Plastic Cards: peculiarity of using in Kazakhstani and foreign practice

     Traditionally, in the form of bank card payments are divided into debit and credit.

     The question of issuing the credit card issuing bank decided on the basis of valid information about his client's credit history, i.e. of what the client's income, where and when a customer used a credit, how gently rotate it, how often took loans, etc. credit history allows the bank to evaluate the risks in issuing cards and accordingly formulate the requirement to provide the customer of any guarantees. If the client well-being - for it is no sin, he has a stable position and income, he has an account in the bank or use the services of another well-known bank - credit card is issued without additional conditions. In the opposite case, when, for example, the client knows nothing either of them listed as violations, it can either be refused a credit card or bank may require the prior introduction of the security deposit in an amount exceeding the credit limit, or you may be offered a debit card .

     Limits on credit card transactions - the value of the credit line amount and the maximum amount of purchases or withdraw cash at any given time - are set individually for each client. Size is established based on the consistency of the client, his monthly income. As for the timing of the limits, the typical monthly limit is within the monthly limit may be additionally set weekly limits. In addition, can be installed and daily limits for cash.

     The credit scheme assumes zero initial balance on the card. All transactions are recorded on the credit card holder who must pay for certain conditions. At the end of the next "business period" (usually a month), the user receives a message bank cards containing data for the period of all payments on the card, the information reported to the bank. In the event of a control date, usually after a few days after the receipt of a monthly account statement, the interest on the loan (debt) is not charged, but must necessarily pay a previously agreed minimum debt. After that, the card holder is reopening a line of credit. The credit line will be opened in the amount of the unused portion of your credit limit. The balance of the debt on which interest will accrue already, you can put out over a sufficiently long period (i.e. year).

     Cardholders deprive the bank of the planned income if pay your debt before the interest thereon. In this case, the design scheme, which involves paying the entire amount produced per month cost for a certain period. These clients are net "consumers convenience." They get all the benefits of card use, but are free from interest payments. In fact, the design scheme is a special case of a credit scheme (30 days + N) 100% - repayment of debt.

     Allocation of settlement scheme in self-explained by the more simple form of loans and interest-free period, as the perception of a mandatory and integral part of the pure credit scheme.

     Credit card fundamentally different from debit card. The use of debit cards requires prior placement of client funds in an account opened in the issuing bank.

     The essence of debit cards is that they spent on operations on the same day deducted (debited) to the customer's bank account. Depending on the specific conditions may be reduced to zero, or limit, or until a certain minimum balance in the account. Payment limit is increased by a deposit. If the transaction amount exceeds the balance of the limit, then the operation is not performed. For debit card authorization is required for each operation. But minimized the risk of unauthorized credit. [8.]

     Authorization - a decision that should get the official service area during the operation using payment cards.

     Sign conducted in the following cases: when the purchase price of the goods under the bank credit card over a one-off limit to the amount of a purchase or when the client uses when paying buying the store card. On the map does not store information on the status of the customer's account, so before you accept it as payment for goods, the seller holds the authorization. Authorization can be the voice for which the employee is directly linked to trade acquiring banks by phone and transmits the data orally or in this procedure is carried out automatically using a POS-terminal. Acquirer performs the routing of a transaction that ultimately falls to the center, authorized to authorize the transaction.

     Log in each transaction with a large number of them is inconceivable, if the seller will call. But the cash distribution operations that require authorization regardless of the amounts held by ATM. Further development of communication networks allowed to take the next step is to equip special devices - POS-terminals for the reader - and shops. It is a development of means of communication and allowed to begin to introduce debit cards.

     In fact, for debit cards do not need a special card account, as any operation directly relates to the usual account of the client, whether it is deposited, the current savings or any other. If there is no account, it opens a special card account to which funds are submitted for future spending.

     This situation is typical for Kazakhstan. So most of our banks believe in releasing of debit card. It's not entirely true. In Kazakhstan practice, not just communications networks and facilities receive cards that are a mandatory element of debit cards. As a result of the same paper technology, adapted for credit cards, our cards are purely debit. They admit the possibility of an overdraft (over-expenditure) on the account, thus giving debit card line of credit. In this case the card is usually called mixed, or prepaid. Nevertheless, in terms of the payment system, these cards are indistinguishable and are serviced by a single technology.

