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Early summer 2021. QR vs token, bitcoin vs CBDC?

Which early summer events, apart from the pandemic that is gaining momentum again in Russia, should be highlighted as trends most likely to develop in 2021?

Withdrawing cash from someone else's card at an ATM: QR code or token?

Let's start with further expansion of the portfolio of innovative payment services. Thus, at the end of May it was announced that from 2022 four Russian banks will launch the function of withdrawing cash from someone else's card at an ATM - Otkrytie Bank, SKB-Bank and UBRIR, VTB is also planning to test the function. The new system will allow generating a QR-code in a mobile application to receive a certain amount, send it to relatives, friends and acquaintances in any messenger, and the recipient will be able to withdraw the funds from any ATM of the organization, even without being a client of the bank. In the same way it will be possible to replenish the account. It is worth noting that so far only Tinkoff has such a system.

To what extent will the promotion of the new service affect the P2P-transfer market, including SBP? Can this scheme be seen as a new incentive to promote QR technology in the payment business? How likely is the prospect of tokenisation for the same purpose? We turned to our external experts with these questions.

It should not be forgotten that the very idea of withdrawing money without a card, by a secret code typed on the PIN-keyboard of an ATM, is at least 10 years old. According to Victor Dostov, head of the Association of Electronic Money and Money Transfer Market Participants (MEMP), at one time this concept of P2P money transfers was quite attractive, but now it has many competitors, including card-to-card transfers, SBP, and the use of cash for this purpose has fallen markedly over the past decade.

At the same time, the new service will undoubtedly be in demand, albeit in a rather niche way, and with some fraud risks. Against this background one may assume that based on the first experience gained the banks participating in the project will "fine-tune" their product to ensure real demand.

Speaking about the new service in the context of QR technology competition with traditional payment methods, today there are two cornerstone drivers that define the current landscape of this market: tariff competition of traditional payment systems and SBP (the latter is known to be more profitable for retail, but less attractive for banks), and the optimality of the user path for a particular application and means of payment. According to Andrey Grachev, an independent expert, QR codes are convenient for technical implementation in the existing payment infrastructure, but in order to pay with a QR code, the user needs to "press more buttons", so most consumers will still prefer Pay services and contactless instruments as a means of payment. In general, the QR code cash withdrawal solution is technologically elegant, but it is indeed by definition a niche solution and, for the reasons mentioned above, will not contribute much to the mass promotion of QR technology. It seems that the use of QR codes in internet shops, in schemes of invoicing with the use of electronic communication channels (e-mail, SMS, PUSH) and in mutual settlements of physical persons will be more popular and widespread.

In general, experts' views on the prospects of the new service coincide - one way or another, its promotion will not affect the card P2P-transfer and SBP market in any way. Moreover, according to Vitaly Kopysov, Innovation Director of SCB-Bank, the new service of cash withdrawal may even increase the number of SBP clients that, for example, will be able to transfer money collectively to one person who will then generate a QR-code for cash withdrawal to the final recipient of these funds. At the same time, from the technological point of view, the use of QR-code seems to be more promising than tokenization and actually the creation of mobile smart contracts.

According to Vladislav Ermakov, the Head of Distance Banking Development Department of MKB, every year the population uses financial technologies more and more actively, banking applications are actively used by customers of all ages, including the mature age and fintech services successfully penetrate into all, even the most remote regions of the country. At the same time, along with the penetration of financial technologies, P2P transfers and SBPs are growing in popularity in proportion. Also, non-cash payment for goods and services at retail outlets (payment by card, Pay services, and finally payment by QR) grows annually and the coverage of retail outlets by POS-terminals is expanding. Against this background, it is highly unlikely that the emergence of the QR cash withdrawal service will prompt citizens to abandon cashless purchases. At the same time, it could give a new impetus to the promotion of QR technology in the payment business. Russian fintech has only recently begun to adopt the experience of Asia in terms of payment for services.

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