Non-Cash Payment System Bachelor’S Degree Work

Bankovní Institut Vysoká Škola Praha

Non-cash payment system Bachelor’s degree work

Baltabay Aisultan Leden 2018

Bankovní Institut Vysoká Škola Praha

Banking management

Non-cash payment

Bachelor’s degree work

Author: Aisultan Baltabay Banking management

Supervisor: Ing. Marcela Soldánová

Praha 2018

Declaration:

I declare that I have elaborated my bachelor’s thesis “Non-cash payment” independently and stated all the literature used.

I attest by my signature that the submitted electronic version of the thesis is identical with its printed version, and I am aware of the fact that the thesis will be archived in the library of the BIVŠ, and further, made accessible to third persons throught the internal database of electronic university works.

In Prague, January, 2018 Baltabay Aisultan

Acknowledgement

I am grateful to my supervisor Mrs. Marcela Soldánová, whose expertise, understanding, generous guidance and support made it possible for me to work on a topic that was of great interest to me.

Finally, I would like to thank my family for their unconditional love and support during the last seven years. I would not be able to complete this thesis without their love and encouragement.

Annotation: The main purpose of my thesis is the study the theory and the existing mechanism of non- cash settlements used by commercial banks, to identify emerging trends and problems, to identify possible areas for improvement in order to increase the profitability of banking operations, accelerate settlements, and reduce distribution costs. In accordance with the purpose of the course work, the following tasks are identify: - to study theoretical bases of the organization of non-cash settlements; - to consider modern types, forms of non-cash settlements and conditions for their use; - to study the organization of the system of non-cash payments in the Republic of Kazakhstan; - to identify the main directions of development and ways to improve non-cash payment turnover in second-tier banks of the Republic of Kazakhstan. The subject of research in this paper are existing and new forms of non-cash payments in the economy. The object of the study of the work are all subjects of the economy carrying out non-cash payments. Key words: Non-cash payment, the National Bank, payment card, Kazakhstan.

Anotace:

Cílem práce je studium teorie a existujícího mechanismu bezhotovostního vypořádání používaného komerčními bankami, identifikace vznikajících trendů a problémů, identifikace možných oblastí pro zlepšení s cílem zvýšit ziskovost bankovních operací, urychlit osídlení a snížit distribuční náklady. V souladu s účelem kurzu jsou identifikovány následující úkoly: - studovat teoretické základy organizace bezhotovostních osad; - odhalit pojetí a ekonomický význam bezhotovostních osad při modernizaci obratu peněz; - zvážit moderní typy, formy bezhotovostních dohod a podmínky jejich užívání; - studovat organizaci systému bezhotovostních plateb v Republice Kazachstán; - určení hlavních směrů vývoje a způsobů, jak zlepšit obrat bezhotovostních plateb v druhotných bankách Republiky Kazachstán. Předmětem výzkumu v této práci jsou stávající a nové formy bezhotovostních osad v ekonomice. Předmětem studie práce jsou všechny subjekty ekonomiky, které provádějí bezhotovostní osídlení. Klíčová slova: Bezhotovostní platba, Národní banka, platebny karty, Kazachstán. Content

Introduction...... 3

1 Theoretical bases of the organization of non-cash payments...... 7

1.1 The concept and economic significance of non-cash payments in modern money turnover ...... 7 1.2 Forms of non-cash payments ...... 8 1.3 E-money and e-commerce ...... 10 2 Authorization and settlement of non-cash payment transaction...... 17

2.1 Legislative and setlle legal acts on non-cash payments in the Republic of Kazakhstan ...... 17 2.2 Rules for the implementation of non-cash payments...... 18 2.3 The results of the acception of a new law about the payment system and rules for non-cash payments ...... 20 2.4 Analysis of non-cash payments in Kazakhstan after the new law ...... 22 2.5 Interbank money transfer system ...... 24 2.6 The system of interbank clearing (ICS) ...... 28 3 Feature of application of non-cash payment system in Kazakhstan ...... 31

3.1 Analysis of trends in performance indicators of payment management operations ...... 35 3.2 The procedure for reflecting non-cash payments in accounting transactions using plastic cards..... 37 Conclusion ...... 41

List of image ...... 46

List of Charts ...... 46

List of Table...... 47

Annexes...... 47

Introduction

To analyze the application of non-cash payment system as a payment instrument and characterize the issuing of non-cash payment system in Kazakhstan.

The economy of any state is a wide-branched network of various economic entities. The basis of these relationships is payments. And it is the creation of a highly efficient reliable payment system that ensures the realization of their economic opportunities.

The main components of the payment turnover are divided into cash and non-cash payments. Today, non-cash money turnover is gradually supplanting cash-money payments in monetary systems of different countries. This is facilitated by low costs compared to cash payments, the speed of their implementation, the extensive network of banks, as well as the state's interest in their development. To date, about 80% of payments account for non-cash money turnover. The bulk of non-cash payments are accounted for by commercial banks. It is they who own the most important payment and payment function in the state payment system.

The term "non-cash payments" can be defined as "legal relations, the prerequisite of which is the right of claiming the account holder of a certain amount of money for the specified details at a certain time and for a fee, as well as the bank's obligation corresponding to this right."

The term payment system became common to bank employees in the second half of the 1990s, and it essentially replaced the previously used term "cashless payments system". There are several definitions of the payment system:

- a set of rules, institutions and technical mechanisms for the transfer of money; - a set of mechanisms for fulfilling obligations assumed by economic entities when they acquire material or financial resources; - a set of mechanisms that carry out the movement of the monetary funds of instruments through which value transfers are realized in value transfers within the framework of commitments; - a set of adequate software, communication lines, computing facilities, work organizations, economic and legal support for the transfer of money.

The concept of a payment system is broader and more complicated than the concept of non- cash payments, since the payment system includes not only the object (money), but also the procedures with this object, and the subjects that perform these procedures.

The system of clearing payments can be defined as the set of instilled institutions that form the mechanism of non-cash payments and ensure their implementation. These definitions show some identity, continuity of these concepts.

Currently, two national payment systems operate on the territory of the Republic of Kazakhstan: the Interbank Money Transfer System (ISMT) and the Interbank Clearing System (ICS).

The development of market relations in the economy required a change in the fundamentals of the system of non-cash settlements, including the principles of their organization.

The first principle of non-cash settlements in market conditions of managing consists in their implementation by bank accounts, which are opened to customers for the storage and transfer of funds. This principle is combined from the first principle of non-cash settlements of the planned system of management, the essence of which was to conduct all settlements of enterprises and organizations through the establishment of the bank. In the market economy, settlement through the bank should be determined by economic expediency, combined with the economic independence of market participants and their material responsibility for their actions. It is important to emphasize that the first principle of non-cash settlements under market conditions is relevant to both legal entities and individuals, whereas previously it concerned exclusively legal entities, since there was a clear legislative delimitation of the sphere of cash and non-cash money turnover.

The second principle of non-cash settlements is that payments from accounts should be made by banks on the instructions of their owners in the order established by the order of payments and within the balance of the funds on the account. However, due to the deterioration of payment discipline in the economy in the conditions of production decline, inflationary processes, the calendar of payments was again established from settlement accounts of customers (with the exception of cash payments for urgent needs, payments to budgets of all levels, as well as to pension funds that should be carried out as a matter of priority). This administrative measure is temporary and is mainly dictated by the concerns of the Government about the completeness and timeliness of the development of the economy of the budget revenue base in the given period of development and ensuring the necessary expenditures in the interests of maintaining priority and life-supporting sectors of the economy. In this principle, the right of market subjects is fixed, they themselves determine the order of payments from their accounts. The main requirement, presented in this case by

4 the bank to the market entity, to the settlement participant, is the execution by the latter of payments within the available balance of funds on the account.

The third principle is the principle of freedom of choice by market participants for forms of non-cash settlements and fixing them in business contracts with non-interference of banks in contractual relations. The bank is given the role of an intermediary in payments. In the Regulation on Non-cash Payments, a tendency is visible to transform the payer into the main entity of the payment transaction, since in all forms of non-cash settlements, the payer's initiative belongs to the payer.

All three of the above principles of non-cash settlements, although not clear, can be traced in the Regulation on Non-cash Payments. However, in our opinion, two more principles of organization of non-cash settlements should be added to them: the urgency of payment and the security of payment.

The relevance of my thesis is related to the fact that at present an acute need has arisen for studying and introducing by all participants in market relations the mechanisms of the functioning of new forms of non-cash payments.

Coursework consists of three chapters. The first chapter is devoted to general issues of organization of non-cash payments. The second chapter of the course work contains an analysis of the current system of non-cash payments for the organization of non-cash forms of payments. It gives an assessment of the effectiveness of non-cash payments on the object under study. The third chapter identifies problems and shortcomings in the implementation of non-cash payments, and also provides a number of measures to improve the payment and settlement system, which can improve the efficiency and quality of non-cash payments in this direction.

When writing the course work used various educational and scientific literature, printed periodicals and Internet publications, legislative and regulatory acts, both general and regulating banking activities.

Methodology

The main methods used for writing the thesis will include analyze non-cash payments in the payment system of Kazakhstan.

To perform the object considered by the author, the following problems have been put:

1) consider the theoretical aspects of non-cash forms of payment based on payment cards; 2) consider the settlement of non-cash payments in Kazakhstan; 3) analyze the development of non-cash payments in Kazakhstan.

The theoretical and methodological foundations of the work were a comprehensive study of the works of Russian economists on banking issues.

The methodology of the research is based on the principles of system analysis, allowing the use of statistical, analytical and other methods of scientific research, making it possible to study the system of non-cash payments in Kazakhstan.

1 Theoretical bases of the organization of non-cash payments

1.1 The concept and economic significance of non-cash payments in modern money turnover

With the improvement of payment and settlement relations, the ratio between cash and non-cash spheres of money circulation also changed. Until the late nineteenth century. payments prevailed in cash. In modern conditions, the share of cash, especially in industrialized countries, is small, for example, in the US it is about 10%. Non-cash payments are payments that are made without the use of cash, by transferring funds to accounts in credit institutions and offsetting mutual claims. Non-cash payments are of great economic importance in accelerating the turnover of funds, reducing cash needed for circulation, reducing the costs of circulation; the organization of cash payments using non-cash money is much preferable to payments in cash. The widespread application of non-cash payments is facilitated by an extensive network of banks, as well as by the state's interest in their development, both for the reason mentioned above, and for the purpose of studying and regulating macroeconomic processes. Differences in the organization of non-cash payments are due to the historical and economic development of individual countries. So, in the UK earlier than in other countries, non-cash payments by promissory notes and checks have spread. Since 17751 there have been payments, clearing houses - special interbank organizations that carry out non-cash payments on checks and other payment documents by offsetting mutual claims. Commercial banks - members of the Clearing House accept payment checks issued to any bank or its branch. All checks arrive in the clearing house, where they are sorted and set off several times a day. Only the final balance of payments through accounts in the central bank is paid. In a number of countries, the functions of clearing houses are performed by central banks. Clearing houses exist also at commodity and stock exchanges for mutual offset of requirements on the transactions concluded here that considerably simplifies and accelerates calculations. Payments operations are among the most important banking operations. They include collection, transfer and credit operations. With the development and improvement of automation of banking operations, since the mid-1970s2, a system of electronic payments used for credit and payment transactions and control over the state of bank accounts through the transmission of electronic signals began to be applied in developed countries without the involvement of paper data carriers. They facilitate the acceleration of money turnover, improve the credit and banking services for customers, reduce the costs associated with the implementation of payment transactions. For the timely transfer of funds from the sender of the money transfer to the recipient for wholesale payment transactions, telegraphic transfers are used.

1 Antonov N.G, Pessel M.A Money circulation, credit, banks. - Moscow: Finstatinform, 1995. - P. 208-210 2 Antonov N.G, Pessel M.A Money circulation, credit, banks. - Moscow: Finstatinform, 1995. - P. 209-211 7

The electronic money transfer system currently operates banking machines that allow the bank's client to connect independently to the bank computer and carry out the most common operations: receiving cash from the account, making deposits, transferring funds to accounts, etc. Some ATMs are used only for cash withdrawals money.

1.2 Forms of non-cash payments

Credit reform of the 30-ies. summed up certain results in the economic development of Kazakhstan and was aimed at creating economic prerequisites for the transition from a market economy to a planned (administrative-command). Credit reform of the 30-ies. has a special significance today. Because at the present time in Kazakhstan there is a reverse movement from an administrative-command to a market economy. Modern economic development of Kazakhstan has a number of features, the most important of which is the transition to a market economy. The transition economy can not be stable. In the monetary sphere this is manifested in the aggravation of contradictions. The manifestations of the economic crisis in Kazakhstan were: the disruption of economic ties between economic entities, a sharp drop in output, inflation, a payment crisis, exacerbation of tension in the monetary sphere (budget deficit, growth of domestic and foreign debts, currency crisis, banking liquidity crisis), insolvency and the bankruptcy of enterprises and financial structures, the growth of political and social tensions, etc. In attempts to overcome the payment crisis, including by improving the system of non-cash payment. As a result, the National Bank of Kazakhstan took measures to limit the scope of application of payment forms that do not provide a guarantee of payment. Simultaneously, the practice of using payments by payment orders with advance payment was expanded. At present, cashless payments in Kazakhstan are gaining popularity, as they are very accelerating turnover and reducing the cost of circulation of cash. According to the current legislation, the following forms of non-cash payments are used in our country: payment order; checks; promissory note; payment request-instruction; a letter of credit; collection order; payment cards; transfer of electronic money.