     To prevent unauthorized lending, banks impose a mandatory deposit insurance, which is used in case of an overdraft facility for its repayment. On the security deposit is charged by most banks interest on deposits, as deposit.

     Thus, the map of Kazakhstan companies, on the one hand, are debit, as you must have funds in the account, on the other hand - on the organizational and technological reasons may be lending a client. [8.]

     Comparing the schemes of service based on credit and debit cards, we can note their technological proximity. The differences between them lie mainly in the relationship bank and the cardholder emite6nta. At the same time credit and debit schemes do not oppose each other, as oriented to different segments of the consumer market. Credit card requires sustainable financial position. A debit card is oriented on the same sector of potential clients for which the bank does not have any specific pre-arrival information.

     The client, by presenting the card at the point of service, receives goods or services in exchange for a receipt, usually called slip. Recorded on the slip the card number, code, and coordinates of the point of service, the amount of goods (services), transaction date, and then slip signed by both the card holder and the seller. Card holder puts his signature to the statement made ​​on the slip way typographic, whose meaning lies in the fact that he is obliged to pay the said amount with the issuing bank.

     In any transaction payment made ​​with the card is held in a specific action chain.

     In the process of settlement of card transactions are often situations when the cardholder disputes the validity of the transaction and demand the return of amounts written off. The issuing bank may make a similar write-off on request. Bank-acquirer, defending the interests of the merchant, upon the request of the latter re-submit documents to the bank-issuer. This is done in those cases where return is not enough documented or need additional information.

     In a conflict situation, banks can independently resolve the dispute or resort to the arbitration association. [9.]

     After receiving notice of cancellation to the contrary, the bank-acquirer shall credit the amount into a special account balance for the disputed amounts, where it will be listed until a final decision, and the bank needs as quickly as possible to resolve the situation, since the amount in dispute is listed on its balance sheet and he bears the costs of its financing.

     Banks set target dates for the return of operations.

     The issuing bank determines the minimum time from the date of receipt of the claim from the cardholder prior to processing of accounting return Amounts to acquiring banks. At the same time great attention is paid to documentation of the return, because otherwise, the transaction can be re-presented for payment by the bank-acquirer. Bank-acquirer controls the amount of refunds, outstanding in the account waiting. Payment systems are developing standard that defines the minimum number of days from receipt of the return until the date when it shall be deducted from the account of expectations. Basically, for 90% of the disputed amounts it is 20 days, and all sums to be written off within 30 days.

     At present, at different levels and in different systems of plastic cards are occupied more than 1,000 Kazakhstan banks, more banks are considering the release of maps of the existing payment systems, or even their own.

     Some Kazakhstan banks the average magnitude of the card programs have paid off and started to make a profit after 1-1.5 years, so the assertion of experts that card projects pay for themselves in 10-15 years, is incorrect. Payback cards depends on the skill of card manager program or on national circumstances, not the size of the bank, although it is also important.

     Occurs such that the card program will not pay for themselves.

     It turns out that the volume of transactions on the number of issued and existing cards will not exceed the payroll department staff, and the income is not enough even to pay for office supplies.

     Working with bank cards require at least medium-term planning and well thought-out decisions. Once having decided to work with the cards as soon as you can "play" back without compromising the reputation of the bank, consequently, its financial condition. [10.]

     Choosing what kind of card issue, the bank understands how numerous network receiving such cards. This allows for both the client chooses a card. But now the Kazakhstan bank may face a dilemma: to issue international cards or Kazakhstan. The problem is that in many Kazakhstan cities are no points of accepting cards. If you develop a network of reception yourself, cheaper way to do this for their own cards, and more expensive and the longest - for international, because you want to join the international system. Each bank solves this problem in its own way, usually focusing on the needs of clients. The Bank's experts should be clearly understood by any card products can achieve the expected results. Will these cards "force" be given to individuals who already have deposits in our bank, or will be attracted new clientele. To attract new customers to pre-plan an advertising campaign.

