New regulation on user identification may affect cross-border payments from Russia

According to the amendments, there are currently three levels of transactional anonymity:
• The anonymous use of electronic payments remains possible for individual transactions under RUB 15,000 (almost USD 440), with a monthly limit of RUB 40,000 (USD 1,170). The change here is that anonymity is no longer permitted for money transfers of any size between individuals, and as payments to foreign e-merchants operating without a Russian representative.
• In these last two cases, users are required to identify themselves under a “simplified” procedure. Users must provide their mobile phone number, their passport number, and a secondary identification number – either their tax payer number (???), individual insurance number (?????) or medical insurance number (OMC). Under this procedure, individual transactions can be made for amounts of up to RUB 60,000 (USD 1,750), with a monthly limit of RUB 200,000 (USD 5,830).
• Fully identified users – those who present their original or notary certified passport – can make e-payment transactions of up to RUB 100,000 (USD 2,915).

These new rules are significantly less restrictive than those initially considered. In their first reading earlier this year, the amendments established a threshold for user identification in all types of transactions at RUB 1,000 (around USD 30).

However, intense lobbying from payment industry players and associations resulted in a more liberal – are arguably more reasonable – approach to fighting terrorism.

According to Nadezhda Kiyatkina of Yandex Money there is a “positive change” in the fact that users are now able to spend up to RUB 60,000 in one transaction under the simplified identification procedure. She also added that Yandex Money warned its users about the new rules some time ago, and they are actively upgrading their accounts.

The company has also begun integration with government databases to verify users’ identification numbers. This procedure, which is supposed to be completed automatically and instantaneously, will become mandatory on November 2014.

Xsolla also fears “a large drop in revenue” for foreign e-merchants due to the new user identification requirements on small transactions.

Indeed, Russian e-currencies, as well as cash-in kiosk operators like Qiwi or Cyberplat, have a non-negligible piece of their business related to cross-border payments. Millions of Russian users on international gaming websites, and online services like Skype, have until now also paid for their accounts anonymously.

It is hard to predict at this stage to what extent the new identification requirements will affect these businesses. However, payments with bank cards – which represent a significant part of cross-border transactions – are not affected by the new rules, since they already imply user identification.