Payment orders3 - are the most common form of non-cash payments in Kazakhstan at present time. A payment order is an instruction of an enterprise to a servicer about the transfer of a certain amount from his account. This form of non-cash payments is more often used in a market economy. Payments by payment orders are used to make a wide range of payments: with their help, they are calculated with suppliers and contractors in case of advance payment, pension and insurance funds, employees when transferring wages to their accounts in other banks, with tax and other payments, when paying to the bank commissions, etc. Payment orders are valid for ten days from the date of their issue, the day of discharge is not taken into account, and they are accepted from the payer for execution only if funds are available on the account, unless otherwise stipulated by the bank and the account holder. The payment demand - is the demand of the recipient to the sender of money for payment for goods delivered, works performed, services rendered on the basis of documents confirming the specified requirement. An example is the same as with a payment order, only in this case the company that provided the service will provide the Bank with a payment request-an instruction to withdraw the necessary amount from your account with the provision of supporting documents on the performance of services. Letter of Credit - a payment document, based on which the Bank, acting on behalf of the payer on the opening of a letter of credit, undertakes to carry out payments in favor of the payee on presentation of recent documents that meet all the conditions of the letter of credit. For example, you decided to buy from a foreign company the goods and, to transfer money, are afraid not to receive the goods. In this case, the Bank will act as an intermediary to exclude risk, after the issued goods and the provision of the necessary documents, the Bank will pay for it. Promissory note - is a payment document of a strictly established form, containing a unilateral unconditional monetary obligation, i.e. a written obligation to pay a person a certain amount of money within a certain period. Checks - are a way of paying for a product or service, in which payment is made by issuing a check. A check holder is a person who has money in the bank, which he is entitled to dispose of by issuing checks. A payment document - used to withdraw money from a bank account without the consent of the sender of money, is a collection order. The collection order is applied by the state revenue bodies in the presence of a tax debt and judicial authorities in the presence of a court decision on recovery of debts. The payment card - is used by its holder for the non-cash payments, receiving cash, exchanging currencies and other operations provided by the bank that issued the payment card. A relatively new term that appeared in Kazakhstan is "electronic money"4. The transfer of electronic money takes place through computer networks, electronic wallets, the Internet, POS-terminals, bracelets, mobile phones and other specially equipped devices. In

3 https://www.almaty.gov.kz/page.php?page_id=4902&lang=1&article_id=34561 [cit. 17.12.2017] 4 https://www.almaty.gov.kz/page.php?page_id=4902&lang=1&article_id=34561 [cit. 17.12.2017] 9 general, electronic money is a substitute for cash, they are especially useful and convenient for making numerous payments and small amounts. For example, with payments in transport, cinemas, payment of utilities, payment of various fines, calculations on the Internet, etc.

1.3 E-money and e-commerce

An important feature of the modern system of non-cash payments is the automation of document flow processes at different stages of processing. Almost completely eliminated manual work in the compilation of payments documents. Automated accounting and control, arriving for further processing, documents. Automated and the process of posting payments on accounts both inside the institutions of banks, and between them. The speedy automation of the system of non-cash payments is of immense importance for streamlining the banking document circulation, will ensure the reduction of payment terms and guarantee against illegal access to payment and payments documents. New technologies make it possible to create a convenient system of banking services. For example, automatic reception and issuance of deposits by financial institutions; payment of wages, pensions and social insurance. In the system of new non-cash payments, the corresponding monetary unit also participates. It's about electronic money (e-Money). Dutch scientist, David Chowm, first proposed the idea of electronic money in the late 1994s5. Electronic money is an analog of ordinary money, a means of payment that exists exclusively in electronic form, that is, in the form of entries in special electronic systems. Typically, electronic money includes the use of computer networks, the Internet and payment cards. On July 21, 20116, electronic money was introduced into the Kazakhstan market as a new payment instrument. This happened when the President of the Republic of Kazakhstan signed the Law on Making Amendments and Addenda to Some Legislative Acts of the Republic of Kazakhstan on Electronic Money. After the adoption of the law in Kazakhstan, electronic money received legal status. According to the adopted Law, electronic money can be used along with other payment instruments, such as, payment cards, checks, payment orders, etc. In general, electronic money is issued by the Bank and used through a certain system. One of the systems in Kazakhstan is E-tenge or e-kzt7. Users of electronic money have an electronic wallet and can transfer electronic money from one electronic wallet to another through the Internet. Each user can apply to the Bank (the issuer) and exchange electronic money for cash or non-cash (will get into the bank account). There are two types of users of electronic money, identified and not identified. The difference is that the identified user is the owner of electronic money registered in a certain system through the Bank, by making his

5 http://www.paysyscenter.ru/index.php?option=com_content&task=view&id=374 [cit. 23.12.2017] 6 http://taraz-gov.kz/?p=2599 [cit 05.01.2018] 7 http://www.eximbank.kz/virtualnye_dengi/etenge [cit. 08.01.2018] 10 personal data. For example, in Kazakhstan there is an "Eximbank" bank (issuer). Register and receive an electronic wallet through Eximbank. And аn unidentified user is a user registered in a particular system through an Internet resource. For example, in Kazakhstan immediately through the system E-tenge / e-kzt. The main advantage of the identified user is that it is possible to pay for a larger amount than the unidentified owner of the electronic wallet. Advantages of electronic money: Instant - payment with the help of electronic money occurs instantly, and the opening and replenishment of the electronic wallet takes a few minutes in online mode. In this case, there is no need to fill out a huge number of forms for registration, as in the case of payment cards. Accessibility - each user can easily open an electronic wallet and use it anywhere, regardless of where they are, that is, in any city or even country. Mobility - the location of the owner of the electronic wallet does not matter, to access it you only need the Internet. The system operates in the "24/7" mode. Security - encryption using digital signature is used for information transfer, as well as for transactions. You do not leave your details on the seller's website, as in the case of a payment card. Simplicity - no special knowledge and skills are required. Comfort - the ability to buy goods and pay for services without leaving home, no need to carry cash with you. Confidentiality - the identification of the sender is not mandatory. Saving - on the Internet to buy cheaper, but it depends on the country and laws, the system of electronic money. For example, in Kazakhstan, the commission in the system "E-tenge / e-kzt" is 7 tenge for the transfer of electronic money. Electronic money also has negative aspects. Limited use. Electronic money is not yet able to cover all areas of services available for ordinary money. Only the range of services provided by the system limits you. These services, of course, are not unlimited and limited in comparison with the services that are available to you with cash. Temporary lack of access to the wallet. If there are problems with connecting to the Internet, a PC failure or, for example, banal light off, you may not have access to your electronic wallet. The probability of hacking a wallet. Modern means of protection and fraud. The risk of hacking bills and stealing electronic money is still quite high, because hackers and scammers are looking for more and more ways to get access to someone else's electronic wallets. According to the National Bank of the Republic of Kazakhstan, the volume of transactions using electronic money by Kazakhstan issuers in 20168 in Kazakhstan amounted to 43.3 million transactions in the amount of 154.2 billion tenge (compared to 2015, the number of transactions increased 2.7 times , and the amount is 3.5 times).

8 http://www.nationalbank.kz/document/?docid=5919&switch=rus [cit. 08.01.2018] 11

Payments in favor of individual entrepreneurs and legal entities using electronic money in 2016 are 130.4 billion tenge (an increase of 3.4 times as compared to the same period in 2015). The number of electronic wallets for which transactions are possible on January 1, 2016, there were 2 943 477 wallets, a year later, by January 1, 2017, their figure was 5,913,356 wallets. On average, there are 0.3 electronic wallet for every Kazakh. In 2016, electronic money was issued in the amount of 129.7 billion tenge. 3.3 billion tenge. Are in circulation on January 1, 2017.

Chart 1 Dynamics of change in the number of owners of electronic money making payments using electronic money for 2014-2017

Sources: Review of the results of oversight (oversight) of payment systems and development of the payment services market for 9 months of 2017. Available from http://nationalbank.kz [cit. 15.01.2018] As you can see in Chapter 1, the number of "electronic wallets" as of 01.10.2017 amounted to 7.2 million units, I follow from this it can be understood that the market of electronic money in the territory of Kazakhstan is actively developing. And now, on the territory of Republic of Kazakhstan are represent 17 electronic money systems: E-KZT, Wooppay, Visa Qiwi Wallet, Personal Cash, Paypoint, Dar, Homepay, Halyk, AllPay, Wallet One, Kaspi Bank, AlemPAy, Altynpay, MultiBank, MyBonus, Homebank Wallet, and TengriWallet. At that, the peak of appearance on the Kazakhstan market of electronic money systems is 20169. In 2016 was started 8 electronic money systems.The whole system of new forms of non-cash payments has a common name - e-commerce or e-Commerce system. E-commerce is a form of speeding up the majority of financial business processes by carrying them electronically, i.e. supply of products, in which the choice and order of the latter is carried out through the telecommunications network through an electronic device, and payments between buyers and suppliers are carried out using electronic documents and electronic means of payment with the help of financial and credit organizations.

9 http://m.nationalbank.kz/cont/%D0%9E%D0%B1%D0%B7%D0%BE%D1%80%20%D1%81%D0%B2%D0%BE%D0%B 4%20%D0%BD%D0%B0%20%D1%80%D1%83%D1%81%D1%81_15112017.pdf 12

The average level of e-commerce in Kazakhstan, relative to the retail turnover in 2016, was 3.9%10.

Chart 2 Distribution of purchases of Kazakhstan people by seller countries 2016 Sources: https://www.shopolog.ru/news/obzor-rynka-e-commerce-kazahstana/ [cit. 15.01.2018] As indicated in Chapter 2, Kazakhstanis prefer to buy goods from Kazakhstan's Internet resources. And the main age of buyers is up to 25 years. Although there is not much potential for the older generation, those over 50 years old. According to analysts, from 2013-2016, the sale of goods and services via the Internet in Kazakhstan from Kazakhstan's Internet resources is steadily growing by 10-17%. Data taking into account that the wholesale is held in tenge. In the retail segment in the Republic of Kazakhstan, e-commerce is the most dynamic sector. In 2016, the overall growth of e-commerce amounted to more than 37% of the 2015 indicators. In 2017, the share of online trading sites in Kazakhstan is at least 10% due to the active interest on the part of businesses to e-commerce and an active increase in the proportion of Internet users actively ordering goods and services on the Internet. M-Commerce - is the further development of e-commerce. Because now the trend is towards mobile devices, then online trade or service is also developing towards mobile devices. Since 201611 in Kazakhstan, mobile operators can launch client services in the m- commerce field, and customers have to pay for various goods and services from their mobile accounts.

10 http://eximar.kz/index.php/sfera-uslug/76-innovatsionnyj-rynok/153-innovatsionnyj-rynok-1 [cit. 15.01.2018] 11 http://profit.kz/news/33635/Mobilnaya-kommerciya-v-Kazahstane-pervie-lastochki/ [cit. 15.01.2018] 13

Chart 3 The proportion of users of mobile Internet at the age of 16 - 74 years, in %

Source: https://e-pepper.ru/news/payonline-izuchil-onlajn-torgovlyu-v-kazaxstane.html [cit. 15.01.2018]

Paying for goods and services from a mobile phone has been actively developing over the past few years. According to PayOnline12, the mobile commerce market is growing by 300%13 faster than the e-commerce market as a whole. In Kazakhstan, consumers are increasingly buying from mobile devices. 40%14 of purchases are made from a mobile device, of which 22% from tablets and 78% from smartphones. According to the same company PayOnline in Kazakhstan in 2016, purchases are more often made from Android devices than from others. Thus, the share of Android devices in mobile commerce in Kazakhstan is 59%, the share of iOS devices is 40%, Windows is 0.7%, and the rest is 0.3%.

