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« A channel challenge | Main | Innovate and innovation »

Russian regulation

By Dave Birch posted Nov 13 2010 at 5:54 AM

[Dave Birch] As many people have noted, the Russia e-payments landscape is really

According to Victor Dostov

There are 25 million active "e-purses" (web wallets containing pre-paid value) and the market is growing at 20%.

The market is now going to be shaped by regulation. It's a difficult problem for regulators, to take a rapidly growing market and add prudent regulation without disrupting

The government has approved a bill to regulate e-payments, a market that is growing at 40% per annum.

Viktor Dostov, the chairman of the Russian E-Money Association, says that the bill is a reasonable compromise, requiring operators such as WebMoney and Yandex.Dengi to obtain a Central Bank licence for "non-banking credit organisations". The law requires such organisations to have a minimum equity of 18m roubles ($600,000), which may be a little high for innovative startups.

It is very tempting for regulators to demand rigorous identification Here's an example. The current "Draft law on the National Payment System" has the concept of "proportionate identification" which is important.. The law also contains a sensible balance on KYC, so no identification is needed for payment accounts with a maximum balance of 15,000 roubles.

Under current framework, there is no equivalent of the European "Payment Institution" or "Electronic Money Institution". One of the key aspects of European regulation is that it has allowed non-banks to bring innovation to the sector

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Yota, Russia's leading 4G networks operator (offering WiMax, battling for LTE frequencies and thinking about brand-name handset), launched a partnership with Mobi. Dengi (a mobile money transfer scheme working closely with Beeline, a Russian MNO) and Tavrichesky Bank - to allow its subscribers to use the money they have topped up to their prepaid account - to pay for other services like utility bills, TV, mobile top-up.

[From Retail Banking in Russia: Innovation Unfolded: Each decent Internet service provider strives to create its own payments wallet]

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Here's a typical transaction chain: a Russian customer transfers money from their bank account to their Yandex Dengi web wallet. From there, they send money to the "number broker" who sells them the scratchcard number for iTunes and XBox Live (the number broker has bought iTunes and XBox Live scratch cards in the US and scratched them to obtain the numbers).

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

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