central Bank and commercial organizations: international payments - the governing bodies of the respective settlement systems (e.i., SWIFT), payments by plastic cards - bodies of payment systems, settlement of stock market participants - regulators of this market. In addition, they have quite a significant technological features. [4.]

     These components are now available in almost any country in the world, except in the most underdeveloped. So have we. It must be borne in mind that each component is usually not a single thing, and consists of a set of interacting entities, technological systems, rules, protocols, etc. Typically, an exception to this is the system of the Central Bank, but we have it yet united only in terms of affiliation: CBR is a legal entity and all its institutions are units of the entity. In CBR systems are one of the only rules that payments approved by the departmental instructions. Same technology, procedures and hardware and software systems, according to many members of the Central Bank, even now are a pretty motley "zoo."

     The essence of non-cash payments and payment systems based on plastic cards lies in the definition of money and its functions. From an economic point of view of the nature of cash and cash is the same. Creating a bank payment systems based on plastic cards do not give them the opportunity to receive the share premium, it remains the prerogative of the state.

     A credit institution shall have the right to issue bank cards the following types: bank cards, credit cards and prepaid cards. Payment card designed to make operations of the holder within the established credit institution - the issuer the amount of money (spending limit), settled by cash at the expense of the customer. Located on its bank account or credit extended by a credit institution - the issuer pursuant to the customer's bank account funds (overdraft). [5.]

     A credit card is intended to carry out its holder transactions settled by the expense of funds provided by the credit institution - issuer client within the limit set in accordance with the terms of the loan agreement.

     1. Prepaid card is designed to carry its holder transactions settled by the credit institution - the issuer in its own name, and satisfies the requirements of the right holder of a prepaid card to a credit institution - the issuer for payment of goods or issuance of cash.

     2. A credit institution shall issue payment cards and credit cards to individuals, legal persons and individual entrepreneurs, Prepaid Card for individuals.

     3. A credit institution may undertake in the territory of the Kazakhstan, the issuance of bank cards issued by other credit institutions - issuers and issuers of payment cards - whether foreign companies that are not foreign banks.

     4. Specific conditions for the grant of funds for settlement of transactions committed through the use of payment cards, credit cards, the order of return offered by cash and accrual and payment of interest on such funds may be determined in agreement with the customer.

     5. On the territory of the Kazakhstan carried out calculations of credit institutions with organizations on trade operations carried out with the use of payment cards, and give out cash cardholders who are not clients of these credit institutions.

     6. A credit institution shall have the right at the same time to issue bank cards, acquiring of payment cards, as well as the distribution of payment cards.

     7. Internal regulations approved by the governing body of a credit institution authorized by its charter, and shall be binding on all employees of the credit institution.

     8. In making the client - individual transactions using prepaid card bank account agreement with an individual is not.

     9. When performing operations with payment card credit institution must identify the holder.

     To consider directly the existence of legal characteristics of non-cash payments based on plastic cards need to understand the nature of legal relations arising from the implementation of the settlement, payment and other transactions. It is important to determine the extent of the rights and obligations assumed by their subjects, the limits of liability as well as features of an object.

     In the broadest sense, the object of any relationship is understood that, about which actors come into relationship, ie, something about which they have become carriers of reciprocal rights and duties. By the law of the “Monetary system settlements between legal entities, as well as calculations involving citizens connected with their business activities carried out on a cashless basis "(paragraph 1 of Art. 861 Civil Code).

     The object of legal settlement is money to be paid for work performed, products delivered, services rendered.

     By itself, a way of cashless payments based on plastic cards as not to create new means of payment - "non-cash", which should be included in the concept of object relations calculated. [6.]

     The development of technology has resulted in new terms – “e-money " and " electronic payments ". Related to this next evolutionary step of monetary circulation, and the object of such calculations are still the same non-cash money." Electronic money "is a subspecies of non-cash and have all the characteristics inherent in non-cash money. Signs of the cost, as reflected in the electronic media, are directly dependent not only on the special subject - the bank, but on the whole system for their traffic, including the technical means for receiving, processing and storage of information (computers, databases, data, special software to support payment transactions, links and such means of payment and settlement operations, such as ATMs, POS terminals and plastic cards.) emergence of digital media value generated new legal problems with the continued economic nature of newly minted money. These issues lie at the area of money laundering of the shadow economy and human rights. There is a special intergovernmental commission on financial transactions (Financial Action Task Force, FATF) of the representatives of 26 countries in exploring the use of electronic money to launder illicit proceeds. She wants to make sure that you create a system of electronic money will banks to identify suspicious transactions and report them.

     In contrast to the banking regulations that reinforce the mandatory nature of relations in the implementation of cashless payments, HA has expanded the possibility of the parties to establish the rights and responsibilities at its discretion.

     The legislation does not set specific rules for the establishment, operation, management, determination of liability in the payment systems. All relationships in the payment systems are contractual in nature. Definitely one the right space, developed in this area will be solved. [7.]