12 PayOnline - a company that handles payments on sites and mobile applications.URL: http://payonline.ru/ [cit. 15.01.2018] 13 https://geektimes.ru/company/payonline/blog/272654/ [cit. 15.01.2018] 14 http://eximar.kz/index.php/sfera-uslug/76-innovatsionnyj-rynok/153-innovatsionnyj-rynok-1 [cit. 03.02.2018] 14

Chart 4 Distribution of buyers by age categories

Sources: https://e-pepper.ru/news/payonline-izuchil-onlajn-torgovlyu-v-kazaxstane.html [cit. 15.01.2018] The main problem for users when buying products and services via mobile devices is technical problems. The matter is that not all sites are adapted for mobile devices or have a mobile application, but not through the application there is no possibility to pay for the goods. But every year the number of unadapted, or lack of opportunity to make a purchase through the application is getting smaller. As you can see in Chapter 4, almost half of the customers who make mobile purchases are people between the ages of 25 and 34. More than 28% of mobile payments fall on young people whose age varies between the ages of 17 and 24. One of the types of mobile payments is the ability to pay through the NFC15 module. Using a smartphone as a means of non-cash settlement. Holders of ordinary payment cards can create a digital copy of the payment card in a special application and use the NFC module to make contactless payments. Payment can made, as in ordinary stores, paying through a non-contact POS-terminal and in the network. This method of non-cash payment is one of the safest since the information on the payment card is not stored in the memory of the smartphone and before making the payment it is necessary to confirm with a scanner a fingerprint, an iris scanner or a face scanner. It all depends on which of these scanners is install on the smartphone. The most common way to verify the identity and confirm payment is a fingerprint scanner. One of the worldwide services is Apple Pay, Samsung Pay and

15 NFC (Near Field Communication) - is a technology for data transmission at short distances, and its main feature is that it is based and fully compatible with the ISO 14443 standard, which unites the majority of modern contactless smart cards: MasterCard PayPass and VISA PayWave bank cards, transport cards, office passes and parking, and many others. 15

Android Pay from Google. Since 201416 with the release of the iPhone 6 in which the NFC- module was installed, Apple introduced its payment system Apple Pay. Over the past 3 years, Apple Pay service is available in the US, Canada, France, Britain, Spain and other European countries, Japan and China, and several Asian countries. Among the CIS countries, Apple Pay is only available in Russia. Since 2016 with the release of the new Macbook Pro, Apple Pay has been further develop. Now using one Apple ID account on the iPhone and Macbook pro, you can make payments online. To confirm payment on the Internet through the Macbook Pro, you also need to use a fingerprint scanner on the laptop itself. In addition, for payment in shops or in other places where a contactless POS-terminal is used, you can still use a smart watch - Apple Watch. The payment system Samsung, works on a similar system, like Apple Pay, but there is one difference. Unlike the Apple service, Samsung Pay can be use with the Secret in that, in addition to NFC, Samsung will use its own technology - MST17, which makes it possible to pay for purchases with a Samsung Galaxy18 smartphone and Samsung Gear device S3 on any terminal accepting bankcards. Samsung devices that support Samsung Pay service and support MST technology can create a magnetic field similar to a magnetic bankcard signal. Usually even the sellers themselves do not know that this is possible in their stores, but it really works. In many countries, local banks themselves produce such a service with the application. Unfortunately, this only works on Android devices. In Kazakhstan, such a service is available for QazKom Bank19 works just like Google Pay. You need to download the application from QazKom Bank and register your payment card with the service. Unfortunately, in Kazakhstan except for the payment system of non-cash payment via mobile devices with NFC, except for QazKom Bank there is nothing, since the banks of Kazakhstan do not yet support such services as Apple Pay, Samsung Pay, Android Pay. In the Czech Republic, since November 1420, customers of the KB, mBank, Moneta bank have access to the Google Play service. All payment systems of non-cash payment via NFC module in smartphones work with VISA and MasterCard.

16 https://www.apple.com/ru/apple-pay/ [cit. 15.01.2018] 17 MST - Magnetic Secure Transmission. 18 http://www.samsung.com/ru/apps/mobile/samsungpay/ [cit. 15.01.2018] 19 http://profit.kz/news/27949/Kazkommercbank-zapustil-NFC-platezhi/ [cit. 15.01.2018] 20 https://www.android.com/intl/cs_cz/pay/ [cit. 15.01.2017] 16

2 Authorization and settlement of non-cash payment transaction.

2.1 Legislative and setlle legal acts on non-cash payments in the Republic of Kazakhstan

The National Bank of the Republic of Kazakhstan oversees the payment systems in accordance with Articles 8 and 48 of the Law of the Republic of Kazakhstan "On the National Bank of the Republic of Kazakhstan". Oversight (supervision) over payment systems is the activity of the payment system unit implemented to ensure the efficient, safe and uninterrupted functioning of payment systems, as well as the effective functioning, use and development of other supervisory facilities. According to Article 48 of the Law of the Republic of Kazakhstan "About the National Bank of the Republic of Kazakhstan" in order to oversee (overtake) payment systems, the National Bank of Kazakhstan is entitled: Establish the procedure for conducting oversight (overtake) for payment systems; adopt normative legal acts defining the terms and procedure for the organization and functioning of payment systems; monitor payment systems; check the organization and functioning of payment systems; receive information from participants and operators of payment systems; implement inspections of the activity of participants in payment systems. The objects of over-payment for payment systems are: Interbank money transfer system, Interbank clearing system, Correspondent bank relations system, payment instruments, payment card market and international money transfer market. The National Bank of the Republic of Kazakhstan overdrawn payment systems in accordance with the Rules for the Supervision of the Functioning of Payment Systems and the Concept of the Supervision of Payment Systems of the Republic of Kazakhstan. According to Article 1 of the Law of the Republic of Kazakhstan of August 31, 1995 No. 2444 "About the Banks and Banking Activities in the Republic of Kazakhstan, the Bank is a legal entity that is a commercial organization which, in accordance with this Law, is authorized to conduct banking activities. The official status of a bank is determined by the state registration of a legal entity as a bank in the justice bodies and by the availability of a license from the authorized body for regulating and supervising the financial market and financial organizations for conducting

17 banking operations. No legal entity that does not have the official status of a bank can be call a "bank" or characterize itself as engaged in banking activities. The Republic of Kazakhstan has a two-tier banking system. The National Bank is the central bank of the state and represents the upper level of the banking system. The National Bank of Kazakhstan, while performing its tasks, should not be guided by the purpose of making a profit. On September 10, 201621, a new Law of the Republic of Kazakhstan on "Legislation of the Republic of Kazakhstan on payments and transfers" was adopted, which regulates relations in the field of payment systems, payment services and activities of payment market participants. Based on the laws of the Republic of Kazakhstan dated March 30, 1995 "On the National Bank of the Republic of Kazakhstan". We will consider the changes of July 26, 201622 "On Payment and Payment Systems", as they are directly related to non-cash payments and money orders. In order to establish the procedure for non-cash payments and money transfers in the territory of the Republic of Kazakhstan, the Board of the National Bank of the Republic of Kazakhstan decided to introduce new rules for the implementation of non-cash payments and money transfers. The adopted new law takes into account certain decisions and structural elements of individual decisions of the "Board of the National Bank of the Republic of Kazakhstan" that are obsolete and invalid. The law was adopted with a view to effectively regulating public relations arising in the sphere of payment systems, including non-cash payments, regulation of the payment services market, as well as improving the practice of making payments and money transfers in the Republic of Kazakhstan. The new normative legal act introduces completely new players to the payment services market - non-bank payment service providers. We are talking about payment organizations, payment agents and subagents.

2.2 Rules for the implementation of non-cash payments.

The rules are not valid for international non-cash payments and money transfers that are carried out outside the territory of the Republic of Kazakhstan and are regulated by agreements applied in banking practice, taking into account the requirements established by the Law of the Republic of Kazakhstan of August 28, 200923 "On Countering the Legalization (Laundering) of Incomes Received by criminal means, and the financing of terrorism. " The rules also do not apply to payments and money transfers, using a payment card, carrying out transactions with transfer and simple bills and using checks in the territory of the Republic of Kazakhstan.

21 Resolution of the Board of the National Bank of the Republic of Kazakhstan of August 31, 2016 No. 208 [02.02.2018] URL: http://nationalbank.kz/?docid=45&switch=russian 22 https://www.zakon.kz/4834163-regulirovanie-platezhnykh-sistem-i.html [02.02.2018] 23 https://online.zakon.kz/Document/?doc_id=30466908 18

The procedure for implementation of non-cash payments and money transfers in the territory of the Republic of Kazakhstan includes: execution of payment documents, presentation and execution of payment documents, features of making non-cash payments and money transfers without opening a bank account, execution of a non-cash payment by direct debiting of a bank account.

The Rules use the concepts provided for in Article 1 of the Law «About Payments and Payment Systems», as well as the following concepts: debit transfers - non-cash payments and money transfers made by submitting a payment request, a payment order to the bank, a collection order by the beneficiary for payment by the sender of the money; card file - outside the balance sheet of uncompleted or partially executed payment documents in the absence or insufficient amount of money in the bank account of the sender of money for their execution; credit transfers - non-cash payments made by submitting a payment order, consolidated payment order, payment order, payment notice or money transfer application to the bank of the sender; Authorized persons - persons authorized in accordance with the requirements of the Civil Code of the Republic of Kazakhstan (General part) of December 27, 1994 (hereinafter - the Civil Code) (constituent documents, power of attorney, order, other documents) to sign on behalf of legal entities, legal entities (branches, representative offices, territorially segregated subdivisions) payment documents when performing operations related to the conduct of a client's bank account (by disposing of money in a banking couple) in accordance with the document with signature and seal.

The order of implementation non-cash payments or money transfers from accounts opened with the central authorized body for budget execution is determined by Articles 97- 100-1 of the Budget Code of the Republic of Kazakhstan of December 4, 2008 and Order No. 540 of the Minister of Finance of the Republic of Kazakhstan of December 4, 2014 "On Approval of the Rules for the Execution of the Budget and its Cash Service"24. Non-cash payments and money transfers in the territory of the Republic of Kazakhstan can be implement using bank accounts and without opening bank accounts in Tenge or in foreign currency. All this in accordance with the requirements of Articles 25, 45- 57 of the Law on Payments and Payment Systems, Article 16 of the Law of the Republic of Kazakhstan of June 13, 2005 "On Currency Regulation and Currency Control", Articles 5, 7, 12 and 13 of the Law on CLPFT25 and Rules. Non-cash payments and money transfers without opening a bank account include payments and money transfers, in which the sender of money and the beneficiary do not use bank accounts, and which are made by means of a

24 registered in the Register of state registration of regulatory legal acts under No. 9934 25 CLPFT - counteraction to legalization (laundering) of proceeds from crime and financing of terrorism 19 cash deposit for their transfer in favor of the beneficiary's designated beneficiary's money and receiving cash by the beneficiary. Non-cash payments are based on payment documents of the sender, presented in electronic form or on paper, as well as generated in the bank system using remote access systems. Forms of payment documents compiled on paper are determined by the Rules. Payment documents sent in electronic form contain the requisites established by the Rules for each type and form of the payment document. According to the legislation of the Republic of Kazakhstan, crypto-currencies such as bitcoin, etherium, etc. do not refer to money or currencies, nor to financial instruments, nor to electronic money in the legislation of Kazakhstan - do they in themselves not represent any value in value or in other terms. Three distinctive features of the crypto currency are the absence of the issuer (i.e., the Guarantor), decentralization (i.e., over nationality and cross- border) and the use of cryptographic algorithms to create them.

