With the implementation of new technology by VISA, where payments occur using two phones – buyer’s and seller’s – traditional POS terminals may become obsolete. The NCE 'Atameken' believes that this technology has prospects if it attracts the interest of trade entities themselves. Kazakh banks note that they would welcome the introduction of this service in Kazakhstan.
Recall, according to Article 195 of the Code of Administrative Offenses of the Republic of Kazakhstan, the absence of equipment for accepting payments by payment cards in trade by an individual entrepreneur or legal entity results in administrative liability in the form of a warning.
The repeated commission within a year entails fines for small businesses (40 MRP), medium businesses (60 MRP), and large businesses (80 MRP), with 1 MRP equal to 2269 tenge. Currently, POS terminal costs vary from 20 thousand (MiniPOS for small businesses) to 400 thousand tenge, depending on the purpose and type of company operations.
The NCE 'Atameken' noted, according to the NB of Kazakhstan, the number of active POS terminals by May 1, 2017, is 117,038 units, including 108,055 in trade enterprises and 8,983 in banks. As of May 1, 2016, there were 89,273 units, including 81,735 in trade enterprises and 7,538 in banks, an increase of 31.1% over the year.
The New Revolution in Payments
Now, with VISA's new technology, POS terminals may become unnecessary. This technology removes the need for a traditional POS terminal, allowing payments to be made using two phones: one belonging to the entrepreneur, the other to the consumer.
A special QR code in the sales location initializes payments. The customer scans the code from the entrepreneur's phone or other media. Transaction amounts can be entered manually or predefined by the QR code. The customer then completes the payment, and the seller receives payment confirmation on their phone. The mVisa technology is currently being tested by Ukrainian banks.
Angela Kashperuk from Visa's Innovative Products Department in the CIS and Southeast Europe notes: “We view mVisa as a new ecosystem. I think all financial market participants will benefit from its implementation. The key feature of mVisa is providing seamless interaction between customers and merchants from different banks. Customers can initiate transactions using mobile phones in physical settings or electronically. They get a mobile app as a payment tool via QR code scanning or USSD session entry and operation control on their phone. Consumers completely control transaction initiation both legally and technologically.”
Angela Kashperuk highlighted some key benefits for businesses: firstly, the ability to operate without additional payment devices like POS or mPOS terminals. A mobile gadget like a smartphone or feature phone, tablet, or other device, plus a bank account, is sufficient for payments.
Secondly, no transaction initiation by the business, no balance check requests, or signature verification responsibility on receipts are required. Customers initiate transactions, their bank verifies the balance, and the business receives the funds, ensuring transaction finality.
Thirdly, transactions occur in real-time, allowing businesses to receive instant successful transaction notifications. Funds are credited as agreed with the servicing bank.
She also noted that the technology was initially for markets with infrastructure issues, like India, Kenya, Uganda, Egypt, but gained interest in developed markets.
What Do Business and Banks Think?
NCE 'Atameken' believes this technology has prospects if it interests trade entities, suggesting loyalty programs for businesses instead of just consumers.
“Focus should be on business entities who need financial project appeal. Otherwise, consumer demand might exceed what entrepreneurs can supply, hindering new tech solutions,” experts say.
Nurbank’s Press Secretary Aigul Kasenova noted the bank's intention to explore the mVisa project with VISA International in Kazakhstan.
“Nurbank is open to innovations ensuring high-quality and fast banking card technology services,” she added.
Aigul Kasenova noted benefits over traditional POS networks for banks and SMEs: reduced POS network support costs, no required constant turnover in POS terminals as per acquirer bank requirements, and a fast payment method unaffected by remote communication channels or equipment failures.
“The technology simplifies and may increase non-cash circulation in Kazakhstan's market, avoiding the need for payment card presentation or fully functioning POS terminals. Just download an app for QR code payments in a merchant's location,” Aigul Kasenova believes.
The new technology, however, will require additional financial market participant investments.
Angela Kashperuk states: “Banks and merchants show interest in mVisa. QR code solutions were implemented in other markets already. QR code payments are gaining popularity, but widespread adoption is hindered by local execution where buyers and sellers need the same bank. mVisa, an open solution, allows cross-bank interaction. Costs vary by participant, dependent on existing Visa tech and services, business type, and implementation method (smartphones or feature phones, static or dynamic QR, etc.). Visa offers participants SDK and API tools to ease mVisa adoption.”
Aigul Kasenova confirmed potential bank expense increases: “New technologies require bank expenditures related to project costs from the payment system and technical development/integration costs.”
The implementation timeline of mVisa in Kazakhstan remains unknown.
“mVisa is new for the CIS and Southeast Europe countries. We are assessing its potential with market participants, including banks, businesses, and regulators. We presented the technology in Ukraine in late April 2017, marking the analysis and pre-implementation phase,” Angela Kashperuk notes.
She adds that transactions are growing exponentially in countries where this technology exists.