The payment system in Kazakhstan

The main share of payments through bank electronic terminals and systems remote access occurred in the city of Almaty (37.4 % and 40.2 % of the amount) and in Astana (11.3 % and 11.5 % respectively). At the same time, the proportion of removal operations for cash money using payment cards in the city of Almaty (17.8 % and 20.9 % of the number of and amount of removal operations for cash money) and Astana (9.5 % and 9.9 %, respectively) is lower than the corresponding share of the structure in the cashless payment, that also shows the greater financial literacy of the inhabitants of these cities.

Figure No. 4 The cashless payment system in Kazakhstan in 2013

Source: compiled by the author by “National Bank of Kazakhstan: number of cashless payment system, using payment cards have increased in 2013, to 31%. [online], [cit. 2015-02-03]. Available from WWW: <// www.Profit.kz, on 19 February 2014>”.

As at 1 January 2014, remote banking services by means of the electronic terminal services and remote access systems provide 27 second-tier banks and KazPost from the specified number of the 24 bank and in KazPost represent, including, services with payment cards, and 13 banks - without their use.³¹

In the past year alone, the number of banks, providing electronic banking services without the use of payment cards has increased by three. The regulator explains that the small banks to focus on the installation instant payment terminal. However, according to the National Bank, in the near future, is not expected to be a significant increase in the number of banks the terminal owners instant payment, since this market segment, given the competition, there still remains for banks unattractive.³²

Figure No. 5 The structure transactions using cash-in Kazakhstan in 2013

Source: compiled by the author by “National Bank of Kazakhstan: number of cashless payment system, using payment cards have increased in 2013, to 31%. [online], [cit. 2015-02-03]. Available from WWW: <// www.Profit.kz, on 19 February 2014>”.

On the whole the number of POS terminals increased by 46.8 %, reaching the mark of 40117 units. Also there was a significant increased (58 %) of number of trade points with POS-terminals and amounts up to 33709 units. However, in spite of such a turbulent growth the number of POS-terminals remains low. In the year 2013 during 24 hour about two transactions per one POS-terminal were made.

In regional cross-sectional distribution network of the implementation of the electronic banking services in practically has not changed. Change in the ratio of the basic indicators infrastructure in the vast number of regions does not exceed 1 %. An exception to this is the situation with the banking kiosks, the share of which in the South Kazakhstan region has increased by 6.3 %, in the Karaganda Oblast - at 4.4 %, and in the city of Almaty - at 3.7 %, which is also linked to the actions by a single bank. Still, not less than 20 % market share for the core indicators are in Almaty.

2.1.2 Internet-banking system

Currently, 12 second-tier banks provide online payments and money transfers. Six of them provide data services only, using payment cards. In the year 2013 online payments with credit cards for cellular service usage prevailed. The major share of volume of data operations are transfers from one bank account to another (watch annexes No. 4).

2.1.3 Mobile banking

Currently, 6 second-tier banks are services on the implementation of the payments and money transfers by mobile phone. Four of them are the data bank services only with the use of cards, the other without their use.

Table No. 3

Cashless payments through mobile phone in 2013

Source: compiled by the author by “National Bank of Kazakhstan: number of cashless payment system, using payment cards have increased in 2013, to 31%. [online], [cit. 2015-02-03]. Available from WWW: <// www.Profit.kz, on 19 February 2014>”.

In the year 2013, with the use of cards or its details, as well as without their use, the number and amount of all operations carried out by mobile phone, fall for the services cellular operators (watch table No. 3).

2.2 Development rations card payment system in the Republic of Kazakhstan and the modern condition of the market payment card

One of the main indicators effective development interbank payment systems is a high rate of retention business continuity of the work of (operational) payment systems (CUW), which contributes to the timely payments on the territory of the country. According to international standards (standard TIA-942 to create data centres) this figure should be at least 90 %. The rate exceeding 99 % indicates the high efficiency system functioning.³³

As a whole, during the 2012, the value of coefficients health payment systems maintained at more than 99.9 %, which is consistent with the stated goal. The average rate for the year 2012 is operating correctly ISMT amounted to 99.989 %, the rate interbank clearing system health amounted to 99.998 % that characterizes a high efficiency in the functioning of payment systems (watch figure No. 6).