2.3 The results of the acception of a new law about the payment system and rules for non-cash payments

With the adoption of the law on the payment system and new rules for the implementation of non-cash payments, as early as 2017, 1926 payment systems were registered. Of these, one system is recognized as systemically significant, and another three systems are attributed by the National Bank of the Republic of Kazakhstan to significant payment systems. According to the National Bank of the Republic of Kazakhstan as of January 1, 2018, 15 money transfer systems operate on the territory of the Republic of Kazakhstan. A systemically important payment system is the Interbank money transfer system, owned or operated by the National Bank itself. This system occupies 95%27 of the total amount of all non-cash interbank payments made in the country. According to the reports of the National Bank of the Republic of Kazakhstan, daily transactions through this system amount to 3.5 trillion tenge, almost all liquid financial sector uses this system. Therefore, the National Bank first of all ensures the continuous functioning of the system - systemically significant payments. The National Bank also manages risk management and monitors its work on an ongoing basis. Other payment systems collect statistical or other information, including incidents and operational events, and monitor their operation. According to the National Bank, after the adoption of the new law and according to the requirements of the new Law, 29 companies passed the procedure of registration as payment organizations. These are non-bank institutions, and companies of all kinds, but with their appearance, the base of the payment market has increased. The market has become more diverse and competitive. These organizations provide a set of basic payment services, including receiving payments, including in a cashless manner and in cash. Payment with cash is the most popular type of services, the share of this service in the total turnover of payment

26 https://www.kursiv.kz/news/finansy/v-2017-godu-bolee-cem-na-40-vyros-obem-beznalicnyh-platezej-v-kazahstane/ [cit. 03.02.2018] 27 https://kapital.kz/finance/63982/platezhnye-sistemy-rk-god-po-novym-pravilam.html [cit. 02.02.2018] 20 organizations is 74%. In addition, these organizations can attract payment agents or act as payment agents of banks, mutually complementing each other and expanding the presence of financial services in remote regions of Kazakhstan. There are more than 60 thousand units of the network of payment terminals, which are used to receive payments and which belong to payment organizations, as well as agents that belong to system organizations. Payment organizations processed 134.8 million transactions, the volume of rendered payment services amounted to 326.8 billion tenge and this is only for the first half of the year 2017. Now, second-tier banks also have the right to create or use a payment agent network to accept payments. With the adoption of the new law, banks were allowed to provide certain types of payment services using payment agents. 14 out of 33 banks have their own network of payment agents, through which non-cash payments including cash are accepted. In Kazakhstan, according to the National Bank, the agent network covers 69 payment agents, which in turn have 6153 subagents. The National Bank of the Republic of Kazakhstan has all the necessary tools and powers to implement quality regulation of the non-cash payment system and the payment system in general. As well as the National Bank will help, increase the transparency of the payment market in Kazakhstan. After the adoption of the new law, there have been some changes in the sphere of execution by banks (issuers) of payments. The most important is the shortening of the terms of execution by banks of the instructions of the clients. Previously, the bank of the sender of money, as well as the beneficiary's bank, could perform the money transfer operation right up to 4 days, but today the clients' instructions must be executed during the day of receipt of the payment to the bank. There are exceptions for some cases, for example, if there is no money, in this case the document is placed for storage in a card file, or the execution of card payments and payments with a future implementation date. In general, this innovation is aimed at accelerating the implementation of payments. Another noticeable change was a new mechanism for banks on payment claims for recovery from debtors who had overdue the payment of arrears to the Bank, which issued the money. From January 1, 2017 such innovations on payment requirements, collection of funds, are executed by banks from current accounts of borrowers, but within 50% of the amount of money that is on the borrower's current account. Also, since January 1, 2017, a restriction has been set for the issuing of several payment claims by the creditor banks to the bank account of the debtor simultaneously within the framework of a single loan agreement. Prior to the adoption of the law, banks of senders of money accepted payment requirements without restrictions. These measures are aimed at protecting the rights of the borrower and presuppose the preservation of the debtor's funds to ensure its livelihoods. Since the introduction of a new procedure for the execution of a payment demand by the National Bank for its violation of 6 banks, limited measures have been applied and 2 banks have been brought to administrative responsibility. Also, the mechanism for applying direct debit of a bank account as a way of making payments taking into account worldwide practice was substantially modified.

2.4 Analysis of non-cash payments in Kazakhstan after the new law

The payment market is growing, showing high growth rates in all major areas. As it is written in the report of the National Bank, the segment of online payments is especially fast developing - it is the Internet and mobile payments. More than 70%28 of legal entities' payments are made through the Internet or other remote payment methods and every second non-cash payment of individuals is conducted today through remote channels. The most significant trends today are also connected with the growth of remote services, the emergence of new non-bank players, technologies and solutions, additional services, which change the role of banks in servicing payments and business processes. In general, the norms of the main branch law of the Republic of Kazakhstan lay the necessary legal basis for the future development of the market and enhance its innovative potential. According to the National Bank in the report on non-cash payments, for 9 months of 2017, the volume of non-cash payments in Kazakhstan increased by more than 40%29. The volume of non-cash payments using payment cards for the year 2017 increased by 80.7% in terms of quantity and by 75.0% in terms of the amount of payments compared to the previous year. Non-cash payments using payment cards of Kazakhstan issuers amounted to 152.1 million transactions in the amount of 1 965.5 billion tenge. As can be seen in Chart 5, the share of non-cash payment in the total volume of transactions using payment cards increased by the number of payments to 47%, and by the amount of payments - up to 20.4%. The growth of non-cash payments using payment cards was, of course, facilitated by the work carried out by banks to expand the service network of payment cards, the development of Internet and mobile banking systems, as well as motivational and loyal programs to increase customer interest in the use of payment cards to pay for goods and services. At the time of the report, the number of POS terminals for the 9 months of 2017 increased by 18.8% to 121,725 units, compared to the same period in 2016.

Chart 5 Proportion of non-cash payments using payment cards for 2011- for 9 month 2017

28 https://kapital.kz/finance/63982/platezhnye-sistemy-rk-god-po-novym-pravilam.html [cit. 02.02.2018] 29 https://www.kursiv.kz/news/finansy/v-2017-godu-bolee-cem-na-40-vyros-obem-beznalicnyh-platezej-v-kazahstane/ [cit. 03.02.2018] 22

Sources: Non-cash payments using payment cards show stable growth. Available from http://m.nationalbank.kz/cont/%D0%98%D0%BD%D1%84%D0%BE%D1%80%D0%BC%D1%81%D0%BE%D0%BE%D 0%B1%D1%89%D0%B5%D0%BD%D0%B8%D1%8F.%204%20%D1%82%D0%BE%D0%BF%D0%B8%D0%BA%D0% B0.pdf [cit. 03.02.2018]

The National Bank's report on non-cash payments says that the volume of payments through money transfer systems grew by 24%30. The total volume of transactions sent through money transfer systems for 2017 amounted to 1.9 million transactions in the amount of 361.6 billion tenge and increased in comparison with 2016 by 24.0%. Payment systems are mainly focused on carrying out gratuitous transfers (99.7% of the total number and 99.6% of the total amount of money transfers). For urgent and small transfers of money abroad, the services of money transfer systems provided by banks and organizations carrying out certain types of banking operations are mainly used, based on agency agreements with operators of these payment systems. At the same time, the volume of money transfers through money transfer systems across Kazakhstan in January-September of 2017 amounted to 150.7 thousand transactions worth 15.2 billion tenge. Over 1 million 766.8 thousand transactions were transferred through the money transfer systems for the amount of 346.4 billion tenge, 1 013.0 thousand transactions were received from abroad for the amount of 226.9 billion tenge.

Chart 6 Dynamics of Payment Flows in Payment Systems of the National Bank of Kazakhstan for 2010- for 9 month of 2017

Two national payment systems operate in the Republic of Kazakhstan: Interbank money transfer system (ISMT) and Interbank Clearing System (ICS), as well as local

30 http://m.nationalbank.kz/cont/%D0%9E%D0%B1%D0%B7%D0%BE%D1%80%20%D1%81%D0%B2%D0%BE%D0%B 4%20%D0%BD%D0%B0%20%D1%80%D1%83%D1%81%D1%81_15112017.pdf [cit. 03.02.2018] 23 systems: Altyn Card of Halyk Bank of Kazakhstan JSC, a local card of JSC Citibank Kazakhstan. In addition, payment cards of international payment systems are issued in the Republic of Kazakhstan, such as Visa International, MasterCard Worldwide, American Express International and UnionPay International. At the same time, the share of Visa and MasterCard payment systems accounts for more than 95% of all transactions and issued debit and credit cards. As we see in Chart 6 for 2017 In the payment systems of the National Bank of Kazakhstan, the growth trend in the volume of payments remained. For 9 months of 2017, through the system of ISMT and QMS, 26.4 million transactions were made, for a total of 643.4 trillion. tenge. If we compare with the results for 9 months of 2016, the number of payments in payment systems decreased by 0.6% - this is 153.3 thousand transactions. But the amount of payments on the contrary, increased 49.2% - it is 212.1 trillion. tenge. This is explained by the fact that the volume of payments with securities and deposits mainly grows.

2.5 Interbank money transfer system

Reliable and secure payment systems contribute to the stability of the financial system of the state as a whole, ensure the effective use of financial resources and improve the liquidity of financial markets, and also ensure timely settlement between sellers and buyers. The system of non-cash payments in Kazakhstan, inherited from the previous centralized planning system and supported by the State Bank of the former Soviet Union, was not suitable for the new conditions of a market economy. In this regard, the National Bank of the Republic of Kazakhstan in 1991 started the reform of the payment system. At the initial stage of development, the main objectives of the reform of payment systems in the Republic of Kazakhstan were to accelerate the passage of payments between banks and their customers (at the beginning of the 1990s, the period of one payment was 3-12 days), as well as the wider introduction of various payment instruments, checks, payment requests). The first step in reforming the payment system was the transfer of commercial banks' inter-branch accounts (IFTs) accounts to correspondent accounts opened in branches of the National Bank of the Republic of Kazakhstan, which allowed the IFTs to close down, streamline the organization of inter-bank payments and ensure the execution of cash services for commercial banks. In order to ensure interbank payments, in 1992 the National Bank established settlement and cash centers in all districts, cities, city districts of the regional centers and the city of Alma-Ata. By mid-1992, 19 regional CSCs and 274 regional CSCs of the National Bank operated. In 1993, as the technical means were ready, electronic payments began to be introduced in payments between the regions of Kazakhstan in order to accelerate payments, as well as to prevent the use of fictitious advices.

In 1995, on the basis of the National Bank, the Almaty Clearing House (ACH), the first in Kazakhstan, was organized, which worked on the multilateral netting method. Final payments were made once at the end of the trading day by the net position of each participant. The main disadvantage of this system was that at the end of the day the participating banks had to exchange payment orders on paper carriers. This was due to the lack of a normatively fixed concept of "electronic payment order" and the ability to make payments electronically. In order to develop and improve the payment system of the Republic of Kazakhstan, regional clearing houses were set up in the regional branches of the National Bank in 199631, which carried out inter-bank clearing of intraregional payments. In total there were 19 clearing houses during this period. Also in 1996, ACH was reorganized into the Kazakhstan Interbank Settlement Center (KISC), which installed modern equipment and developed software that allows to work with electronic payment orders that do not require confirmation on paper. This became possible after the legislation of the Republic of Kazakhstan provided for the possibility to make payments electronically and enshrined the concept of "electronic payment order". One of the most important moments in the development of the payment system of the Republic was the creation in August 1996 on the basis of KISC of the System of large payments processing electronic payment orders, performing calculations on a gross basis and having the characteristics of a prospective RTGSS (gross settlement system in real time). An important measure contributing to the improvement of payment systems was the centralization of correspondent accounts of second-tier banks in the central office of the National Bank, which was carried out between October and November 1998. The centralization of correspondent accounts allowed the National Bank to quickly perform the functions of a settlement bank and a bank of banks, to improve the efficiency of control functions over the payment system and the banking system as a whole. In order to develop the retail payments market and improve the quality of services provided in this area of banking, the National Bank closed clearing chambers in the regional branches of the National Bank in 1999. At present, clearing of retail payments is performed by the KISC clearing system. At the end of 200032, the KISC Large Payments System was transform into the Interbank Money Transfer System (ISMT), which performs real-time payments (RTGSS) within the available funds in the users account and meets all the basic requirements of international financial organizations for payment systems on gross basis. The introduction of the IMTS was the next stage in the development of payment systems in Kazakhstan, which improved the mechanisms for monitoring the system and managing the liquidity risks of participating banks. Currently, two national payment systems operate on the territory of the Republic of Kazakhstan: The Interbank Money Transfer System (ISMT) and the Interbank Clearing System (ICS).

31 http://www.nationalbank.kz/?docid=341&switch=russian [cit. 01.07.2017] 32 http://www.kisc.kz/pay_systems/mspd.html [cit. 04.07.2017] 25

The Interbank Money Transfer System (ISMT) is a real-time gross settlement system (RTGSS) in which each document is processed individually and money is transferred on the basis of each payment document. Money transfer in the system is carry out within the amount of the user's money transferred from his correspondent account opened with the National Bank to a specially defined account of the system at the National Bank, as well as the amount of money received from other users of the ISMT. The account of the system in the National Bank serves to account for the money of users during the period of money transfers in the system. The purpose of the ISMT is to process the largest and priority payments in the country. Through the system can be carried out both credit and debit transfers. The system ensures the final settlement in national currency (tenge) during the operational day. At the same time, payments to the ISMT are made only electronically. The ISMT is managed by the National Bank, and the Kazakhstan Interbank Settlement Center (KISC) is the operator of the system that ensures its operation. The ISMT is based on a solid legal framework presented by the Law on the National Bank of the Republic of Kazakhstan, the Law on Banks and Banking Activities in the Republic of Kazakhstan, and the Law on Payments and Money Transfers. Rules for the transfer of money to ISMT, Rules for the use of payment documents and for the implementation of cashless payments and money transfers in the territory of the Republic of Kazakhstan, as well as other rules and standards, have been developed and are being implemented, where procedures for the functioning of the system are described in detail. The ISMT complies with the information security procedures approved by KISC, which are aimed at verifying the transmission of electronic messages and detecting errors in their transmission. KISC and users provide accounting and control over the sent and received electronic messages. All electronic messages processed in the ISMT leave an audit trail.

