National Interbank System in Uzbekistan

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Issuer
25 Leading Banks of Uzbekistan

System Description
National Interbank Payment System

Business Sectors
Retail, Salary, Loyalty

Why Shift To Smart?

• To overcome serious problems in the processing and handling of clearing transactions. The existing methods proofed to be outdated and inefficient – a technology shift was overdue
• To implement a state-of-the-art funds transfer system that can meet the requirements of a sophisticated interbanking system guaranteeing top-notch security throughout all the levels of the front- and back office
• To establish a trusted authority for the interbank payment system on the basis of an independent Issuing and Processing center
• To offer not only interbank and clearing settlements, but also various retail, service and salary payments

The beginning of the “Smart Card-Era” of Uzbekistan goes back to 1994. At this time, the two largest financial institutions of the country (the National Bank of Foreign Trade and the Savings Bank) were confronted with serious problems in the processing and handling of clearing transactions. The existing methods proved to be outdated and inefficient – a technology shift was overdue. BGS’ smart card platform seemed to be the right choice, as it not only provides retail payments based on smart cards, but every kind of funds transfer in a very secure way throughout all the levels of the front and back office. The pilot project with 5,000 cards started in 1995 and was successfully developed and deployed in only three months. In 1996, the Savingsbank of Uzbekistan joined the system and not much later the Association of Banks of Uzbekistan founded an independent Issuing and Processing Center in order to establish a trusted authority for the interbank payment system.

On 24th September 2004, the Cabinet of Ministers of Uzbekistan issued a resolution aiming to stimulate the development of cashless transactions based on smart cards, their use in retail trade, communal and other services. An equally important goal was the reduction of off-bank money circulation. The Central Bank and the Association of Banks of Uzbekistan were entrusted to establish a Single National Processing Center on the basis of the Interbank Processing Center within three months. The resolution exempted commercial banks and the Single National Processing Center from payment of property tax for three years starting from 1st January 2005. The property tax exemption applied to ATMs, POS terminals, and other hard and software required to establish the necessary smart card payment infrastructure. The banks were also exempted from payment of custom duties when importing plastic cards, equipment of graphic and electronic personalisation, POS terminals, ATMs and other equipment necessary for establishing the required payment infrastructure until 1st January 2007. Commercial banks/card issuers were ordered to establish terminals for accepting payments in all branches, mini banks and savings banks by 1st January 2005. As a further incentive, commercial banks were ecouraged to issue soft credits (at a rate of 50% of the Central Bank’s refinancing rate) to enable the financing of the required terminal equipment for retail, trade and service organisations that lacked the necessary means for investment.

Facts & Figures
As of January 1, 2010, 4,800.000 UEPS smart cards, 35,000 POS terminals are active in the system. The transaction turnover in 2009 was USD 800 million, compared to USD 450 million in 2008, which is an increase of 78%.  In addition, Net1 has received additional orders for 1,000,000 UEPS smart cards and 25,000 POS devices for 2010.