Figure No. 6 Dynamics of change factor is operating correctly in 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty,

Payment systems in the year 2012

However, in a number of countries have standards for the equipment room data centres, to evaluate the ability of the Centre to ensure that a given level of reliability. In the United States adopted the American (ANSI) standard TIA-942, supporting the recommendations for the establishment of centres data processing, and which bisects centres on the level of reliability. In fact, the TIA-942 is perceived throughout the world as a single standard for the data centre.³⁴

According to a generalized table characteristics, to a very high level of reliability data centre should be able to hold any work without stopping the work, engineering systems must be duplicated (for example, two uninterruptible power supplies). If this is allowed the downtime in the event of an accident is not more than 26 minutes.

For example, in the year 2012 the total middle time payment system was 19 minutes (ISMT - 19 minutes, ICS - 8 minutes), as compared with the 2012 year (ISMT - 4 hours, 25 minutes, ICS - 3 hour 14 minutes ) this figure has improved in 14 times (watch figure No. 7).

Figure No. 7 The downtime payment systems from 2010 to 2012 (minutes)

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty,

In order to achieve the highest reliability and performance payment systems in the period from 2011 to 2012 held work on upgrading systems power supply and installation of additional channel encryption between the main and redundant centres KISC.

The number of payments The average number of payments

Figure No. 8 Payment flows in the payment systems 2008 - 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

In particular, for the servers payment systems was installed the optional uninterruptible power supply with connecting it to diesel-generator of the National Bank. The specified work has allowed to lower risk of failure of power supplies twice and accordingly increasing fault tolerance in case of problems of power supplies. Also there was established connection of the additional secure optical connection between the basic and redundant centres KISC. The work has increased the level of data protection and high availability server network systems of payment between the primary and backup centres KISC.³⁵

In order to ensure the uninterrupted functioning of the payment systems and the maintenance of backup centre in a constant readiness KISC during 2012 has been translated twice of payment systems in the software-hardware complex backup centre. For example, on 26 March 2012, has been translated KISC of payment systems in the software-hardware complex backup centre. Reverse Transfer of payment systems has been carried out on 30 March 2012. Also, on 11 July 2012, on 18 July 2012, the payment system has been carried out on the stand-by servers. Payment and communication systems ISMT, interbank clearing system and system of exchange of banking messaging smoothly served on server's backup centre.

Payment Amount, in billion tenge The average payment amount, in billion. tenge

Figure No. 9 The speaker volume of payments during years 2008 - 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

As a whole via the payment system of Kazakhstan in the year 2012 was held 32.4 million transactions in the amount of 170.7 trillion KZT (or 1,144.8 billion USD). In comparison with the year 2011 the number of payments in the payment systems has increased by 2.8 %, the amount payments declined by 11.3 % (watch figure No. 9). The average for the day via the payment system of Kazakhstan in 2012, there were 131.1 thousand transactions in the amount of 693.0 billion KZT (watch figure No. 8).

With the decline of payments was due mainly to a decrease in the amount payments on operations with deposits and transfers its own funds from customers at 40.3 %, as well as payments for transactions with securities and promissory notes, released residents of the Republic of Kazakhstan, at 12.1 %.

Table No. 4

Payment volumes in cross-sectional view types of appointment payments in 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

In 2012, banks and in JSC KazPost with the presented in the table instruments of payment transactions were conducted in the number of 310307 thousand documents in the amount of 124948 billion KZT. To continue to be the most common in the territory of Kazakhstan payment tools are payment instructions and payment card. At the same time, the average amount a single payment for the year 2012 amounted to 1.0 million KZT. However, a high number of cards and low amount of the payment is characterized by the use of this tool in the balance-of-payments mainly to remove small cash (the average amount of a transaction for the year 2012 amounted to 32.7 thousand KZT).³⁶

In the year 2012, the least used payment instruments are payment requirements, assignments and receive orders (watch table No. 4). Low interest of the use of these tools what is for the total number and the amount due to their specific characteristics (watch table No. 5).