Picture 1 Exchange of electronic messages

Sources: http://www.nationalbank.kz/?docid=672&switch=russian [cit. 05.07.2017] At the beginning of the operational day of the system (from 8 to 9 am), the National Bank of the Republic of Kazakhstan transfers a certain portion of the means of users of ISMT

26 from their correspondent accounts with the National Bank of the Republic of Kazakhstan to a specially designated account of the NBRK - the ISMT account with the NBRK. The operational day of the ISMT starts at 9:00. Transfers of money to the ISMT are made during the operational day within the amount of the user's money transferred to the account of the ISMT in the National Bank, as well as the amount of money received from other users of the ISMT. In case of insufficient money to make a payment, the payment document becomes in the queue. The payment documents in the queue are processed in accordance with the priority codes. Within the priority codes, the execution of payment documents is carried out in the order of their receipt in the queue, according to the principle of FIFO (the first in the arrival, the first in the expenditure). Users of the system have the right to establish and change the order of execution of payment documents. In addition, users can withdraw the payment document that is in the queue. During the operational day, users, upon their request, are provided with information on executed payments, on payment documents registered in the queue, and on the remaining money of the user in the system. Closing of the trading day is at 19:00. However, at the request of the system user, the National Bank may extend the operational day. After the end of the operational day, the ISMT forms each documents finalizing the operational day. At the same time, an electronic statement is sent to the National Bank with balances of users' positions. The National Bank checks this statement and reports the results of the audit to KISC, then the National Bank transfers money in the amount of the balance of the users' positions from the account of the ISMT in the National Bank to the correspondent accounts of these users opened with the National Bank. The number of users as of October 1, 2017 was 38 second-tier banks and JSC "Development Bank of Kazakhstan"; Committee of the Treasury of the Ministry of Finance of the Republic of Kazakhstan; 6 organizations that carry out certain types of banking operations (Kazpost JSC, Kazakhstan Mortgage Company JSC, Central Securities Depository JSC, Kazakhstan Stock Exchange JSC, RSE Kazakhstan Center for Interbank Payments of the NBRK and Clearing House of KISC); State Center for the Payment of Pensions; Interstate Bank and Eurasian Development Bank; The National Bank of the Republic of Kazakhstan (Appendix A).33

(thousand transactions and billions of tenge. respectively) Year October Total (Jan. - Oct) Quantity Volume Quantity Volume 2015 Total 1 126,6 25 790,2 11 095,7 185 587,3 average per day 51,2 1 172,3 54,4 909,7 2016 Total 1 107,6 47 913,9 11 535,5 474 939,9 average per day 52,7 2 281,6 56,5 2 328,1 2017 Total 1 243,6 69 904,7 12 184,7 708 680,9 average per day 60,0 3 165,6 59,8 3 455,7

33 www.nationalbank.kz/document/?docid=6132&switch=rus [cit. 21.12.2017] 27

Table 1 - Dynamics of changes in the number of payments through the IMTS

Sources: www.nationalbank.kz/document/?docid=6132&switch=rus [cit. 21.12.2017] As you can see in Table 1 in total, during January-October 201734, as shown in “Table 1” through the ISMT, 12.2 million transactions were made in the amount of KZT 708,680.9 billion. Compared to the same period in 2016, the number of payments increased by 5.6% (for 649.2 thousand transactions), the amount of payments increased by 49.2% (by KZT 233 740.9 billion) and in 201535 the number of payments increased by 4.0% (by 439.7 thousand transactions), the amount of payments increased 2.6 times (by 289.4 trillion tenge). On average, 59.8 thousand transactions for the amount of KZT3,455.7 billion were made through the ISMT for January-October 2017. which is 5.8% more than in the same period of 2016 (by 3.3 thousand) transactions) and by an amount of 48.4% (by KZT1,127.6 billion) and in 2015 by a quantity of 4.0% (for 2.2 thousand transactions) and by a total of 2.6 times (by 1.4 trillion tenge). In accordance with the main purpose of the ISMT, users send mainly large and urgent payments to the specified system for financial sector operations. Thus, during the period January to October of 2017, mainly payments were made through the ISMT on transactions with securities of residents of Kazakhstan (48.8% of the total volume of payments to the ISMT), as well as with inter-bank deposits and transfers of own funds of banks and their customers (26.5%, respectively). At the same time, through the ISMT, systemically significant payment system of the country, during the period January to October of 2017, 98.3% of the total volume of non-cash payments in the country and 39.2% of their total amount were processed, which indicates that the ISMT is designed for carrying out the largest and high-priority payments.36

2.6 The system of interbank clearing (ICS)

The system of interbank clearing (ICS) is a clearing system for retail payments for small amounts. In this system, all payments are made on a net (net) basis. The main direction of the ICS is to conduct a large number of retail payments for small amounts. ICS is implemented on a multilateral basis without prior deposit of funds on the user's account. At the same time, the system sets a limit on the maximum amount of one payment equal to 537 million tenge. In the system, you can use the value date, i.e. send payment documents to the system with a future payment date of up to three days. Documents received with a future value date are stored in the system before the specified date, after which they are processed in clearing. This allows participants to plan their liquidity in advance. Transfers of money based on the

34 Development ISMT and ICS 2017 – www.nationalbank.kz [cit. 21.12.2017] 35 Development ISMT and ICS 2016 – www.nationalbank.kz [cit. 21.12.2017] 36 www.nationalbank.kz – ISMT. Review of results oversight payment systems and market development payment services for 9 month 2017. (P. 7-9) [cit. 01.11.2017] 37 www.nationalbank.kz/document/?docid=6132&switch=rus [cit. 08.11.2017]

28 results of clearing are carried out in the ISMT. Each participant of the system has access to information about all his payments that are in the system. The new operational day of the ICS starts at 4:00 pm. Reception of documents in the system is carried out round the clock. The peculiarity of the ICS is that the payment documents are not processed individually, but are queued up to the moment of calculation also on the basis of the FIFO principle. Clearing participants have the opportunity to withdraw the payment document sent to the system before the close of the trading day. The settlement of the counter claims of participants of the system with the current payment date is carried out once a day from 15:00 to 16:00. At the same time, the payment documents are offset in accordance with priority codes, and within the same priority code, payment documents are processed in the order of their receipt in the queue. Based on the results of the test, the net position of each participant is determined. The net debit position of the clearing participant shall not exceed the amount of money held by this participant in the ISMT. In case of insufficient money in the ISMT for final settlement, the payments in the ICS in the queue with lower priority are canceled. The final transfer of money based on the results of clearing is carried out through the ISMT. After the transfer of money, a new operational day of the clearing system begins. As you can see in Table 2, in October 1, 2017, the number of participants in the Interbank Clearing System was 38, of which 32 second-tier banks, the Treasury Committee of the Ministry of Finance of the Republic of Kazakhstan, the National Bank of the Republic of Kazakhstan, 3 accounts for the State Center for Paying Pensions, Kazpost JSC (Appendix C, table C.1). For January-October of 2017 through this system 17.4 million electronic payment messages were made for the amount of 5 205.4 billion tenge. Compared to the same period in 2016, the number of payment messages in the clearing system decreased by 2.0% (by 346.5 thousand documents), the amount of payments increased by 8.2% (KZT 394.3 billion). On average, during the day through the clearing system for January-October 2017, 84.9 thousand payment messages were made for the amount of KZT 25.4 billion, which is less than the level of the same period in 2016 by the number of messages by 2.4% (by 2.1 thousand transactions) and more on the amount of payments by 7.7% (by 1.8 billion tenge).38

(thousand transactions and billions of tenge. respectively) Year October Total (Jan. - Oct) Quantity Volume Quantity Volume 2015 Total 1 767,0 491,3 18 040,4 4 490,3 average per day 80,3 22,3 88,4 22,0 2016 Total 1 598,4 519,5 17 759,5 4 811,1 average per day 76,1 24,7 87,1 23,6 2017 Total 1 918,7 570,4 17 413,0 5 205,4

38 www.nationalbank.kz – ICS. Review of results oversight payment systems and market development payment services for 9 month 2017. (P. 9-11) [cit. 01.11.2017] 29

average per day 87,2 25,9 84,9 25,4

Table 2 - Dynamics of changes in the number of payments through ICS

Sources: www.nationalbank.kz/document/?docid=6132&switch=rus [cit. 24.11.2017] On average, 84,9 thousand documents for the amount of 25,4 billion tenge passed through the clearing system for January-October 2017, which is less than the level of the same period in 2016 by the number of payments for 2.1 thousand transactions (by 2,4%), and more by the amount of payments - by 1.8 billion tenge (by 7,7%). At the same time, the average amount of one payment in the System of Interbank Clearing for 2017 was 260.5 thousand tenge, having increased by 15.5% compared to 2016 (by KZT35.0 thousand) and in 201539 by the number of payments by 1.6% (per 1.4 thousand transactions) and more by the amount of payments - by 7.1% (by 1.6 billion tenge). At the same time, 77.6% of the total number of non-cash payments in the country and 1.7% of their total volume were made in the Interbank clearing system intended for making payments that are not of high priority and not exceeding KZT 5 mln. the clearing system fulfills its mission in carrying out a significant number of payments to small amounts. In ICS the number of participants as of January 1, 2017 amounted to 36. In 2016, through the system, 21.3 million electronic payment messages for the amount of KZT6.0 trillion. Compared with 2015 number of payment messages in the clearing system decreased by 1.8% (by 399.1 thousand documents), the amount of payments increased by 8.9% (by 489.6 billion tenge). Average amount of one payment message in ICS for 2016 was 282,4 thousand tenge, having increased in comparison with 2015 by 27.8 thousand tenge, or by 10.9%. In the context of the amount of payments, the largest share in the number of transactions in the ICS account for an interval of up to 500 thousand tenge (90.0%), the major share of the amount of payments - to electronic payment messages in the range from 1 million tenge (the share of 77.6%). Through the ICS, most of the payments were made by economic entities for the calculation of goods and intangible assets (share in total the volume of payments in the system was 28.9%), services provided (26.2%), payments to the budget and payments from the budget (18.6%).40

39 Development ISMT and ICS 2016 – www.nationalbank.kz [cit. 01.11.2017] 40 Review of results oversight payment systems and market development payment services for 9 month 2017. (P. 7-9). Available from http://nationalbank.kz [cit. 18.12.2017] 30

3 Feature of application of non-cash payment system in Kazakhstan

The uniqueness of the Republic of Kazakhstan lies in the fact, first that only 35 countries have national payment systems, Kazakhstan is one of them, and secondly, that if, for example, in Russia, the national payment system Mir starts work in 2015, then in Kazakhstan, the foundations of the national payment system were created in 1996. Features of the payment system in Kazakhstan are as follows: making payments in real time; the ability to determine at any time of the operational day the amount of funds on the correspondent account, so that it is profitable to use the bank's funds; he ability to independently determine this or that way of performing settlements in compliance with the relevant requirements; availability of reliable means of protection against unauthorized access by unauthorized persons. The national payment system developed and operating in the Republic of Kazakhstan differs favorably from payment systems of other CIS countries. The payment system existing in the Republic of Kazakhstan is compatible with all international payment systems. In addition, a new law on non-cash payments and rules for the use of non-cash payments and money transfers was developed. Today, with the majority of problems, banks in Kazakhstan have basically coped. However, not all the problems that should be solved have been solved. Banks do not use all the opportunities that are available to boost the economy. Abroad, collection orders are widely used by banks in the process of their management of corporate finances - a complex set of transactions with cash, liquidity, risks, etc., divided into two large groups - the control and treasury. In particular, in carrying out the treasury function, banks maximally reproach collection of money for large corporations, "collecting" them from hundreds of branches to concentrate on a single account for quick and profitable investment of even the smallest cash surpluses. Banks help to neutralize the risk of customers refusing payment, delivered products or late payment. The advantage for banks from such operations is, first, in mobilizing additional liabilities and expanding the deposit base, secondly, in obtaining income in the form of payment for services, thirdly, in a strong attachment, the clientele for service through a close relationship with it. A number of Kazakhstan banks are very actively involved in such activities. When making payments in a letter of credit, banks charge a higher commission fee, because of difficulties and high costs.

