Glass, tin, electronic – Newspaper Kommersant No. 18 (7463) dated 02/01/2023

Retail, in the event that the Bank of Russia introduces the digital ruble into circulation, will become the main and relatively large, in the amount of tens of billions of rubles, the beneficiary of this process. However, banks that lose comparable amounts from this step have the possibility of an aggressive strategy that covers their lost profits, experts from Yakov and Partners believe. Of the three options for the “digitization” of cash payments, the digital ruble is considered the most promising in the long term, although the SBP and tokenized cards will retain their positions in the market in the medium term – the share of non-cash payments in Russian turnover grew in 2022, despite the withdrawal of payment systems and Western companies from the Russian Federation.

Yakov & Partners review “Is the future of payment systems determined?” evaluates possible short-term profits and losses, as well as scenarios of changes in the markets associated with the Central Bank Digital Currency (CBDC) project of the Bank of Russia – the digital ruble, now implemented in the pilot projects of the Central Bank. Although the prospects for the Central Bank of Central Banks in Russia have not been formally defined, the experts of Yakov and Partners consider the project to be implemented by the Bank of Russia with a high probability rather quickly, especially in the light of recent changes in the markets – the withdrawal of Visa and Mastercard payment systems from the Russian Federation, the closure of payment systems such as ApplePay and GooglePay , the successful development of the fast payment system (FPS) and the NSPK Mir payment system, and the continued rapid development of online trading.

Russia, according to experts, is “one of the most developed payment markets in the world”, and in 2022, despite the sanctions, the explosive growth of non-cash payments continued – up to 78% of such payments in circulation from 74% in 2021. The Russian Federation is a jurisdiction with three components of the payment infrastructure, which is typical for 11% of the 75 countries studied by experts (its own system of instant payments, the Central Bank of Central Bank project in the pilot and its own card system, 35% of countries have only two components). The explosion in popularity of “smartphone payments” in Russia since the mid-2010s is underestimated: in 2019, 90% of POS terminals in the country supported this technology (in 2018 Russia was the world leader in contactless payments), the world will reach the same level on average by 2025 year.

Payment by QR codes in the Russian Federation is also seen as a big opportunity, but the digital ruble, according to Yakov and Partners, is close to the reality of the future, and this will change the outlook once again.

The Central Bank of Central Banks is unlikely to take the bulk of retail payments, experts say, but it will be actively promoted by the Central Bank and will find its niche – which will certainly reduce the profitability of banks and, to a certain extent, consumer income, reducing cashback programs that have triumphantly spread in recent years in the Russian Federation. Estimated by Yakov and Partners of bank losses in this scenario is up to 50 billion rubles. per year 3-5 years after the launch of the Central Central Bank. Retailers will be the main beneficiary of the changes – their gain should be about 80 billion rubles. per year on a horizon of 5–7 years with significantly lower investments.

“Yakov and Partners” in this regard suggests the scenario of creating partnerships between banks and retailers. However, the real scenario may be more complicated. Experts suggest that the “protection” scenario for banks can stretch their losses over time, while an “attack” (especially implemented by an aggressively limited number of banks) with the active promotion of products based on the digital ruble allows you to get a “disproportionately high income”: delaying the adoption of the Central Central Bank banks can be collective and efficient, but aggression in this market due to the rapid expansion of the fee base looks extremely attractive (which is possible even now on the basis of the SBP). “Potential losses are easily compensated, for example, exclusively at the expense of commissions on transactions with real estate and vehicles using the functionality of smart contracts of the digital ruble. Moreover, the new digital currency can play an important role in corporate settlements, where payment volumes are disproportionately higher,” says Ilya Ivaninsky, co-author of the report. Retail wins in any case: for it, payment progress means a reduction in the cost of acquiring from 0.5-3% for cards to 0.4-0.7% in the SBP and the digital ruble project. The consumer, on the other hand, will lose significantly in cashback programs – in essence, now this is his share in the inflated acquiring rates.

Dmitry Butrin