     The most common level of the bank's cards issuer any payment system.

     The first stage of entry into the system, along with preliminary negotiations with its representatives is to prepare a business plan. The business plan must show that the promised performance are possible and the bank actually has a client, financial, technological and human capacities in order to solve the projected problem. Not all questions can be summarized in a business plan, but to think of options for their solutions, time and cost necessary to start the real issue cards. When choosing a system, which intends to issue cards bank, be aware that membership in international and domestic systems differ both in time and investment, and on the procedures.

     To work in the international monetary system requires general license and significant financial investment (up to several thousand dollars stew), as well as highly skilled staff with very good knowledge of foreign languages ​​or the willingness to bear the costs of preparation of such employees. [3.]

     Upon entry into the international system problem is timing, since the questions on the admission of new banks are considered once in 3-4 months, and the necessary documents should be ready in 1-2 months prior to the meeting of the Board, which will ultimately decide on the admission. The forms of agreements for several legally polished, and the procedure bureaucratized that few who dare to make, let alone insist on any changes that are beneficial for the bank. The process may take an additional few months and at the same end in undesirable results. In the case of a positive decision to release their first real cards will still be 4-6 months.

     If a bank enters into the Kazakhstan system, the agreements should be discussed with representatives of the systems. Kazakhstan payment systems are not as bureaucratic, less regulated in technology and thus more open to creative collaboration. You can come to a mutually acceptable formulations and new items issued contracts.

     Treaty of Accession of the bank in the Kazakhstan system is often a contract on the issue of the cards. Such a contract is not with the payment system and the central processing company system.

     What are the similarities in the Kazakhstan payment systems from international, so this is a clear separation of the technological part of the card business from its own financial, i.e. the organization of settlements. Organization of the calculations is the key to any payment system. Both international and Kazakhstan systems, this issue is resolved in agreement with the clearing bank. Many of its settlement bank "administered", there are payment systems that provide the opportunity to work through alternative settlement banks, which gives the issuing bank of choice, including in the calculations with the chosen settlement bank.

     Legally, the bank - a member of the system must enter into an agreement with the clearing bank on correspondent relations.[11.]

     In order to ensure the financial stability of the payment system and the timely reimbursement of payment systems, most acquirers to issuers establish security deposit, the amount of which depends mainly on the turnover of the card issuing bank. In this case just the traffic that passes through the system. Therefore, if in a particular region, such as Kazakhstan, it is possible to organize an internal clearing, i.e., settlements between Kazakhstan banks to carry out without the participation of the international system, it can seriously reduce the size of the bank deposit insurance in the region. This is one of the most pressing current problems of the Kazakhstan "card" business, since its solution would reduce the cost of card transactions.

     In the Kazakhstan payment systems for large regional banks sometimes there is an opportunity to get to the right to issue and the right, under certain conditions to become a regional clearing bank.

     The technological side of the card business (transaction processing, data exchange, authentication) provides processing company. In the Kazakhstan payment systems, this will be the central processing company system, which is a contract of indenture.

     Quite a different picture emerges when joining the international payment system: the bank itself should choose a processing company. Selecting a processing company - very crucial issue, since most of the problems of technological character arise, usually because of failures in the processing company itself or the channels of communication with her. The most important factor in choosing the processing company is its reliability, experience in the Kazakhstan market and the ability to quickly eliminate the problems as they arise. An important factor is the cost of services provided, although reliable processing - this article, for which better pay more than daily due to the client. [12.]

     With Kazakhstan banks currently operate several processing companies, both domestic and foreign service providers in various international and Kazakhstan systems. At the final stage of negotiations with the processing company is determined by the entire process chain of the future will be clear what kind of equipment and how much to take. When choosing a brand of the server, embosser, etc. You can consult a specialist processing company or technology specialists in the payment system itself.