Payment system transfers payments not only for legal, but also for individuals. Currently, the market money transfer systems submitted to such international systems, such as Western Union, Faster, Gold Crown, Contact, Blitz, Unistream, Anelik RU System, World Postal Union system, Leader, MoneyGram, Coinstar Money Transfer, CiberPlаt, BS-client Open Way, IntelExpress, Orient Express, InterBаnking, postal orders.

Table No. 5

Information on payments in cross-sectional view instruments of payment for the year 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

3. Interbank payment operations in the Republic of Kazakhstan

In Kazakhstan, there are two interbank electronic payment systems:

• The ISMT

• The SRP

These two systems are the main mechanisms of funds transfer in Kazakhstan. The KISC has been operating the ISMT since 1996. Previously, the ISMT was known as System of Large Payments (SLP), and its operation was governed by the “Rules on KISC settlement in the System of Large Payments”. After the SLP became the ISMT at the end of 2000, the “Rules on money transfers in the Interbank Money Transfer System” were approved, which regulate the procedures for funds transfer by the KISC, and define the structure, organisation and operation of the system.

3.1 Interbank money-transfer system

Interbank money-transfer system (ISMT) as a whole is similar in performance to the most payment systems in real-time (RTGS), are practiced in the world. Such systems include the system SIC Switzerland (calculating payments in real-time, with assets located in the National Bank Switzerland), the system CHAPS England (system of electronic payments, in which payments are made in real-time), BOT of Ukraine, MEPS Singapore, Kyrgyz Republic Kyrgyzstan, fed join these interventions-NET Japan.³⁷

The number of users ISMT as at 01.01.2013 amounted to 50. In the year 2012 through ISMT was held 12.3 million transactions in the amount of 166.5 trillion KZT (1,116.5 billion USD), which is 5.8 times greater than GDP of Kazakhstan. The average per month through ISMT is about half the annual volume of country's GDP. For comparison in the BESP of Russia in 2011 amounted to 6920, 6 billion USD (in 4.1 times more country's GDP), in SIC Switzerland in 2011, 66,698.3 billion USD (in 6.8 times more country's GDP), in Singapore in the year 2012, 11,618 billion USD (in 3.6 times more country's GDP).

The number of payments The average number of payments

Figure No. 10 Payment flows in the ISMT 2008 to 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

Payment Amount, in billion tenge The average payment amount, in billion tenge

Figure No. 11 Payment flows in the ISMT 2008 -2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

In comparison with the year 2011 the number of payments in the ISMT has increased by 3.9 %, payment amount decreased by 11.8 % (watch figure No. 10). The average amount one payment instrument in the ISMT for the year 2012 amounted to $13.6 million KZT. In 2012, the average time used to calculate payment document in the ISMT, amounted to 13 seconds (the maximum time is 2 minutes 16 seconds), that said the high speed processing of documents. With the ISMT in the year 2012 was held 97.5 % of the total amount of cash payment in the country, and 38.0 % of the total number of that reaffirms its characteristics, as well as systematic and meaningful payment system of the country (watch figure No. 11).³⁸

Mainly through the system were payments on transactions with securities resident of Kazakhstan (43.9 % of the total payments in the ISMT), liquidity indicators reveals deposits and transfers its own funds banks and their clients (15.1 %, respectively), as well as for operations with foreign currency and precious metals (15.7 %). The payment for goods and services in the year 2012 amounted to 12.1 % of the total amount of payments (watch figure No. 12).

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

In the year 2012, the largest number of payments by interval amounts has been observed in the interval up to 3 million KZT, and the smallest is 500 thousand up to 1 billion KZT and more than 1 billion KZT. Cross-sectional view in the intervals of time and the maximum number of payments were held in time interval 15:00 to 18:00 hours (watch annexes No. 1).³⁹

In order to manage liquidity risk and systemic risk, which may have a significant impact on the stability of the financial system of the country, the National Bank and user's payment systems on a continuous basis, a monitoring and control positions users in the systems.

