According to the Bank of Russia, China was the largest area in terms of money transfers turnover among the foreign countries in 2014. Last year, $825 million has been sent from Russia to China via money transfer systems, in the opposite direction – $109 million. For comparison, the transfers turnover between the US and Russia amounted to $179 million. It is noteworthy that the volume of transfers to China showed a positive trend in the past year.

CONTACT payment system is one of the largest channels to send money transfers to China. The system has long been active in the Asian region and maintains direct partnerships with major banks in the country. 
Traditionally, China ranks among the largest areas not only for the Russian cross-border transfers market, but for the global either. According to preliminary estimates of the World Bank, the largest recipient of remittances in the world in 2014 became the Asian countries – India ($71 billion), China ($64 billion), the Philippines ($28 billion). Though the share of the Russia – China corridor in the total volume is not as significant (4.5% in 2014, according to statistics of the Central Bank of the Russian Federation), still it is essential for the Russian market: in 2014, it is amounted to $824.9 million, showing constant quarterly growth of 10–15%, which is supposed to continue in 2015.

The results of the CONTACT system financial performance in international markets in 2014 confirmed the global trend – the largest regions of our presence include Asia countries – China, Vietnam, the Philippines and others. Obviously, the priority should be given to projects in areas most demanded by our customers, that generate substantial transfers volume. Further I will focus on two CONTACT projects implemented in the period of 2014–2015, which open up new channels of sending money to China as well as became a shining example of the new technologies expansion in the market.

In the autumn of 2014, CONTACT system was the first in Russia to activate MoneyExpress service – a UnionPay service of replenishment banking cards. With direct agreement between CONTACT and UnionPay it became possible in Russia to send money transfers directly to the UnionPay cards, issued by Chinese banks. The main advantage of the service lies in its simplicity: for sending money it is sufficient to indicate the card number of a China resident. However, we understand that, although the service is convenient for the customer, for UnionPay it is still new: in Russia, UnionPay cards are issued only by barely ten banks. MoneyExpress service was also new in global market: currently, in addition to Russia, the service is available only in the United States, Japan, Singapore and Australia. 

To launch this service, first of all it was necessary to establish a redundant communication channel with UnionPay and its backup. Then to implement conversion of sent transfers in US dollars into CNY at the exchange rate applied on the date of dispatch. Such overall conversion transparency is a big step forward in terms of quality of crediting to the card service. Another feature of the services is a real time transaction processing held in two stages: 1) checking the validity of the UnionPay card, as well as cardholder verification for the compliance reasons; 2) checking the local conversion quota cardholder and instant updates to SAFE (State Administration of Foreign Exchange). Now, under the laws of the PRC, payments in CNY are limited for no more than $10,000 per day and no more than $50,000 per year to one individual. Verification of the conversion quota is carried out by UnionPay processing center by a person’s ID, “linked” to the card. 

I would like to emphasize that despite the fact that both of these stages involve the real time connection with several information centers, the whole procedure of transfer registration takes no more than a few minutes. The money appears on the balance of UnionPay card immediately, except for transfers sent from 22:00 to 07:00 AM Beijing time (when SAFE is not available).

The maximum amount of the transaction in MoneyExpress is limited to $3,000. No additional fees from the cardholder are taken.

In the first stage we have decided to make the service free of charge for a sufficiently long period so that even more customers could use it and compare its advantages with other transfers formats available in the market today: transfers to bank accounts in China and cash pick-up in the offices of ICBC and Bank of China.

Another important example of no less technically challenging project was the launch of a new information channel – SWIFTRemit. Once again, our partner was from China – ICBC (Industrial and Commercial Bank of China), the largest Asian bank in the corporate sector.

SWIFTRemit business solution is the first SWIFT project, designed specifically for retail banks, money transfers systems operators and mobile operators. CONTACT system was one of the initiators of the ad hoc group on the development of the SWIFT service (SWIFT Workers’ Remittances Advisory Group), as well as one of the first members of this working group.

For the implementation of the joint project, we and our colleagues from ICBC Beijing developed a universal hybrid system of information exchange that allows to send money orders directly from Russia and CIS countries to China using the ISO 20022 XML international standard applied in SWIFT Remit, and at the same time to execute messaging in SWIFT FIN with the Industrial and Commercial Bank of China (ICBC subsidiary in Russia) to support the existing settlement model. 

We started testing with ICBC Beijing HQ in August 2014. The first live transaction for the sum of $1,000 via new communication channel was made in the beginning of 2015 and at the beginning of the Chinese New Year the service has earned full capacity. In the first phase of the project money transfers were made available to our customers with payment by transfer to accounts of individuals and legal entities opened in ICBC. A bit later, in March 2015, we expanded the service by connecting the payment of transfers in cash in more than 700 ICBC pos in China. Now we are working on the activation of other ICBC products, in particular the payment for foreign currency accounts in banks participating in the Chinese clearing system CFEPS.

What are the benefits for banks of SWIFTRemit compared with SWIFT FIN? On the one hand – it’s still a unified set of rules for information exchange and a unified list of participants, which greatly simplifies the process of integration between the partners. On the other hand – this is the SWIFTRemit content itself: new types of messages, new transfer statuses, separate fields to transmit information on the sender and the payee in a structured way. Also it includes identifiers for the terms of delivery and methods of payment, as well as standards for headers generation, new standards of reference base of participants and their updates, unified template of agreement for provision of money transfer services and settlements on them.

Talking about CONTACT development in the Chinese direction. It is worth saying that for the last three years it is one of the most important corridor for us. Within a few years we have made significant progress with our partners in China, which has strengthened our competitive edge and take a significant share in this area. Today, in addition to the above-mentioned services, we also offer to CONTACT system customers both in cash and credited to the account in the leading Chinese banks – Bank of China (BOC), Agricultural Bank of China, Bank of Communications, China CITIC Bank, China Construction Bank, China Merchants Bank, China Minsheng Banking Corp, Postal Savings Bank of China, Guangdong Development Bank, Huaxia Bank, Industrial Bank.

Nowadays, a brand new CONTACT project of electronic payment in favor of online merchants using e-invoicing has been passing the stage of technical harmonization. Not surprising that in this project our partner is also form China.