National Interbank System in Uzbekistan

Click here to see pictures of the DUET System in Uzbekistan

Issuer
18 Leading Banks of Uzbekistan

System Description
National Interbank Payment System

Business Sectors
Retail, Salary, Loyalty

Facts & Figures
Started in 1994 with 1000 cards and 20 POS
Status 2/2008: 3 680 000 cards, 17 800 POS, 4 300 ATMs

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 The existing methods proofed to be outdated and inefficient – a technology shift was overdue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

A New Era for the Banks in Uzbekistan
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 The existing methods proofed to be outdated and inefficient – a technology shift was overdue. The DUET smart card system 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 DUET system represents a sophisticated bundle of software solutions for such tasks as the issuance of cards, protection of data, arrangement of payments and settlement of smart card transactions, including interbank settlement.The pilot project with 5000 cards started in 1995 and has been successfully developed and deployed in only three months. In 1996 the Savingsbank of Uzbekistan joined the system and not much later the Association of Uzbekistanian Banks founded an independent Issuing and Processing center in order to establish a trusted authority for the interbank payment system. The two leading banks of Uzbekistan decided to profit from the opportunities of a shared system where all cards, terminals and transactions are based on the same rules and regulations. In 1998 the Asaka Bank joined the system that was more and more becoming the national payment system of Uzbekistan serving not only interbank and clearing settlements, but also various retail, service and salary payments. Paxtabank, UzPrivatBank and UzjilSberbank started to provide payment functions based on the successful DUET system in 2001 and became part of the interbank system.

Towards A Cashless Society
On the 24th of September 2004, the Cabinet of Ministers of Uzbekistan issued a resolution “On measures for the further development of the existing system of calculations based on plastic cards” which aims to stimulate the development of cashless transactions based on smart cards, their use in retail trade, communal and other services. An equally important goal is the reduction of off-bank money circulation. The Cabinet approved a forecasted schedule for the expansion of the DUET smart card system by commercial banks until 2006, developed by the Central Bank of Uzbekistan, Uzbekistan Banks’ Association and commercial banks. 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 of January 2005. The property tax exemption applies to ATMs, terminals, and other hard- and software required to establish the necessary smart card payment infrastructure.The banks were also freed from payment of custom duties (except for custom registration fees) when importing plastic cards, materials, equipment of graphic and electronic personalisation, terminals, ATMs and other equipment and software used to carry out payments with plastic cards until 1st of January 2007. Commercial banks/card issuers were ordered to establish terminals for accepting payments in all branches, mini banks and savings’ banks by 1st of January 2005. As a further measure, 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 lack the necessary means of investment.

Facts & Figures
The number of card transactions in 2007 increased by 140% compared to 2006. The share of NBU card payments in retail POS transactions rose to 61% compared to 39% cash payments. The transaction turnover in 2007 was 460 million USD which is a 210% increase compared to 2006.
According to the above-mentioned resolution of the Cabinet of Ministers (period: 2007-2010), the yearly increase in card turnover and transactions shall be 30% until 2010. The resolution also set the milestone of a total of 5 million cards and 30 000 POS to be installed in Uzbekistan by 2010. As of today, 18 leading banks of Uzbekistan are part of the national DUET interbank payment system.