Also to the National Bank of Kazakhstan in order to manage liquidity risk and systemic risk on a daily basis is calculated turnover money (code) and liquidity ratio (LT) ISMT, as well as an analysis of their conformity with established values (watch figure No. 13).

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

Turnover level of liquidity in the system, (amount of money, ownership by users in the system for the implementation of the payments and transfers money) for the year 2012 amounted to 912.0 billion KZT, increased compared with 2011 year 7.9 %. When the turnover measure of liquidity is 135.3 % of insured persons receive payments that characterizes sufficient endowments users of the system liquidity for the payment (watch figure No. 14).⁴⁰

Turnover rate money (code) in the ISMT amounted to 0.74, the liquidity ratio money (LRM) - 1.48, that corresponds to the values in which the credit, liquidity and the system risks are considered to be minimal.⁴¹

Liquidity (billion tenge)

909.2890.6896.9891.7897.7921.5907.0891.9899.1899.4938.91,011

In % of avg. amount turns 158.1136.4127.3140.8130.9134.0140.1133.2138.6141.9133.4118.4

Figure 14 Dynamics of change in the ISMT liquidity users in the year 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

3.2 Interbank Clearing System

The interbank clearing system as at 01.01.2013, the number of participants was 37.

The number of payments The average of payments

Figure No. 15 Payment flows in the interbank clearing system during years 2008 - 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

Payment Amount, in billion tenge The average volume of payments, billion tenge

Figure No. 16 Payment flows in the interbank clearing system during the years 2008 - 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

In the year 2012 through the interbank clearing was held 20.1 million payment documents in the amount of 4,218.5 billion KZT (or 28.3 billion dollars). In comparison with the year 2011 the number of documents in the ICS system increased by 2.2 %, payment amount increased by 13.3 %. The average for the day through the clearing system for the year 2012 was 81.2 thousand documents in the amount of 17.1 billion KZT (watch figure No. 15).⁴²

Statistical data on this system as well as it of its vocation in the main stream retail payments in small amounts. For example, for the year 2012 through this system was processed 62.0 % of the total number of all cashless payment and 2.5 % of the total volume. Most of the payments within the clearing system (watch figure No. 16) were made for the goods, intangible assets (the proportion of the total amount of payments within the system amounted to 32.7 %) and services (proportion - 26.9 %).

Figure No. 17 The payments in the ICS in the years 2011 - 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

In 2012, the average time to calculate net position user's interbank clearing system amounted to 18 seconds (watch figure No. 17).

Figure No. 18 Dynamics of change the number and amount of payments made in the ICS in 2011 - 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

In 2012, the largest number of payments by interval amounts there is in the interval 10 thousand KZT, and the lowest - in the interval 500 thousand KZT or up to 1 million KZT. The maximum payment amount by interval amounts in the year 2012 is in the interval over 1 million KZT, and the minimum in the interval 10 thousand KZT (watch figure No. 18).

Figure No. 19 Dynamics of change the number and amount of payments made in the ICS in 2012

Source: compiled by the author by “An analytical review of electronic banking services and payment systems for the year 2012, the National bank of the Republic of Kazakhstan. Almaty, 2014”.

The ICS in order to manage liquidity risk and systemic risk is used to calculate code (factor turnover money in ICS), which indicates how many times were held payments in the system at the expense money flow obstruction causing braking action, as well as the amount of net users (watch figure No. 19).

For example, in 2012, turnover amounted to 4.9 code, whereas, in 2011, the rate was 5.1. The amount for a day labourer in the clean position users on the results clearing amounted to 3.6 billion KZT, as compared with the year 2011 increased by 18.3 %.

The percentage of the sum of net users in second reading in relation to the amount of speed users, that is the average amount of the net debit positions users, which corresponds to the amount of insured persons receive speed users in the ISMT, because the calculation of net ...