The advantage of a letter of credit form is the guarantee of payment and the opportunity to receive it as soon as possible after the shipment of the goods. This form of payment is preferred by the supplier, if not sure of the buyer's solvency. Lack of payments by letters of credit is a distraction from the buyer's turnover of funds, since he reserves them to pay the supplier's invoices before shipment of goods. The accredited form of payments takes an insignificant share in the payment turnover. Thus, the use of bills will pay off the debts of enterprises; it will lead to a new inside the republican offset of mutual debts of enterprises and organizations; necessity of additional issue of tenge and growth of inflation. The drafts must have free circulation, including their sale on bill auctions, which can be organized by the stock exchange or by commercial banks. Outstanding in time, drafting companies, if any, will be transferred to the courts in due course in accordance with the established procedure with a view to withdrawing the property pledged under the promissory note from the drawer. The first interim agreement in the Republic on the bill settlement system was approved by the National Bank on February 27, 1992. But it remained unrealized in practice. However, in one way or another, the market economy will require the application of a bill of exchange settlement system. From the point of view of methodological support, the National Bank has enough, with minor adjustments to date, to apply the law on transfer and promissory notes (an annex to the "Convention Establishing the Law on Transfer and Promissory Notes", signed in Geneva on June 7, 1930).41 Kazakhstan, as a private legal successor to the USSR, is a party to this Convention. However, without the existence of a clear bill of exchange legislation that ensures the functioning of this system of payments, one cannot introduce it. Calculations with the help of payment requests-instructions, which replaced the accepting-collection form of payments, are not very effective and will work in full only with the appearance of money on settlement accounts of enterprises-buyers. The non-cash form of payments by checks is developed all over the world. In Kazakhstan, however, basically payment orders. Banks are interested in the concept of the National Bank of the Republic of Kazakhstan on the creation of a modern payment system in the country, which provides for various types of payment instruments. Including checks. At the end of January 1997, the National Bank of the Republic of Kazakhstan adopted the provision "On Calculations with Guaranteed Checks". According to a sociological survey among clients, the results showed that the proposal to issue checks interested them. A guaranteed check is a means of payment for non-cash payments in tenge, is provided by means on the account of the owner's checkbook and a guarantee. On this

41 "The National Bank summed up the results of 2000", O. He. Panorama, The Weekly Newspaper, Almaty, 2001. - No. 1 - P. 27-28.

32 document, the amount in which the bank undertakes to pay a check is indicated in a typographical manner. The scope of checks is expanding. So, banks conclude contracts with organizations where there are financial flows. This is the Customs Committee of the Republic of Kazakhstan, companies selling air and railway tickets, road and rail transport. The speed of payments when processing the same customs procedures increases, enterprises do not incur costs using a check system of payments. A guaranteed check is a means of instant payment. On checks you can buy goods, pay for services partners. Money to the seller's account will not arrive immediately, but upon receiving a check of the bank, he receives the bank's obligation to pay by check regardless of the state of the customer's account. For example, issuing checkbooks is done in two ways: With the deposit of the amount. However, the funds from the turnover of the enterprise are not free of charge: the interest on the account balance is calculated monthly, based on the rate -% on demand, according to the bank's tariffs of +1% per annum. Without depositing the amount for customers who have a credit history with the bank. This is a kind of short-term loan. For settlement by checks, the bank charges the same commission fee as for payment by payment orders. Checks have many advantages. If plastic cards require special equipment, then the scope of checkbooks is not limited. Checks should interest entrepreneurs of small and medium-sized businesses, where the intensity of transactions and transactions is high. There is one more advantage of checks before payment orders is that the scheme of their filling is simplified: for filling does not require the signature of executives and the seal. The checkbook is more universal - its owners can be both legal entities and individuals. When calculating checkbooks, you must follow certain security measures. When a checkbook is received, each owner informs the bank of the codeword, which is the password for authorization. If a check is lost, the customer informs the bank about it, which includes the numbers of these checks in the stop - list. Illegal use of checks is excluded, since before payment the check will be checked on the stop list. Each check has a copy designed to track the owners of traffic written checks and expenses. According to the position of the National Bank of the Republic of Kazakhstan, check forms must have at least 5 degrees of protection. On guaranteed checks, seven of them: a watermark, a micro font, the borders of check fields consist of micro-letters composing a word, on the back there is a drawing made using a special technology, a guilloche frame, the numbering on the check must correspond to the numbering on the reverse side of the cover of the checkbook, - a certain saturation colors. Priority areas of activity in commercial banks include the development and widespread introduction in the territory of Kazakhstan of electronic payments that facilitate the passage of payments and ensure high-quality and reliable service for all billing participants. When electronic payments are used, full-format electronic documents that do not require accompaniment with payment documents in paper form are used. And also electronic documents of the reduced format, accompanied by settlement documents on paper carriers.

A significant expansion of the scope of electronic payments, will allow for the calculation in a shorter period. Electronic payments provide limitation of access rights to processing systems, identification of signatures and integrity of payment documents. Preservation and confidentiality of information, immediate transmission of a message about an attempted unauthorized access, transfer of information about payments. The pricing policy of banks is based on the differentiation of tariffs depending on the types of payments, methods and time of transfer of payment documents. In order to stimulate the introduction of modern means of communication and electronic payments to customers, the lowest tariffs are set for electronic payments, the highest - for payments on a paper basis. In order to improve the system, the focus will be on determining the efficiency of operations, reliability issues, methodological aspects of building payment systems. As well as the level of sufficiency of banking services. Benefits of the user S.W.I.F.T .: - common language and common operational procedures for the exchange of financial information; - automation of processing operations; - A reliable network that is always available; - Unrivaled security and privacy guarantee; - Convenience of direct access to correspondents, partners, branches; - clearly defined rules that impose liability and obligations on the sender, the recipient and S.W.I.F.T .; - A flexible universal platform that can ensure compatibility with your financial applications, the key to achieving and maintaining competitiveness; - turnkey equipment and software in conjunction with consulting services. The work of the Collective Access Node (CAN) in the network S.W.I.F.T. is provided. using the X.25 data transfer protocol. Correspondent Bank not only forms, checks and sends electronic documents to the bank, but also receives statements on its accounts in quasi-real time mode. In the statement, he sees both debit and credit documents, and each of them the client can view and print in the corresponding S.W.I.F.T.- format. New competition appears among other sectors of communications. The Internet is a more global tool. It provides for the removal of geographical barriers. Through the Internet, you can also make various financial services. Thus, attempts to create a new payment instrument on the technological basis of the next century and thus to get ahead on the world level are good. However, the approach seems to be correct - the way of maximum integration into the world banking system using its payment instruments, promising and traditional, entering into its development rhythm. If we

34 go "our own way," then we will simply fall out of the international system. Exit in the near future to the level already achieved by Western banks, it is possible only through integration into international settlement and payment systems. It is advisable for the Government of the National Bank of the Republic of Kazakhstan to develop a long-term program for supporting commercial banks taking into account the results of their activities, the availability of personnel, material resources, location and other factors. The solution of these problems will contribute to the improvement of the economy of Kazakhstan.

3.1 Analysis of trends in performance indicators of payment management operations

The Savings Bank is entitled to the following credit and settlement transactions in tenge and foreign currency: attract and place cash deposits, deposits, and loans by agreement with the borrower; perform payments on behalf of customers and correspondent banks and their cash services; open and maintain accounts of customers and correspondent banks; issue guarantees, guarantees and other obligations for third parties that provide for execution in cash; attract and place funds and manage securities on behalf of customers.

Increased competition between banks for attracting clients requires special attention from all credit institutions to the problem of organization of relations with customers, expansion of the range of banking services, improvement of their quality, establishment of partnership relations between the bank and its clients. Specificity of organization of work with the clientele of the bank in each case, the risk of accounting for balance sheet and off-balance accounts. Thus, all documents received during the operational time are subject to registration and reflection on the accounts on the same day. Documents that arrived after the expiration of the operating time are reflected in the accounts on the next business day. The procedure for accepting documents after the operational time is specified in the contracts for customer service. Acceptance of payment documents from customers during the operational day is made directly by the operating officer. If the documents for any reason cannot be accepted for execution, then clients are notified about it either orally, or by telephone. Unworked documents are attached to the statement with the mark "without execution". The complex of services for account maintenance assumes: execution of the client's order for the transfer of the relevant amounts from the account;

making payments in the forms established by law and banking rules through RCC networks or accounts of their correspondent banks. transfer of funds received to the client's account; reception of documents for deferred execution; issue of account statement; advising on the issue of payment documents. Settlement operations with branches of the National Bank, as well as with correspondent banks are carried out within one hour. More than 99% of money transfers on behalf of clients is carried out through electronic payments through the Bank's own correspondent network and the system of payments of the National Bank of Kazakhstan.42 The Bank's strategic task for deposits is primarily due to non-competitive deposit rates. The growth of indicators was due to the balanced policy of the bank in all areas of activity. The Bank seeks to maximize profits while maintaining a sufficient level of bank capital and liquidity balance. Currently, among the customers of Banks there are representatives of all groups: big business, medium business, small business. And the main part of clients are small business representatives. Thus, banks have the right to perform the following credit and settlement transactions in tenge and foreign currency: to attract and place cash deposits, deposits, and loans by agreement with the borrower; to carry out payments on behalf of customers and correspondent banks and their cash services; open and maintain accounts of customers and correspondent banks; issue guarantees, guarantees and other obligations for third parties that provide for execution in cash; attract and place funds and manage securities on behalf of customers. Large business is represented, primarily by factories, by large enterprises (the production of pipes, steel smelting, the production of tractors, etc.). Average business is represented by enterprises of various sectors of the economy (trade, industry, education, other industries). Payments of bank customers are mainly carried out in two ways: through the cash settlement center of the National Bank of the Republic of Kazakhstan or directly to the correspondent account of another bank (if there are corresponding correspondent relations). The number of payment orders passing through the correspondent bank correspondent accounts increased at a faster rate than on unprocessed documents. To do this, we estimate the number and percentage of raw documents, and also identify the reasons for which the documents were not processed.

42 Zhukov V. "National Bank for the development of a system of non-cash payments for individuals" / / Banks of Kazakhstan - № 6 - 2005g. - pge. 36-43.

The share of unprocessed documents during the analyzed period varied insignificantly and was within 4-5% of the total number of documents. The most rapid growth is in balances on accounts of trade and intermediary organizations and organizations belonging to other sectors of the economy. The reasons are a lot of the data of the enterprises which are on service in bank. In addition, there is an increase in production volumes for these sectors of the economy.

3.2 The procedure for reflecting non-cash payments in accounting transactions using plastic cards

A bank plastic card is one of the ways of non-cash payments for goods and services, to get money to bank account and the receipt of cash by individuals and legal entities from a bank account. National (international) system of payments using cards is a set of rules, institutions, payment instruments and software and hardware used for issuing and servicing bank plastic cards. The bank that issued the card (hereinafter - the card) is called the issuing bank; a legal entity or an individual who has concluded an agreement with the issuing bank on the use of the card as a means of payment - the cardholder. A natural person who receives the right to carry out payments and other transactions by means of a card on the basis of a power of attorney or a holder's application - the card user. To carry out operations with cards their holder is open in the issuing bank by a card account. In accordance with their functional characteristics, the cards are divide into: A debit card is a card intended to pay for goods, receipt of funds in cash by direct debiting from the card account of the owner in the bank; debit and credit card - this card is used to receive banking services both at the expense of the user's own funds and, in some cases, at the expense of a loan provided by the issuing bank. Cards are payment instruments issued by issuing banks. Issuance of cards of the national (international) settlement system is carried out by the bank on the basis of the Permission of the National Bank of the Republic of Belarus for the right to carry out transactions using bank plastic cards in accordance with the "Rules for Conducting Card Transactions" adopted within the System. An individual for the receipt of a card shall submit to the bank the following basic documents: passport or other document proving the identity;

application form for receiving a card. If desired, a personal card can also be issued to another individual (relative), if the client specifies this in the application form for receiving the card. To a legal entity (an entrepreneur without the formation of a legal entity), in order to receive cards, it is necessary to submit to the bank: duplicate notification of assignment of taxpayer's account number; application form for each cardholder; the trust for each holder, signed by the head and chief accountant, sealed with an imprint of the seal. Operations with a debit or debit-credit card are made Only if there is a necessary amount of funds on the card account that legal entities transfer from their current account, individuals are deposited or paid in cash (through the issuing bank's cash desk). If necessary, the card account is replenished. Operations with a debit-credit card are made only at the conclusion of a loan agreement between the issuing bank and the cardholder. Before issuing a card, the bank must familiarize the card account holder with the following information: the scope of the card; conditions for using the card; Tariffs for transactions with cards; the rights and obligations of the client and the bank for transactions with cards; distribution of responsibility between the issuing bank and the client in case of violation of the Agreement; procedure for considering disputes; procedure for cancellation and withdrawal of the card. The issuing bank may impose certain restrictions on transactions with cards - the minimum and maximum limit of the amount of one transaction, the number of settlement transactions during a given period, the limit of the amount of settlement transactions for one day, a week, etc. The card is valid for the period stipulated in the contract. At the expiration of the validity period, the card can be replaced. The card is also replaced if the card fails prematurely, if the customer wishes, it is calculated with a different type of card. A new card is issued for the amount of unused funds on the card account. Payment by card is fixed in a card-check, which states: Name of the payment system; name and address of the enterprise of trade (service); card number; name of payment currency, amount of payment; date and time of the transaction.

