Russian regulatory environment and the National payment system

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE MOSCOW, JUNE 4-5, 2015

The development and implementation of Russia’s NSPC

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 2

Key stages of NSPC development

Stage 1: Until March 31, 2015 Development of national independent operational platform – via local operational payments and clearing center

Stage 2: April-December 2015  Development and launch of National payment instruments (payment cards)

Stage 3: Y2016 – 2018 Launch of new products and services of NSPC in Russia as well as promotion of Russian cards and payment instruments outside Russia

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 3

What has been achieved so far and next steps

Now Stage 1 is completed:• Russian banks have transfered Master Card

and Visa cards processing to the NSPC• Operators’ security deposits have been

paid in accordance with Article 82.5 of Federal law 161

• The NSPC’s tariff policy has been made public. However no concrete numbers are available yet;

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 4

Integration of international card operators

Next steps include:

• The integration of international card operators in co-badging* form with JCB and MasterCard (negotiations - to be completed in 2 months, according to Olga Skorobogatova of the Central Bank)

• In 2016 the Central bank will further develop international cooperation of NSPC with other foreign players

* ”Co-badging” allows payers to use both payment systems infrastructure

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 5

Consequences for foreign players and Russian consumers

• Consequences for foreign players (online and offline merchants, ISPs) will be visible starting with local cards issuance – December 2015

• If co-badge is properly done, no changes will affect merchants / consumers

• 239+ million cards are issued in Russia up to now; in 2-3 years Russians will have newly issued national cards

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 6

The new payment regulations

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 7

The new payment regulations: E-wallets and repaid cards

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 8

A bit of history:

Acting limits before May 16, 2014

Proposed limits, beg. 2014 - not approved

unidentified unidentifiedidentified in simplified

wayunidentified

Limit of 1 transaction 15.000 RUR 1.000 RUR n/d 15.000 RURNumber of transactions, daily n/d 1 n/d n/dOutstanding amount @e-wallet 15.000 RUR 5.000 RUR 60.000 RUR 15.000 RURMonthly payment volume 40.000 RUR 15.000 RUR 200.000 RUR 40.000 RURCross-border payments not allowed not allowed allowed not allowed

Final wording (from May 16, 2014)

E-commerce industry now benefits from “simplified identification”, which still needs improvement

The impact of the personal data storage law on e-commerce players and payment systems

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 9

The impact of the personal data storage law

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 10

According to Federal law 152, amended in 2014:

• Starting from Sept. 1, 2015, organizations are required to use databases located in Russia for “the collection (including collection via Internet), recording, structuring, storage, editing, extraction”

of Russian citizens’ personal data.

• Impact on e-commerce players and PSPs includes transfer of databases to Russia in case foreign datacenters are used currently

[Company logotype and/or speaker’s picture]

Let’s keep in touch!

Elena Orlovaexpert in e-paymentsex-CEO at PayU Russia

• Email: a2309@mail.ru• Phone: +7903 9618070

EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 11