Scandalous exclusive

Cooperation between Russian Standard and American Express has again given rise to conflict

Russian Standard's exclusive rights to work with American Express cards still haunt the retail banking giant's competitors. But if earlier the dispute was about the right to issue AmEx cards, now the scandal is flaring up over the issue of acquiring cards, their acceptance in trade and service enterprises. Having received the right to exclusive acquiring of AmEx cards from June 1 of this year, Russian Standard began to renew agreements with those banks and processing companies that installed and serviced terminals for accepting cards. The terms of the partnership did not suit everyone: from Monday, the largest Russian acquirer, United Card Service (UCS), will stop servicing AmEx cards. Russian Standard promises to install its own receiving terminals to replace those owned by UCS within a few weeks. According to UCS, the bank will have to replace 21 thousand terminals. But representatives of American Express are confident that the current situation will not harm its business in Russia.

UCS CEO Vladimir Komlev said yesterday that from August 7 the company will stop authorizing American Express cards. According to him, for two weeks the company conducted difficult negotiations with Russian Standard about continuing to service the cards, which were not successful. “The temporary and economic conditions proposed by Russian Standard turned out to be unacceptable,” Vladimir Komlev said at a press conference yesterday. In his opinion, further activities would be aimed at developing the business of Russian Standard to the detriment of the financial interests of UCS. The bank made more favorable offers to our clients (trade and service enterprises), subject to a complete transition to it for servicing all transactions with plastic cards, Mr. Komlev said. Having learned about this, UCS sent the bank its version of a partnership scheme for acquiring AmEx cards, but they were not supported, and the conditions set during the negotiations “became increasingly tougher.” "I think this was the last round of negotiations between us," Mr. Komlev said, adding that if the lender could come up with an acceptable plan to work together, "UCS would be willing to come back to the table."

Today, UCS organizes card acceptance in 40 thousand trade and service enterprises, of which 21 thousand accept American Express. The acquiring turnover of American Express in the UCS network last year amounted to approximately 320-330 million dollars, which is at least 50% of the total acquiring turnover of American Express in Russia.

“Russian Standard” has done a lot of work with UCS, counting on continued cooperation,” the bank’s press service commented on the situation yesterday. -- The decision made by UCS is not in the best interests of both American Express cardholders and merchant customers. We believe that the right to decide how to pay for their purchases belongs to the customer. "Any restrictions on selection will be an inconvenience to merchants and their customers, American Express cardholders."

Since problems with renegotiating contracts did not arise with all banks, Russian Standard and American Express are not inclined to panic. “UCS is just one of many processing companies that are engaged in acquiring in the Russian market,” said Thomas Sclafani, director of public relations for the European division of American Express. -- Russian Standard has already concluded several acquiring agreements with several Russian banks. It is also working hard to replace UCS terminals with its own terminals in order to minimize any possible inconvenience for cardholders. American Express does not see any indication in this situation that it could interfere with the operation of our business in Russia in the long term."

“American Express was aware of the progress of the negotiations and even intervened in them, trying to bring the parties closer together. But since AmEx transferred exclusive rights to Russian Standard, it was difficult for it to exert significant influence,” noted the UCS CEO. In his opinion, UCS will not suffer significant losses from the termination of servicing AmEx cards - they account for only 10% of total revenues.

Russian Standard is the holder of the exclusive right to acquire AmEx cards, but, as far as we can judge, it is interested in negotiating cooperation with banks that previously acquired these cards. The bank proves this in practice. Representatives of Russian Standard came to us, and we had no problems with them,” confirms Arkady Komyaginsky, senior vice president of Svyaz-Bank (also acquiring AmEx cards). There are quite a few banks that continue to service AmEx cards without showing dissatisfaction, at least publicly. “Today the processing of transactions on these cards is carried out by Impexbank, MDM Bank, Raiffeisenbank, Petrocommerce, Bank St. Petersburg and other financial institutions,” the press service of Russian Standard reported. Key retail chains of the country, in particular Euroset, Ramstore, Perekrestok, Azbuka Vkusa, Apteka 36.6, Tekhnosila, M-Video, Ile de Beaute, Shell gas stations " and "Tatneft" continue to accept American Express cards for payment. True, according to Mr. Komlev, if Russian Standard alone wants to increase the number of AmEx card acceptance points to the levels of Visa or MasterCard, it will need tens of millions of dollars and several years.

Nikolay KOCHELYAGIN