Card-checks are submitted by the trade (service) enterprise together with the register to the bank's servicing institution for crediting the proceeds to its settlement account.43 The use of plastic cards helps to reduce cash turnover and costs of its servicing, accelerate the turnover of funds in the sphere of consumer transactions, improve the quality of work of bank employees and serve trade enterprises and the population.44 The most common, simple and affordable way to make a payment is a payment card. There are payment cards debit, credit and debit-credit. The debit card is used when making payments within the amount of money that is on the card account of its holder. With a credit card, you can pay for goods within the loan granted by the bank to the cardholder. At the same time, a debit and credit card can be calculated both within the amount of money on the card account of its holder, and within the loan granted by the bank. To issue a payment card, the bank enters into a contract with the client and opens a card account to it. At the same time, it can be opened not only in tenge, but also in foreign currency. Customers of the bank may have several payment cards with different payment currencies. With the help of a payment card, both non-cash payments and the delivery of cash are made. And payment by payment card can be made directly at fulfillment of purchase at the enterprises of trade and service. According to the technology of manufacturing, payment cards come with a magnetic strip and with a microprocessor. Now cards with magnetic stripe are the most widely spread, but in the world there is a tendency to replace them with payment cards with a microprocessor, which is conditioned by their reliability and long-term use. The payment card is used by its holder for payment purposes, as well as for receiving cash, currency exchange and other transactions on terms determined by its issuer. The payment card can be used only in those trading (servicing) organizations that have concluded an appropriate agreement with the issuing bank, payment card, or the bank that concluded the agreement with such issuer, or the bank servicing payment cards without an agreement with the issuer. Trading (servicing) organizations, the categories of which are established by the Government of the Republic of Kazakhstan, are obliged to accept payments using payment cards when carrying out trade operations (rendering services) on the territory of the Republic of Kazakhstan. Rights and obligations of payment participants associated with the use of payment cards arise from the moment the consent of the trading (service) organization to accept payment made using the presented payment card. According to the National Bank of Kazakhstan, 2645 banks and Kazpost JSC provide issuance of payment cards. All 26 banks such as "QazKom Bank", "Kaspi Bank" and others, and Kazpost JSC also issue and distribute payment cards of international systems: VISA

43 Poreslenko O. "Payment cards as an instrument of non-cash settlements with retail payments" / / Banking - 2005. - No. 11-c. 39-42.

44 Isofenko R. "Payment cards - instead of cash payments" / / Banking - 2007. - № 5 - with. 49-52.

45 http://nationalbank.kz/?docid=786&switch=russian [cit. 05.02.2018] 39

International, MasterCard Worldwide, UnionPay International and American Express International. The share of payment cards of international systems is - 99.6%. In addition, Kazakhstan banks issue payment cards of local systems: Altyn Card - Halyk Bank of Kazakhstan JSC and a local Citibank Kazakhstan card - Citibank Kazakhstan JSC. According to the National Bank, 19.4 million payment cards are in circulation, and the number of card holders is 17 million as of January 1, 2018. If to compare with the situation on the same for January 1, 2017, then the turnover of payment cards grew by 23.6% and the number of holders increased by 19.7%. The most common are debit cards, their share is 80.4%, the share of credit cards - 16.0%. Debit loans with credit limits and prepaid cards account for 2.7% and 0.9% respectively. In December 2017, the volume of transactions using payment cards of Kazakhstan banks amounted to 1 586.6 billion. tenge. Compared to December 2016, the volume of transactions using payment cards increased - by 39.6%). The number of transactions for December 2017 amounted to 53.6 million transactions, which is 53.6% more than in December 2016. At the same time, the growth in the number and amount of non-cash payments amounted to 120.5%, which in turn is 30.0 million transactions. And the volume of payments increased by 114.5%, with the total amount - 411.3 billion, tenge, and the growth of cash withdrawal operations - 11.0%. The amount of the cash withdrawal operation was 23.6 million transactions and the volume increased by 24.4%, which in turn - KZT1,175.2 billion. The main share of non-cash payments was made through POS-terminals (55.0% and 45.9% of the total number and volume of non-cash payments) and through the Internet (41.5% and 47.1%). Cash operations were mainly performed through ATMs (95.2% and 85.4% of the total number and volume of cash operations). More detailed information on the development of the payment card market in Kazakhstan is presented in Annex 4, table 6.

Conclusion

Based on the studies conducted in non-cash forms of payments in second-tier banks, the following main conclusions and suggestions can be made: 1. The country's payment system is an integral element of a market economy through which various economic opportunities are realized. The creation of a harmonious payment system in Kazakhstan has a special significance and is one of the key problems of economic reform in the transition period of the country to the market. In modern conditions, money is an indispensable attribute of economic life. Therefore, all transactions related to the supply of material values and the provision of services, conclude with monetary calculations. The latter can accept both cash and non-cash form. Organization of cash payments using cashless money is much preferable to cash payments, since in the first case considerable savings in the costs of circulation are achieved. The extensive use of non-cash payments is facilitated by an extensive network of banks, as well as by the state's interest in their development both for the previously mentioned reason and for studying and regulating macroeconomic processes. Accordingly, the non-cash form of payments is an integral part of the development of the banking system, as well as the development of the country's economy as a whole. 2. Proper control helps prevent default of obligations of both its own and counterparties, and if it comes from the latter, it is almost entirely possible to reimburse the losses incurred and thereby weaken the negative consequences. Opportunities for this have been significantly expanded due to the improvement of legislation, significantly supplementing the previous (before the transition to the market) measures of impact for not fulfilling monetary obligations. In connection with the reforms in Kazakhstan, perhaps, in no sphere of economic relations, with the exception of taxation, there have been as many legal and by-laws as in the field of payments relationships. The main place among them is taken by the acts on strengthening of property responsibility for violation of obligations when performing payments. 41

3. Analysis of non-cash money turnover in the sphere of material production shows that in cases where cash payments of business entities acquire predominantly an advance nature, their dependence on the proceeds of funds on the performance results is violated. Absence of dependence of expenses on receipts leads to the fact that the maintenance of the reproduction process is carried out not at the expense of own savings, but with the constant use of the credit and financial redistribution mechanism. Thus, the functioning of enterprises is carried out in the conditions of uninterrupted debt, their real solvency is steadily falling. The increase in the efficiency of the activities of business entities requires, first of all, ensuring that the expenditures that are made are consistent with the revenues received by each individual link in the economic turnover, as well as the formation of the necessary amount of money within these boundaries within the limits established by the needs of the money turnover.

4. Depending on the forms of non-cash payments used by business entities, the structure of non-cash money turnover is characterize by the specific weight of each of the forms in the total volume of payment turnover. In recent years in cashless turnover, the largest share is occupied by payments by payment orders. Changes in the structure of non- cash money turnover are due to the advantages or disadvantages of one or another form of payment, as well as the National Bank's policy in the sphere of payments. Changes in the volume and structure of non-cash payment turnover are connected, first, with qualitative changes occurring in the economy: growth (decrease) in production volumes and sales of products, aggregate social product, and national income. 5. In modern conditions, money is an indispensable attribute of economic life. Organization of cash payments using cashless money is much preferable to cash payments, since in the first case considerable savings in the costs of circulation are achieved. The extensive use of non-cash payments is facilitated by an extensive network of banks, as well as by the state's interest in their development both for the previously mentioned reason and for studying and regulating macroeconomic processes. This research gives grounds to assert that electronic money is a very flexible tool that allows expanding the scope of cash. Only with the use of electronic payments is possible: - Develop the market of micropayments - so necessary for the information business in modern conditions; - due to the rapid turnover of electronic money, the rate of inflation is decreasing; - the cost of transactions using electronic money is much cheaper than the cost of traditional money transactions; - processing and accounting of electronic money is simpler, and their use can seriously change the structure of banks and reduce their staff; - electronic money, unlike check and credit systems, allows to maintain anonymity of transactions (to some extent), as they do not require the identification of the payer and its creditworthiness when using them;

- the organization of cash payments using electronic cashless money is much preferable to payments in cash, since significant savings in the costs of circulation are achieved; - the wide application of electronic cashless payments is facilitated by an extensive network of banks, as well as by the state's interest in their development, both for the above reasons and for studying and regulating macroeconomic processes; - and ultimately the development of non-cash (electronic) payments contributes to the "forced legalization" of the shadow economy, since the latter is based mainly on cash payments. Summarizing the presentation of the latest measures on non-cash payments, it should be noted that for the time being there has not been established an integrated system for controlling the sphere of payments on the part of the bodies called upon to implement it: commercial banks and the National Bank of the Republic of Kazakhstan, the Ministry of Finance of the Republic of Kazakhstan, the State Tax Service of the Republic of Kazakhstan, tax police of the Republic of Kazakhstan, prosecutor's office. This is largely due to the emergence of new conditions for the activities of these bodies themselves with respect to the market economy, as well as the shortcomings in the creation of an appropriate legislative framework. During the research, the main directions of development and ways to improve non- cash payment turnover in second-tier banks of the Republic of Kazakhstan were identified. This diploma work makes a significant contribution to the development and improvement of the system of cashless payments in the Republic of Kazakhstan. Therefore, the organization of non-cash payments in our country is at the developmental stages.

List of literature

Babicheva Y. A. Banking. - Moscow: "Economics", 1993. - P. 42-48.

Antonov N.R, Pessel M.A Money circulation, credit, banks. - Moscow: Finstatinform, 1995. - P. 207-210.

The Constitution of the Republic of Kazakhstan. 1995.

Civil Code of the Republic of Kazakhstan. November 24, 1994.

Law of the Republic of Kazakhstan dated June 29, 1998. No. 237-1 "On payments and money transfers" (as amended by the Laws of the Republic of Kazakhstan of December 28, 1998, No. 336-1, dated March 29, 2000, No. 42-II).

Law of the Republic of Kazakhstan, dated April 14, 1993, "On Currency Regulation".

Presidential Decree of August 31, 1995, No. 2444 "On Banks and Banking Activities" (as amended and supplemented on July 10, 1998, No. 282-I).

Decree of the President of the Republic of Kazakhstan, having the force of the Law of March 30, 1995, No. 2155 "On the National Bank of the Republic of Kazakhstan" (as amended on June 29, 1998, No. 282-I).

Polikatov Oleg and Yalymov Ernest: The System of Retail non-cash payments in Kazakhstan. Bank Technologiees, 2011

Kokkola Tom – The Payment System, ECB, 2010

Beketov K. Loan operations of banks. Banks of Kazakhstan, 1998. - №7. - P. 75-82.

Bulletin of the National Bank of the Republic of Kazakhstan. - 2007-2008-2009-2010.

Code of the Republic of Kazakhstan "On Administrative Offenses" of July 5, 2014 No. 235 V ZRK;

Legislation of the Republic of Kazakhstan on payments and remittances (from 10th of September 2016)

Economic Review of the National Bank of the Republic of Kazakhstan (pages 36-41)

The official Internet resource of the National Bank of the Republic of Kazakhstan. URL: http://www.nationalbank.kz/ [cit. 02.03.2017]

The official Internet resource of the Kazakhstan Interbank Payment Center. URL: http://www.kisc.kz/ [cit. 07.12.2017]

The official Internet resource of the Almaty City. URL: https://www.almaty.gov.kz/ [cit. 17.12.2017] https://www.kursiv.kz [cit. 03.02.2018]

New law about Payment System hhtps://kapital.kz [cit. 21.11.2017]

The official Internet resource of the Law of the Republic of Kazakhstan. URL: https://www.zakon.kz/

List of image

1. Picture - Exchange of electronic messages

List of Charts

1. Chart - Dynamics of change in the number of owners of electronic moneymaking payments using electronic money for 2014-2017 2. Chart - Distribution of purchases of Kazakhstan people by seller countries 2016 3. Chart - The proportion of users of mobile Internet at the age of 16 - 74 years, (in %) 4. Chart - Distribution of buyers by age categories 5. Chart - Proportion of non-cash payments using payment cards for 2011-2017 6. Chart - Dynamics of Payment Flows in Payment Systems of the National Bank of Kazakhstan for 2010-2017 7. Chart - Diagram of the number of documents carried out in the ISMT for 2015 – 2017 8. Chart - Diagram of the amount of documents carried through the ISMT for 2015 – 2017 9. Chart - Diagram of the number of documents held in the Clearing for 2015 – 2017 10. Chart - Diagram of the amount of documents held through Clearing for 2015 - 2017 (KZT mln) 11. Chart - The change in the turnover ratio in the Clearing for 2015-2017.

