Photo: Bloomberg

Issuing cards from the national payment system "Mir" will cost banks more than Visa and MasterCard. Banks are afraid that they will not recoup these costs and may pass them on to clients - cardholders of other payment systems.

Expensive chip

Currently, 31 banks are registered in the Mir payment system, including Alfa Bank, Promsvyazbank, MDM Bank, SMP Bank, Svyaz-Bank and others, which have accepted the rules and tariffs of the system. In December, seven credit institutions, including banks on the sanctions list, will issue the first Mir cards. Employees of budgetary organizations will have to receive salaries for them - this is a legal requirement.

Banks' costs for issuing Mir cards will be higher than for Visa and MasterCard cards. According to Elena Bindusova, director of the payment systems department at SMP Bank, the price difference is 35–45% in favor of foreign payment systems. Director of Issuance and Settlements at Alfa Bank Sergei Brynin says that the bank does not have many public sector clients, and demand from individuals has not yet formed, so the first batches of Mir cards will cost a little more. A top manager of a large bank says that the bank has budgeted costs for issuing Mir cards to be three times higher than for Visa and MasterCard. “The share of cards for state employees is only 1% of our total issue,” he clarified.

The cost of issuing bank cards, as in printing, directly depends on the circulation, says Vadim Ustinov, commercial director of the NovaCard card production company. Manufacturer costs differ significantly when ordering 100 thousand and 10 thousand cards. Ustinov says that banks are currently ordering trial batches of Mir cards amounting to several thousand, while requests for Visa and MasterCard can amount to tens or hundreds of thousands.

The cost of Mir cards is also affected by a chip with a larger memory capacity than Visa and MasterCard, says Alexander Petrov, director of processing at Promsvyazbank. “If you take the same number of copies, a card with a larger memory chip will cost more than a card with a smaller memory chip,” he says.

Such a chip is needed for co-badged cards, which NSPK plans to issue jointly with international payment systems in the future. With these cards, bank clients will be able to pay abroad. But the chip required for co-branded cards is already used now when issuing regular debit cards.

An official representative of NSPK told RBC that the company is trying to negotiate with card manufacturers to ensure minimum prices for all elements that make up the card. “The technological solutions being developed by NSPK with all card and chip manufacturers will ensure that the cost of a chip and other card elements for the Mir payment system will not be higher than that of international analogues,” he added.

Inflexible tariffs

Another problem for banks issuing Mir cards is the fixed interchange commission (it is paid from each card transaction by the acquiring bank to the issuing bank). Now this commission is 3–4 rubles. Its size depends on the type of card (debit, prepaid) and the type of payment (payment for housing and communal services, car rental, etc.). For Visa and MasterCard, the interchange commission is a fixed percentage of the transaction amount and also depends on the type of card (for example, it is higher for gold cards). Accordingly, the smaller the transaction amount, the lower the commission.

“We note that now the average cost of a check has decreased, so it would be more reasonable to switch to calculation based on percentage,” says Elena Bindusova, director of the payment systems department at SMP Bank. As a representative of a large bank notes, if the buyer has a check for a small amount, then it is not profitable for the acquirer to pay a commission.

An official representative of NSPK said that the company is now considering the possibility of introducing a combined tariff for debit cards to maintain the economic efficiency of the Mir payment system products in the micropayment segment, namely a fixed rate above a certain transaction amount and an interest rate below this amount.

In the overall structure of costs for issuing and servicing a card, the costs of producing its “blank” are not very significant, says a top manager of one of the banks with state participation. But issuing the Mir card could be very costly for the bank if it does not bring new clients to it, the banker says. “For example, a bank has a salary project, it spent a certain amount on issuing a Visa card, and if it has to reissue the Mir card for this salary project, then this will become another cycle that will not bring any money, given that according to the law servicing Mir cards for public sector employees should be free,” he adds.

Any business expenses sooner or later pass on to clients, says Evgeniy Plaksenkov, head of the Department of Finance, Payments and E-Commerce at the Skolkovo Business School. A top manager of one of the private banks participating in the Mir payment system believes that banks can compensate for the costs of issuing cards by increasing tariffs for Visa and MasterCard cardholders.

Large banks can afford additional expenses to launch a new project, Plaksenkov believes. As for medium-sized banks, much depends on the success of the launch of this project and demand from the population, he notes.

More expensive than Visa and MasterCard

More expensive than Visa and MasterCard