Banks Challenge Central Bank's Card Expiry Authority

The banking sector is pushing back against a key component of the proposed anti-fraud legislation. Financial institutions are urging regulators to reconsider a specific provision that would grant the Central Bank unprecedented authority over card validity periods.

This move comes as part of the broader second package of anti-fraud measures currently under review. Industry representatives argue that the proposed regulatory power could have unintended and severe consequences for the payment ecosystem.

The central point of contention involves a proposal to empower the Central Bank of Russia to determine the validity periods for payment cards. This authority would extend across the industry, potentially standardizing how long cards remain active before requiring renewal or replacement.

Banks are specifically asking for this particular clause to be excluded from the final version of the legislative package. The request highlights a significant tension between regulatory oversight and operational flexibility within the financial sector.

The debate focuses on several critical aspects:

• Regulatory overreach into banking operations
• Impact on customer service continuity
• Operational feasibility for issuing institutions

Financial analysts and industry experts have raised serious concerns about the potential implementation of this measure. According to assessments, the Central Bank's new authority could trigger a cascade of negative effects throughout the payment infrastructure.

The most alarming prediction involves the possibility of complete card blockages. Experts suggest that the regulatory change might inadvertently lead to the total suspension of Visa and Mastercard services, creating a widespread disruption for millions of cardholders.

The measure may lead to the complete blocking of Visa and Mastercard cards and an increase in banks' costs.

Additionally, financial institutions anticipate a substantial rise in operational expenses. The costs associated with implementing new compliance protocols, updating systems, and managing potential service interruptions would ultimately be passed through the banking ecosystem.

The proposed regulatory shift represents more than a simple procedural change—it signals a fundamental transformation in how payment cards are managed in the Russian market. Banks argue that arbitrary validity periods set by a central authority may not align with technical realities or customer needs.

For Visa and Mastercard, operating in this environment would require significant adjustments to their standard practices. The international payment giants would need to navigate a complex new regulatory landscape that differs from their global operations.

Key operational challenges include:

• Coordinating card replacement schedules across millions of accounts
• Managing customer communication during transition periods
• Ensuring system compatibility with new regulatory requirements

This controversy is part of a larger legislative effort to combat financial fraud across the Russian banking system. The second package of anti-fraud measures aims to strengthen security protocols and reduce unauthorized transactions.

However, the banking sector contends that the specific provision regarding card validity periods may be counterproductive to these goals. Rather than enhancing security, the measure could create vulnerabilities through forced card reissuance and system instability.

The discussion reflects an ongoing tension between regulatory objectives and industry practicality. Banks maintain that collaborative approaches, rather than unilateral regulatory mandates, would better serve the dual goals of security and customer convenience.

The debate over card validity periods highlights the complex balance between regulatory oversight and industry autonomy. As the second package of anti-fraud measures moves through the legislative process, the banking sector's concerns will likely influence the final provisions.

Stakeholders continue to monitor how this specific clause will be addressed in the final legislation. The outcome will set an important precedent for future regulatory approaches to payment system governance and the relationship between central authorities and financial institutions.