List of Table

1. Table - Dynamics of changes in the number of payments through the IMTS 2. Table - Dynamics of changes in the number of payments through ICS 3. Table - Participants in the interbank money transfer system as of June 7, 2017 4. Table - Statistics of payment through the ISMT 5. Table - Statistics of payments through the Clearing 6. Table - Use of payment cards, issued by the banks of Kazakhstan, in outside the country 7. Table - Use of the payment cards issued by Kazakhstan and foreign banks, on the territory of Kazakhstan, by regions

Annexes Annex 1 Table 3 Participants in the interbank money transfer system as of June 7, 2017

BIC Name ABKZKZKX JSC «БТА БАНК» ABANAKZKX JSC SUBSIDIARY BANK «RBS (KAZAKHSTAN)» ALFAKZKA JSC «SUBSIDIARY BANK АЛЬФА-БАНК» ALMNKZKA JSC «АТФБАНК» ASFBKZKA JSC «БАНК АСТАНА ФИНАНС» BKCHKZKA JSC SUBSIDIARY BANK «БАНК КИТАЯ В КАЗАХСТАНЕ» CASPKZKA JSC «KASPI BANK» CEDUKZKA JSC «ЦЕНТРАЛЬНЫЙ ДЕПОЗИТАРИЙ ЦЕННЫХ БУМАГ» CITIKZKA JSC «СИТИБАНК КАЗАХСТАН» DABNKZ2P JSC «ДАНАБАНК» DEMIKZKA JSC «БАНКПОЗИТИВ КАЗАХСТАН (SUBSIDIARY BANK БАНКА АПОАЛИМ Б.М.)» DVKAKZKA JSC «БАНК РАЗВИТИЯ КАЗАХСТАНА» EABRKZKA «ЕВРАЗИЙСКИЙ БАНК РАЗВИТИЯ» EURIKZKA JSC «ЕВРАЗИЙСКИЙ БАНК» EXKAKZKA JSC «ЭКСИМБАНК КАЗАХСТАН» GCVPKZ2A ГОСУДАРСТВЕННЫЙ ЦЕНТР ПО ВЫПЛАТЕ ПЕНСИЙ HCSKKZKA JSC «ЖИЛСТРОЙСБЕРБАНК КАЗАХСТАНА» HLALKZKZ JSC «ИСЛАМСКИЙ БАНК "AL HILAL»

HSBCKZKA SUBSIDIARY BANK JSC «HSBC БАНК КАЗАХСТАНм HSBKKZKX JSC «НАРОДНЫЙ БАНК КАЗАХСТАНА» ICBKKZKX JSC «ТОРГОВО-ПРОМЫШЛЕННЫЙ БАНК КИТАЯ В Г. АЛМАТЫ» INEARUMM МЕЖГОСУДАРСТВЕННЫЙ БАНК INLMKZKA JSC «ХОУМ КРЕДИТ БАНК» IRTYKZKA JSC «АЛЬЯНС БАНК» JSRBKZKA ДО JSC «БТА БАНК» - JSC «ТЕМIРБАНК» KAZSKZKA JSC «КАЗИНВЕСТБАНК» KCJBKZKX JSC «БАНК ЦЕНТРКРЕДИТ» KICEKZKX JSC «КАЗАХСТАНСКАЯ ФОНДОВАЯ БИРЖА» KINCKZKA JSC «КАЗАХСТАНСКИЙ ИННОВАЦИОННЫЙ КОММЕРЧЕСКИЙ БАНК» KISCKZKX РГП «КАЗАХСТАНСКИЙ ЦЕНТР МЕЖБАНКОВСКИХ РАСЧЕТОВ НБРК» KKMFKZ2A ГУ «КОМИТЕТ КАЗНАЧЕЙСТВА МИНИСТЕРСТВА ФИНАНСОВ РК» KMGCKZKA JSC «КАЗАХСТАНСКАЯ ИПОТЕЧНАЯ КОМПАНИЯ» KPSTKZKA JSC «КАЗПОЧТА» KSNVKZKA JSC «БАНК «KASSA NOVA» KZIBKZKA JSC «SUBSIDIARY BANK «КАЗАХСТАН-ЗИРААТ ИНТЕРНЕШНЛ БАНК» KZKOKZKX JSC «КАЗКОММЕРЦБАНК» LARIKZKA JSC «ASIACREDIT BANK (АЗИЯКРЕДИТ БАНК) » MEOKKZKA JSC «МЕТРОКОМБАНК» NBPAKZKA JSC SUBSIDIARY BANK «НАЦИОНАЛЬНЫЙ БАНК ПАКИСТАНА» В КАЗАХСТАНЕ NBRKKZKX ГУ NATIONAL BANK OF THE RK NFBAKZ23 JSC «DELTA BANK» NURSKZKX JSC «НУРБАНК» SABRKZKA SUBSIDIARY BANK JSC «СБЕРБАНК» SENIKZKA JSC «СЕНИМ-БАНК» SHBKKZKA JSC «ШИНХАН БАНК КАЗАХСТАН» TBKBKZKA JSC SUBSIDIARY BANK «ТАИБ КАЗАХСКИЙ БАНК» TSESKZKA JSC «ЦЕСНАБАНК» VTBAKZKZ ДОЧЕРНЯЯ ОРГАНИЗАЦИЯ JSC БАНК ВТБ (КАЗАХСТАН) ZAJSKZ22 JSC «ЗАМАН-БАНК»

Annex 2 Diagrams on ISMT for 2015 – 2017

Sources: Cart 7 - Diagram of the number of documents carried out in the ISMT for 2015 – 2017 [cit. 13.12.2017] URL: http://www.kisc.kz/pay_systems/mspd_stat.html [cit. 13.12.2017]

Sources: Chart 8 - Diagram of the amount of documents carried through the ISMT for 2015 - 2017 (KZT million) URL: http://www.kisc.kz/pay_systems/mspd_stat.html [cit. 13.12.2017]

Table 4 Statistics of payment through the ISMT

ISMT payment turnover Month amount, number of documents mln.tenge

2015 January 848 800 21 336 330

February 1 150 483 21 350 972

March 1 049 378 15 853 060

April 1 142 474 18 378 508

May 1 100 098 16 474 152

June 1 158 703 15 314 159

July 1 181 014 12 900 878

August 1 183 404 19 029 961

ISMT payment turnover Month amount, number of documents mln.tenge

September 1 154 770 19 159 060

October 1 126 609 25 790 247

November 1 150 725 18 368 810

December 1 242 337 22 503 844

Total 13 488 795 226 459 981

2016 January 863 077 20 736 265

February 1 216 477 32 315 636

March 1 161 816 45 024 888

April 1 217 943 56 315 044

May 1 161 809 53 609 673

June 1 193 035 57 678 863

July 1 167 316 53 872 502

August 1 313 087 57 931 277

September 1 133 339 49 541 914

October 1 107 567 47 913 884

November 1 163 696 49 836 189

December 1 305 894 59 895 574

Total 14 005 056 584 671 709

2017 January 1 010 723 66 026 507

February 1 177 243 72 646 559

March 1 154 811 70 500 686

ISMT payment turnover Month amount, number of documents mln.tenge

April 1 154 871 66 525 349

May 1 277 347 68 261 192

June 1 236 462 72 048 215

July 1 219 403 78 577 591

August 1 466 694 74 285 451

September 1 243 570 69 904 667

October 1 319 202 69 643 770

November 1 343 885 67 574 945

December

Total 13 604 211 775 994 932

Sources: Statistics of payment through the MRTD URL: http://www.kisc.kz/pay_systems/mspd_stat.html [cit. 13.12.2017]

Annex 3

Cart 9 Diagram of the number of documents held in the Clearing for 2015 – 2017

Sources: http://www.kisc.kz/pay_systems/srp_stat.html [cit. 12.12.2017]

Chart 10 Diagram of the amount of documents held through Clearing for 2015 - 2017 (KZT mln) Sources: http://www.kisc.kz/pay_systems/srp_stat.html [12.12.2017]

Chart 11 The change in the turnover ratio in the Clearing for 2015-2017.

Sources: http://www.kisc.kz/pay_systems/srp_stat.html [12.12.2017]

Table 5 Statistics of payments through the Clearing

Clearing Payroll turnover Average Amount needed for Month coefficient Number calculation of Amount, turnover mln. Tenge docs

2015 January 1 473 526 324 678 103 333 3.14

February 2 172 505 421 305 101 084 4.17

March 1 713 263 398 565 85 000 4.69

April 1 802 568 472 747 92 368 5.12

May 1 473 526 324 678 90 504 3.59

June 1 863 595 492 828 87 368 5.06

July 1 822 666 486 472 93 524 5.2

August 2 016 795 474 563 97 881 4.85

September 1 798 272 488 255 99 415 4.91

October 1 766 951 491 302 94 205 5.22

November 1 665 006 479 100 93 974 5.1

December 1 995 372 556 316 108 934 5.11

21 564 Total 5 410 809 1 147 590 4.68 045

2016 January 1 296 562 298 330 91 036 3.28

February 2 245 302 452 990 99 552 4.55

March 1 752 882 449 515 86 837 5.18

April 1 662 922 497 025 92 055 5.4

May 1 635 336 494 682 92 906 5.32

June 1 869 344 541 169 113 813 4.75

Clearing Payroll turnover Average Amount needed for Month coefficient Number calculation of Amount, turnover mln. Tenge docs

July 1 748 536 486 539 92 129 5.28

August 2 244 837 555 938 116 258 4.78

September 1 705 361 515 403 108 045 4.77

October 1 598 414 519 496 109 959 4.72

November 1 653 018 582 291 116 565 5

December 1 889 124 622 020 138 331 4.5

21 301 Total 6 015 398 1 257 486 4.79 638

2017 January 1 375 340 370 500 92 973 3.99

February 1 947 572 469 098 102 448 4.58

March 1 648 086 467 283 88 734 5.27

April 1 503 833 488 776 97 505 5.01

May 1 580 380 569 806 104 892 5.43

June 1 591 665 574 934 109 415 5.25

July 1 651 966 533 512 102 054 5.23

August 2 378 792 622 181 128 969 4.82

September 1 816 749 538 928 111 314 4.84

October 1 918 694 570 429 117 657 4.85

November 1 928 613 600 050 119 865 5.01

December

Total 19 341 5 805 497 1 175 826 4.93

Clearing Payroll turnover Average Amount needed for Month coefficient Number calculation of Amount, turnover mln. Tenge docs

690

Sources: http://www.kisc.kz/pay_systems/srp_stat.html [cit. 12.12.2017]

Annex 4 Table 6 use of payment cards, issued by the banks of Kazakhstan, in and outside the country

December Specifications Cash Cashless payments withdrawals 2016 Number of transactions (thousand) of which; 13 568,9 21 312,1 local systems 6,8 124,0 international systems, of which: 13 562,0 21 188,1 Visa International 10 912,0 15 187,3 MasterCard Worldwide 2 493,4 4 731,7 Volume (mln.tenge), of which; 191 766,2 944 742,2 local systems 255,5 5 072,6 international systems, of which: 191 510,7 939 669,6 Visa International 153 772,1 706 616,4 MasterCard Worldwide 35 661,7 191 290,3 2017 Number of transactions (thousand) of which; 29 924,8 23 649,5 local systems 2,6 23,5 international systems, of which: 29 922,2 23 626,0 Visa International 18 226,2 14 570,3 MasterCard Worldwide 11 391,2 7 710,4 Volume (mln.tenge), of which; 411 331,4 1 175 249,7 local systems 2 712,6 1 042,7 international systems, of which: 408 618,8 1 174 207,0 Visa International 265 732,4 781 422,4 MasterCard Worldwide 138 044,7 343 367,3 Dynamics (%) Number 120,54% 10,97% local systems -61,26% -81,09% international systems, of which: 120,63% 11,51% Visa International 67,03% -4,06% MasterCard Worldwide 356,86% 62,95% Volume 114,50% 24,40% local systems 961,61% -79,44% international systems, of which: 113,37% 24,96% Visa International 72,81% 10,59% MasterCard Worldwide 287,10% 79,50%

Sources: http://nationalbank.kz/?docid=786&switch=russian [cit. 05.02.2018]

Table 7 use of the payment cards issued by Kazakhstan and foreign banks, on the territory of Kazakhstan, by regions

December Cashless payments Cash withdrawals Specifications Number of Number of Amount (mln.tenge) Amount (mln.tenge) transactions(thousand) transactions(thousand) Total, incl. 27 845,5 367 149,8 23 799,0 1 171 614,8 Akmola region 252,6 6 914,9 708,4 29 940,3 Aktobe region 550,2 8 280,3 1 193,3 51 808,3 Almaty region 253,4 7 644,0 1 090,8 51 803,7 Atyrau region 496,7 9 154,5 1 131,2 57 904,8 East Kazakhstan reg. 494,1 7 994,7 1 761,1 78 266,2 Jambul region 168,4 2 892,0 958,7 42 288,9 West Kazakhstan reg. 359,4 6 810,9 853,1 37 921,9 Karaganda region 1 043,8 14 535,9 1 956,2 89 845,1 Kostanai region 786,5 7 229,2 1 007,6 45 868,1 Kyzylorda region 165,1 2 322,3 743,4 34 989,9 Mangistau region 476,7 7 512,3 1 050,3 64 539,8 Pavlodar region 503,8 6 075,3 1 083,7 48 312,4 North Kazakhstan reg. 228,6 2 949,0 588,5 23 336,7 South 353,6 10 070,9 1 996,1 96 546,5 Kazakhstan reg. Almaty city 18 658,4 230 220,4 5 040,1 276 306,2 Astana city 3 054,2 36 543,0 2 636,6 141 935,8

Sources: http://nationalbank.kz/?docid=786&switch=russian [cit. 05.02.2018]