A reader of "Akchabar" editorial office faced an unexpected situation. As usual, he paid for the Internet services via a payment terminal and noticed that an additional commission of 20 KGS  was charged. This was surprising because recently the National Bank has eliminated commissions for domestic transfers and online payments.

The National Bank has eliminated commissions on non-cash payments. This decision by the regulator is temporary — it came into effect on November 25 and will remain in force until December 31, 2025.

However, an important remark: the cancellation of commissions applies only to transactions in mobile applications. This means payments made via payment terminals are still subject to fees. Why is that?

The authorities of Kyrgyzstan have long been pursuing a policy of promoting non-cash payments. For this purpose, the relevant laws were adopted and the systems of issuing pensions, payment for utilities and others were updated.

As statistics show, the measures taken are yielding results. Since 2020, non-cash payment indicators have been steadily increasing. In 2023, 10.8 million transactions worth 14 trillion KGS were conducted through interbank payment systems. By 2022, the number and volume of these transactions had grown by 23.1% and 32.3%, respectively.

The elimination of commissions for payments via mobile applications is yet another way to encourage Kyrgyz citizens to pay for their purchases and services using non-cash methods.

"The elimination of commissions aims to remove barriers to using non-cash payments, especially for low-income groups. This measure will accelerate the transition to digital services and enhance financial accessibility for everyone," - the National Bank stated.

International experience is also taken into account, where banks prioritize long-term benefits — such as expanding their customer base and increasing transaction volumes — over short-term income from commissions.

However, despite the fact that every bank has its own mobile application, payment terminals remain just as popular among the residents of the country. As of the end of September,  3152 payment terminals were registered in the country, with most of them located in the capital. So why didn’t the new regulation cover these terminals?

Payment terminals are owned by banks, which provide them to entrepreneurs as part of their acquiring services for accepting non-cash payments. They can also be owned by payment operators co-operating with banks or by large retail chains that purchase the equipment independently. Banks and operators are responsible for maintaining the terminals and connecting them to payment systems such as Visa, Mastercard or Elcard. The commission charged for payments made via payment terminals is also collected by the сommercial bank servicing the terminal, as it incurs costs related to device maintenance, including electricity, software updates, communication support and payment processing.

Thus, eliminating the commission for payment terminals would be impractical, as operating these devices requires additional resources. This is why banks set their own service fees. This right established by the Law on Banking Activities.

To be fair, our transfers and payments made in mobile applications are not free for banks either. They pay for clearing and gross settlement services to the National Bank of the Kyrgyz Republic (NBKR), as all transactions pass through the regulator’s systems. However, in this case, the National Bank prioritized a more significant goal—increasing the use of non-cash payments—when making a decision that might not be popular among banks. Especially given their superprofits, banks can afford this measure.

The issue is that banks may not be willing to comply. There is a risk that using the same law that allows them to set service fees independently, banks could increase the cost of other services. This might be done to compensate for the loss of revenue from online payments and in-app transfers. Such actions would directly affect consumers like us.