NATIONAL PAYMENT SYSTEM OVERSIGHT RESULTS 2018–2020 Moscow 2021 CONTENTS Abbreviations .........................................................................................................................3 Introduction ...........................................................................................................................5 I. Oversight in the National Payment System in 2018–2020 .........................................6 1.1. Trends and specifics of the NPS development ...................................................................................................6 1.2. Key indicators of the NPS development ..............................................................................................................7 1.3. NPS regulation developments ..................................................................................................................................11 1.4. NPS oversight practice ...............................................................................................................................................13 1.4.1. Determination of NPS entities .......................................................................................................13 1.4.2. Monitoring of NPS entities’ activities and payment services .......................................................... 16 1.4.2.2. Federal post offices .................................................................................................................. 19 1.5. International cooperation in NPS oversight ....................................................................................................24 II. Oversight of important payment systems in 2018–2020 ........................................ 28 2.1. Results of the Bank of Russia’s oversight of important payment systems .....................................28 2.2. Overview of the payment systems assessed by the Bank of Russia for compliance with the PFMI ...............................................................................................................................29 2.3. Overview of the IPSs and the results of their assessment for compliance with the PFMI .......31 2.4. PFMI implementation in the IPSs assessed by the Bank of Russia ....................................................32 2.4.1. General organisation and risk management (Principles 1–5, 7, 15–17) ............................................32 2.4.2. Settlements (Principles 8 and 9) .................................................................................................35 2.4.3. Access and participation requirements and participant-default rules (Principles 18, 19, and 13) ......36 2.4.4. IPS efficiency and effectiveness (Principle 21), communication procedures and standards (Principle 22), and disclosure of IPS rules and procedures (Principle 23) ........................ 37 2.5. The Bank of Russia’s activities in relation to IPSs .......................................................................................39 Conclusion ........................................................................................................................... 40 Annexes ................................................................................................................................ 41 An electronic version of the report can be found on the Bank of Russia website in the section ‘National Payment System’ at http://www.cbr.ru/eng/psystem/. This publication has been prepared by the National Payment System Department. Photo on the cover: Shutterstock.com Address: 12 Neglinnaya Street, Moscow, 107106 Russia Bank of Russia website: www.cbr.ru © Central Bank of the Russian Federation 2021 National Payment System 2 Oversight Results 2018–2020 We are observing a rapid transformation of the payment service market. It has dramatically changed over recent years, with new participants continuously entering the market, and innovative payment technologies and instruments being created. They are user-friendly, accessible, and are significantly expanding the payment and money transfer options. One of the goals of the Bank of Russia is to secure the stability and development of the National Payment System (NPS). Therefore, the Bank of Russia must ensure that positive changes happening in the payment industry do not entail elevated risks to the stability of the NPS at large, NPS entities and NPS users. The Bank of Russia’s efforts to oversee the NPS represent one of the tools aimed at achieving this objective. As part of its oversight of the NPS, the Bank of Russia analyses the operations of NPS entities and constantly communicates with them, studies global trends, implements international payment sector standards, and encourages the market participants to comply with them. This helps advance the quality of payment services rendered by NPS entities, strengthening consumers’ confidence in them. In order to make its activities more transparent, the Bank of Russia is releasing this overview of NPS oversight results, including the findings based on overseeing the important payment systems in 2018–2020. The first part of this overview highlights the main trends and topical issues of the NPS development and regulation, NPS entities’ performance in payment services provision and international cooperation issues related to NPS oversight, and outlines the regulatory easing for payment market participants effective for the duration of the pandemic-related restrictions. The second part contains the results of the assessment of the important payment systems’ compliance with the international standard ‘Principles for Financial Market Infrastructures’. Olga Skorobogatova First Deputy Governor of the Bank of Russia National Payment System Oversight Results 2018–2020 3 ABBREVIATIONS BPA – bank payment agent SFPS – smooth functioning of a payment system NPSD – National Payment System Department of the Bank of Russia EAEU – Eurasian Economic Union NPS Law – Federal Law No. 161-FZ, dated 27 June 2011, ‘On the National Payment System’ Federal Law – Federal Law No. 103-FZ, dated 3 June 2009, ‘On Accepting No. 103-FZ Payments of Individuals by Payment Agents’ IPS – important payment system FMI – financial market infrastructure CPMI – Committee on Payments and Market Infrastructures at the BIS IOSCO – International Organization of Securities Commissions NPS – National Payment System NSPK – National Payment Card System Joint Stock Company (NSPK JSC) MTO – money transfer operator PSO / PS operator – payment system operator FPO – federal post office EMO – electronic money operator PA – payment agent Bank of Russia – Bank of Russia Regulation No. 607-P, dated 3 October 2017, ‘On Regulation No. 607-P the Requirements for the Procedure Ensuring Smooth Functioning of a Payment System, Indicators of Payment System’s Smooth Operation and Methodologies Used to Analyse Payment System Risks, Including Risk Profiles’ PFMI – CPMI-IOSCO Principles for Financial Market Infrastructures, April 2012 BRPS – Bank of Russia Payment System Mir PS – Mir payment system NSD PS – NSD payment system KoronaPay PS – KoronaPay payment system Visa PS – Visa payment system National Payment System 4 Oversight Results 2018–2020 Abbreviations MasterCard PS – MasterCard payment system Sberbank PS – Sberbank payment system ICI Register – Register of Credit Institutions Recognised by the Bank of Russia as Important in the Payment Services Market PSO Register – Register of payment system operators FPS – Faster Payments System (a service of the Bank of Russia Payment System developed by the Bank of Russia jointly with NSPK) TSC – trade and service company Bank of Russia Ordinance – Bank of Russia Ordinance No. 4443-U, dated 3 July 2017, ‘On No. 4443-U Setting Criteria for Qualifying Payment Systems as Important’. E-money – electronic money EMP – electronic means of payment National Payment System Oversight Results 2018–2020 5 INTRODUCTION The Bank of Russia’s oversight activities are governed by Articles 31 and 35 of the NPS Law and are aimed at enhancing the operations of NPS entities and the services that they provide, as well as at developing payment systems and the payment infrastructure. The key aspects of the NPS oversight include monitoring (collection, systematisation and analysis of data), assessment of the activities of overseen organisations as well as their related overseen entities, and preparation of recommendations for improving their activities. Within the monitoring of general NPS development trends, the Bank of Russia analyses the types of NPS entities, payment services and infrastructure, information and communication technologies applied in the provision of payment services and payment infrastructure services, as well as cross- border money transfers, and identifies innovative approaches and new participants in the payment service market. The Bank of Russia also analyses the continuity of payment services and the smooth functioning of payment systems, regulatory framework, law enforcement, and judicial practice with regard to the NPS. In its NPS oversight efforts, the Bank of Russia actively communicates and cooperates with foreign regulators and international organisations, identifying best foreign practices in rendering payment services and payment infrastructure services, as well as factors hindering the implementation of such practices in the Russian payment service market. This report is the fourth issue and describes the results of the Bank of Russia’s NPS oversight for the period from July 2018