      

3. The development of plastic cards market in the Kazakhstan

 

     Currently in the development of plastic cards are primarily interested in Kazakhstan's two largest banks: Kazkommertsbank and Halyk Bank. It is clear that in order to profitably engage in the issue of payment cards, they need a big capital and a solid work experience in banking. [12.]

     One of the first on plastic cards went public universities. Students began to receive his scholarship at a special card account in the bank. Fee for opening these accounts, as well as costs associated with the manufacture and issuance of cards have been assigned to the Ministry of Finance of the Republic of Kazakhstan. In print, on television, heard statements of broad introduction of market-based means of payment in the life of Kazakhstan. The students formed a positive attitude to this innovation to market, and in general everything was done to ensure that people have a desire to purchase these cards.

     But in any brochure or advertisement was not mentioned a very important aspect. Those cards, which (who looks, who with fear) expect university students and employees of public institutions were classified as debit. This meant that the card holder could not get a large sum of money than was available on his card account.

     Thus, holders of debit payment cards, unlike credit card holders are automatically prevented from using certain spectrum of services. In particular, they can not get credit on your card account when paying for goods and services in the store or at a gas station with credit cards, if they end funds in the account, although the content of debit card is much cheaper and does not require a certain initial amount in the account.[13.]

     One of the most important factors in the development of the payment system was the establishment of the republic in August 1996 on the basis of large-value payment systems of KISC (UPC), manufacturing, electronic payment instructions, carrying out calculations on a gross basis and having the characteristics of prospective RTGS (gross settlement system in real time).With the commissioning of CSP settlement system for government securities made ​​by the method of DVP. Currently, the government securities market adopted a single standard messages (informational messages, and all vouchers are built in accordance with SWIFT) and adopted a system of encoding issues of government securities that conform to the ISIN. [14.] 
 

     Diagram 2.

 

     Source: www.nationalbank.kz 

     Five of the most popular banks in Kazakhstan led the People's Bank of Kazakhstan. He is known 81.8% of the population, and its services are used by 61.3%. The top five leaders of Caspian Bank. Services of this bank are 7.7% of the population of Kazakhstan, and they know it 55%.

     Currently, Kazakhstan has come their local systems of payment cards. Already in place "ALTYN" and "Irtysh-card" - the People's Bank, Cirrus / Maestro - Kazkommertsbank "of Caspian Bank" - Bank Caspian, AlemCard bank "BTA." But now there is a problem with the fact that debit cards are mostly used as a means of obtaining cash. The main reason for this phenomenon can be called that charge cards are mainly issued in the so-called "payroll" for salaries and stipends. In this regard, the task of national libraries is the ability to use debit cards as payment for services trade and service enterprises.[15.]

     In this connection it should be noted project to create a national system of credit cards RK, which is currently at the stage of implementation. Today, all European countries are working with the National Total Bank system of payment cards. Agree, if a few banks provide processing system with a single treatment, range of use of their cards will be much broader. A client of a bank may use the card of the national system, coming into any store, where there is a terminal of the system, regardless of which bank the shop served.

     As of September 1, 2009 issue of payment cards actually implement the 19 banks and JSC "Kazpost". Second-tier banks issued payment cards of local systems: Altyn Card - JSC "Halyk Bank of Kazakhstan" JSC "ATF Bank"; SmartAlemCard - JSC "BTA Bank"; Caspian - JSC "Bank" Caspian ", a local card Citibank Kazakhstan - JSC" Citibank Kazakhstan "; local card Tsesna Bank - JSC" Bank Tsesna "; TemirCard - JSC" Temirbank "and KazCard - JSC" Kazpost. "In addition, the banks of Kazakhstan are manufactured and distributed by payment cards of international systems: VISA International, Europay International, American Express International, China Union Pay and Diners Club International.

     As of September 1, 2009, banks issued 6.7 million credit cards, and the number of holders of cards made ​​up - 6.3 million people. (Compared to same period of 2008 - an increase of 32.7% and 29.8% respectively). The most common payment cards, the cards of international systems, their share was 96.9% and the local cards - 3.1%. On September 1, 2008 this ratio was 96.0% and 4.0% respectively.