(Bloomberg) -- The biggest fintech company in Central Asia is opening its proprietary payment system to other banks’ customers to strengthen its position in the market before Kazakhstan’s central bank starts a platform of its own.
Kaspi.kz’s system, one of the most widely used payment methods at retailers and restaurants in the country, lets consumers pay quickly by scanning a QR code through an application on their phone. In September, the bank opened the platform to customers of Home Credit Bank and Altyn Bank, according to the lenders’ websites.
Several other banks have also been approached about joining the network, people familiar with the talks said, asking not to be identified discussing information that’s not public.
Kaspi is racing to lock in vendors that use the QR-code-based system before the central bank’s roll out of infrastructure that could allow competitors to eat into its business, people said. Kaspi is opening up in order to increase the share of transactions through its network so merchants will have less incentive to migrate to other lenders, the people said.
The National Bank of Kazakhstan said it plans to start a universal payment system this year, and expand it further in 2025. The project is aimed at allowing consumers to make payments from any bank with QR-codes for retail goods and services, which will raise competition to a new level, the regulator said in emailed comments.
Kaspi.kz declined to comment.
While Kaspi may see its profit increase, the lender could also benefit from the experience gained from rolling out such a system, which it could apply in other countries, the people said. Kaspi, which is active in Azerbaijan and Ukraine, recently agreed to buy a controlling stake in Turkey’s e-commerce platform Hepsiburada for $1.13 billion in cash, in a deal that will expand its available market to 100 million people.
Kaspi also may be trying to transform its system into a potential substitute for the one planned by the central bank, if that doesn’t come online on time, though the regulator said that wouldn’t be a possible alternative.
Halyk Bank, the country’s biggest lender by assets, has a rival payment system. However, it has made the decision to support the central bank’s platform in the expectation that it would help it win over more merchants once it is introduced, people familiar with the matter said.
Once the central bank rolls out its system, lenders will compete over services for merchants and cardholders, but not prices, Halyk Bank said by email. It’s impossible for one bank, integrating with two or three other lenders, to build a full-scale alternative to the universal QR-code network because that wouldn’t guarantee data security, according to Halyk.
Kazakhstan’s central bank said in April it wants to weaken the hold of the country’s two largest lenders over payments with the introduction of the new system providing universal access.
The two banks dominate Kazakhstan’s market for payments. Kaspi.kz alone handles about an 80% share of such transactions, and Halyk Bank more than 10%, according to Bloomberg calculations based on data from the lenders and the central bank.
Kaspi.kz serves 14 million monthly users in Kazakhstan, which has a population of 20 million people.
(Updates with comment from Halyk Bank in the 10th paragraph.)
©2024 Bloomberg L.P.