Central bank digital currencies (CBDCs) have largely existed in the virtual realm, with transactions initiated primarily through web and mobile interfaces. But Eurasia’s first CBDC cards, launched in Kazakhstan, have provided 20 million consumers with a new, tangible way to manage CBDC funds.
The first CBDC card transaction in Eurasia was successfully made on 15 November 2023. It was a contactless payment on POS using a card issued by Eurasian Bank JSC on the Way4 digital payments software system. Today, just six months later, plastic cards in the Digital Tenge currency are used for both in-store and ecommerce purchases – and are accepted globally through the Mastercard and Visa networks.
Kazakhstan’s Digital Tenge project is pursuing several ambitious goals: intensifying cross-border trade, implementing innovative social and anti-corruption initiatives, and integrating digital assets issued by decentralised finance (DeFi) participants and those issued by the government.
Trialled Digital Tenge use cases include:
wholesale cross-border CBDC transactions with the Hong Kong Monetary Authority;
CBDC vouchers for school meals;
smart contracts designed to safeguard public funds allocated for road construction;
Digital Tenge stablecoins on the Binance cryptocurrency exchange.
Before launching the Digital Tenge, Kazakhstan’s National Payment Corporation had studied various CBDC architecture models advocated by the IMF, BIS, ECB, the Central Bank of Singapore, and other organisations. The regulator decided to issue and redeem Digital Tenge centrally and allow reputable market participants to facilitate CBDC workflows related to accounts, cards, and payments.
Corda, a blockchain and tokenization platform developed by R3, became the cornerstone of the Digital Tenge infrastructure. Kazakhstan’s National Payment Corporation is adapting this platform and creating APIs for other participants.
In Kazakhstan, commercial banks achieved a rapid and smooth entry into the CBDC initiative thanks to their infrastructure which was modern, flexible, and capable of quick integration. The country stands out in this regard. Over the years, many banks here have embraced OpenWay’s Way4 software system to become pioneers in payment innovations – such as the first-ever UnionPay cards issued outside of China and the world’s first mobile Visa P2P transfers. Today, Way4 powers card issuing and acquiring innovations for many members of the Digital Tenge ecosystem: National Payment Corporation of Kazakhstan, Eurasian Bank, Altyn Bank, Halyk Bank, and the national postal service, Kazpost.
Of these, the three commercial banks integrated their card processing system with the Digital Tenge platform in just six weeks, assisted by their integration partner OW Kazakhstan. By the end of 2023, these three banks succeeded in onboarding 72% of all CBDC cardholders in the country – and were processing 75% of all card transactions in Digital Tenge.
opening a Digital Tenge account on the government’s Digital Tenge platform for an individual or legal entity;
issuing a Mastercard or Visa virtual card linked to the Digital Tenge account;
processing card payments in Digital Tenge on POS terminals, both closed-loop and open-loop transactions, with real-time conversion from Digital Tenge to regular non-cash tenge;
cash withdrawals in Digital Tenge across the bank’s ATM network.
The flexibility of the Way4 system allows each bank to craft its unique CBDC offering:
Eurasian Bank and Halyk Bank issue plastic cards linked to the Digital Tenge account.
Eurasian Bank enables an additional type of retail transaction for Digital Tenge cards, which does not require conversion from Digital Tenge to regular non-cash tenge.
Eurasian Bank also processes P2P transfers in Digital Tenge between its customers.
Altyn Bank is currently the only bank supporting cash withdrawals from a Digital Tenge account using ATMs of other banks.
Altyn Bank and Halyk Bank support payments in Digital Tenge from a legal entity to a list of individuals.
Considering the achievements of these early-bird participants, more banks on the Way4 system may decide to work with CBDC cards in 2024. Increasing the number of participating banks is the first item on the National Bank of Kazakhstan’s to-do list for the Digital Tenge project.
Other plans include the following: exploring new scenarios for wholesale CBDC, implementing smart contracts to ensure that the level of Digital Tenge matches its stablecoin reserves, introducing Digital Tenge vouchers for education services, piloting offline payments and transfers in Digital Tenge for users without Internet access, and advancing other CBDC innovations. Digital Tenge accounts will also adhere to Open API standards, which ensures their integration within the broader financial ecosystem.
‘We can shape global discourse on digital currencies, and by the time it is everywhere, it will be working successfully in our country’, forecasts Binur Zhalenov, the CEO and Board Member of Kazakhstan’s National Payment Corporation. With this project, Kazakhstan is strengthening its position on the international economic stage.
Rudy Gunawan is the Managing Director of OpenWay Asia – the top-rated vendor for the digital payment software platform, Way4. He has been active in the payment industry for 20 years, serving as a consultant to businesses in the Middle East and Asia-Pacific. In his current leadership role at OpenWay, he oversees the company's operations in Asia while promoting the board’s strategic initiatives.
Lana Konakova is OpenWay’s Global Product Marketing Manager who oversees go-to-market strategies to launch new digital payments solutions and projects in global markets. Based in Canada, she also manages OpenWay’s marketing activities in North America, Latin America, and the Caribbean. Lana has 20 years of B2B marketing and communications experience, specialising in payment processing and ecommerce. Earlier in her career, she worked on a team that developed one of the first global ecommerce software platforms.
OpenWay provides the Way4 digital payments software platform for tier-1, mid-size, and startup players – including card issuers, acquirers, processors, telcos, payment switches, fleet companies, BNPL providers, and digital wallet providers. Gartner, Omdia, and Aite (now Datos Insights) have ranked OpenWay as the best digital payments software provider and payment solution in the cloud.
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