Payment settlements between Russia and Central Asian countries delayed up to two weeks

According to Russian industry sources, the average payment time between Russia and Central Asian countries has now increased to two weeks.

Analysts say that in July, payments between Russia and Kazakhstan, Kyrgyzstan, Uzbekistan and Tajikistan took 15% longer than a month ago. Financial institutions in these countries began to request additional documents more frequently. Such strict compliance controls have increased the proportion of refusal to pay to 30%.

According to Roman Romashevsky, financial director of PEC, due to the lack of clear and unified rules and interpretation methods, banks in Central Asian countries can make any decision on the possibility of payment without explaining the reasons in detail.

Tatyana Alekseeva, CEO of Logita, presented a specific case: "When working with the same bank, payments for small batches of goods worth $10,000 may be successful, but business worth $50,000 may be canceled."

According to the survey, the biggest problem in July occurred between Russia and Kyrgyzstan. Financial institutions in Kyrgyzstan suspended payments on the grounds of technical reasons, fluctuations in the ruble exchange rate and possible sharp fluctuations in the currency market. In response, Tatyana Alekseeva said that companies are urgently reviewing payment methods, and some companies even have to suspend contracts with Kyrgyz partners.

Currently, most financial transactions are being restored, but the average payment time can be up to two weeks.

GTL CEO Denis Kalnov added that every payment to the company must be checked, evaluated and approved by the CIS banks. He is convinced: "In order to eliminate payment problems, payments must be fully converted into the currency of the partner country."

Experts say: "Although banks have not yet increased their commission rates, due to the increase in payment costs for financial institutions, in the near future we should expect an increase in commission rates of 5-7%." In addition, Tatyana Alekseeva pointed out that since the beginning of this year, the average commission of payment agents has increased threefold, up to 11%.

“China and Russia begin to turn to digital payments”

In China, fewer and fewer banks are willing to take the risk of secondary sanctions from the United States, which has caused a certain degree of payment bottlenecks, and the steps to avoid delays have become increasingly complicated, including workarounds using small regional banks. 

The problem with payment delays is that many Russian counterparties are not fully aware of and accustomed to this practice, and do not know how to deal with these compliance requirements, resulting in payments that used to take several days now being delayed to one to three months.

According to Reuters, China and Russia are now accelerating their shift to digital payments. The report focuses on a company, "Qifa China-Russia Cross-border Digital Trade Platform".

It is reported that the "Qifa Platform" was established in 2013 and initially focused on importing Chinese consumer goods to Russia. This year, it began to expand to bilateral trade. Seeing the problem of payment bottlenecks between China and Russia, the company began to focus on new businesses, namely "digital assets and cryptocurrency settlement methods that can be completed within one day." The company is currently closely following the legislative trends in China and Russia, and has begun to promote the use of a currency called Tether (USST) for cross-border payments. 

Reuters pointed out that Russia allows the use of some digital financial assets such as Tether to bypass the banking system for settlement. The Russian parliament is also preparing a bill to legalize the use of all cryptocurrencies as a form of payment for foreign trade. 

However, even though there are some companies in the market and their promotion of digital payments, it is actually far from the level of "China and Russia increasingly rely on cross-border digital platforms for bilateral trade settlements" as reported by Reuters.