Taghiyev claims that it will establish a legal
foundation for banks, local branches of foreign banks, national
postal operators, as well as new payment service providers such
payment institutions and e-money institutions, to offer payment
services.
"E-money's release and use will be subject to specific
legal restrictions and other measures. Financial inclusion will
increase and play a vital role in bringing different retail
payments into cashless circulation with the creation of a legal
framework for the usage of e-money and mobile wallets. Payment
services will be used in a way that is more effective and secure,
and statutory protection for users of those services will be
improved," he said.
Taghiyev also mentioned that there will be defined
information rules for the provision of payment services, execution
and refusal to execute payment orders, the procedure for dealing
with unauthorized or improperly executed payment transactions, as
well as the rights and obligations of payment service providers and
users on payment instruments and the extent of their
responsibility.
The open banking tenets will serve as the foundation
for third-party providers' operations, according to Taghiev.
"There will be regulation of cutting-edge payment
service providers like Fintex, which offers account information and
payment transaction intermediary services. To safeguard electronic
payments and client payment information, security standards such
improved customer authentication will be developed. As a result,
the danger of fraud in electronic banking and online payments would
decrease, and user data privacy will be protected," he
emphasized.
He claims that establishing a network of payment
agents who perform payment services for banks, payment
organizations, and e-money institutions will have a legal
foundation.
"On the basis of a contract, agents in the field of
payment services are either businesses with legal status or
independent contractors. This will enable agents to offer payment
services in isolated rural locations that are not serviced by bank
offices. For the development of payment system operators, a legal
framework for licensing, regulating, and controlling their
operations will be developed. At the same time, a more competitive
framework will be used to create the nation's payment system
market. There will be requirements for establishing payment system
operators and settlement agents," he added.
Taghiyev asserts that the passage of the law "On
Payment Services and Payment Systems" will have a significant
impact on the growth of the digital payments ecosystem in
Azerbaijan, but this area is unregulated and the law as a whole
makes no mention of digital currencies, including the Central
Bank's digital currency.
"It is worth noting that most central banks and think
tanks in the world are currently conducting basic research to
assess the feasibility of implementing a Central Bank Digital
Currency (CBDC). Thus, in order to define a conceptual approach in
this direction in our country, the CBA took advantage of relevant
technical assistance opportunities," he said.
Additionally mentioned by Taghiyev were the goals of
the technical assistance that led to the establishment of the CBDC,
the CBDC's design elements, the legal and regulatory environment,
the policy implications (money policy, financial stability, and
financial inclusion), and the infrastructure of existing digital
payment systems. The Central Bank closely monitors research and
pilot projects carried out in other nations as a continuation of
the work done in this area, and their experiences are
evaluated.
“According to the law "On Payment Services and Payment
Systems", foreign payment service providers and payment system
operators will be able to work in Azerbaijan in two forms,” said
Taghiyev.
"First of all, they can carry out their activities in
Azerbaijan by opening a local branch and obtaining a license.
Secondly, by concluding an agreement with payment service providers
operating in Azerbaijan and opening an account, these organizations
will be able to provide payment services in Azerbaijan," he
said.
Taghiyev noted that a total of 38.4 million
transactions worth 1.1 billion manat ($647.1 million) were made
through Apple Pay, and 20.5 million transactions worth 420 million
manat ($247.1 million) were made through Google Pay from January
through August 2023.
According to Taghiyev, interest in payments made using
mobile devices in Azerbaijan has increased significantly in a short
period of time.
"In recent years, the high growth rates of non-cash
payments in the country, especially contactless transactions,
indicate the growing interest of the country's population in
non-cash payments and innovative payment solutions. Therefore, the
number of payment cards in circulation increased by 20.2 percent
(to 15.7 million) compared to the same period last year, and the
volume of non-cash payments doubled as of September 1, 2023 (to
28.8 billion manat, or $16.9 billion),” said Taghiyev.
“Compared to the corresponding period last year, the
share of non-cash circulation in internal card payments increased
by 12.4 percentage points (to 53.7 percent). The volume of payments
made through POS terminals increased by 75.8 percent year-on-year
and reached 6.1 billion manat ($3.6 billion)," he said.
Taghiyev also said that compared to the same period
last year, the number of contactless payment cards increased by
26.8 percent (11.7 million), the number of domestic contactless
payments exceeded the indicator of the same period in 2022 by 2.3
times, and the volume increased by 93.2 percent.
The Law "On Payment Services and Payment Systems" was
adopted by Milli Majlis (Parliament) on July 14 and signed by
President of Azerbaijan Ilham Aliyev on August 9.