Target of NSMEP creation

The National System Mass Electronic Payment is a domestic state banking multi -issuing mass electronic payment system, in which all payments for goods and services, receiving cash and other transactions are effected with payment smart cards according to technology, developed by the National Bank of Ukraine

The target of NSMEP creation is development and introduction in Ukraine a relatively cheap but well secured electronic system of cashless payments, which is mostly designed for "off-line" operation.

After NSMEP introduction, citizens of Ukraine shall be able to settle accounts for goods and services on cashless basis, with smart-cards, as well as to keep and accumulate their savings in banks on current and card accounts. Thus, one can anticipate not only a significant enlargement of potential of the banking system of Ukraine due to additional drawing of people's funds, but also an extra people's income in the form of interest of their bank account balance.

Furthermore, NSMEP technology allows to use on a broad scale charge cards by legal entities, i.e. corporative and business-cards.

National Bank considers the NSMEP development as the final stage in building up a system of electronic payments in Ukraine. Because of its  large scale, complexity and its high development,- introduction and operation costs, NSMEP exceeds considerably the current system of National Bank electronic payments. Taking into account the world experience, there shall be issued in Ukraine no less than 10 million NSMEP Charge Cards, there shall function at least one hundred thousand  payment terminals (in trade, transport and human services, as well as banking terminals and cash dispensers in banks).

NSMEP merchandise mark

The National Bank of Ukraine shall possess an exclusive right for NSMEP merchandise mark (mark certificate for goods and services # 20832 of 17.09.2001 with priority of 28.04.2000 according to corresponding categories of the International Classification for goods and services on mark registration).

A bank shall acquire the right to use the NSMEP merchandise mark after concluding contract on joining the NSMEP and an agreement on use of the NSMEP merchandise mark, which shall be the Supplement to the contract of adhesion.

Tlhe logotype of the NSMEP merchandise mark shall be placed on payment cards, ATM's and their displays, other NSMEP terminals, with the NSMEP service stations.

NSMEP special means of payment

The NSMEP special means of payment shall contain:

payment cards;
mobile payment instruments.

NSMEP Internet-payments

Bearers of  NSMEP cards can effect payment for goods (services)  and transfer funds with NSMEP cards via Internet network:

Specifically, as of today the following Internet transactions are available:

1. Postal money transfers for individuals and legal entities (system of electronic transfers of UMS "Ukrposhta"
2. Payments for communal services and electric power in the cities of Kyiv, Odesa, Kharkiv, Lviv, etc.)
3. Payments for telecommunication services (PC "Ukrtelecom", "Farlep", CCC etc.)
4. Payment for services of cable digital and analog television (Volia Cable", Favorite, NTV+, etc);
5.  Payments for services of Internet providers;
6. Acquisition of mobile communication cards, IP-telephony, hosting and domain names, as well as other goods (services) in Internet shops.
7.  Fund transfers in favour of individuals and legal entities (SmartPay system of Internet-payments);
8. Acquisition of electronic railway tickets as well as airline tickets

To effect NSMEP Internet-payments the following is required:

1. Computer attached to Internet
2. NSMEP payment card, which can be obtained at a bank-NSMEP participant
3. Money on account or on NSMEP payment instrument (cheque or purse)
4. Smart-card reader
5. Special software which can be free loaded.

With NSMEP Internet-payments there are used the software of two technical NSMEP acquirers:

Software of the Universal microprocessor terminal "ARGUS";
Software of “InetTerm II” “Unisystem" SPC.

Detailed information on effecting of NSMEP Internet-payments is available on web-sites of banks-NSMEP participants and the Interplat and SmartPay system of NSMEP Internet-payments.

NSMEP Payment Card

NSMEP makes use of  payment cards with in-circuit chip-units - smart cards. Smart card, being a carrier of rescript of financial data kept in NSMEP, satisfies more fully safety requirements, as against a plastic card with magnetic band. On its basis there developed an efficient off-line technology, operating without on-line connection with a bank account during payment transactions (it is very important, considering not rather high quality of domestic communication channels) which has considerably reduced operating costs. Due to this, NSMEP can be used by Ukrainian citizens with small income (pensioners, students, pupils, etc.). The system operation rate is far larger than by cash payments and operations with magnetic cards.

There are used in NSMEP  payment cards with payment instruments, such as electronic purse and e-cheque. Usage of electronic purse is financially efficient even in case of small value payments (beginning from several kopecks). E-check is designed for large and middle value payments (between several Hryvnias and several thousands Hryvnias).

Bearers of  NSMEP cards can effect the following financial and non-financial transactions:

- on-line load of the card's payment instrument (e-cheque and electronic purse) from load account;
- off-line load of the card's payment instrument (e-cheque and electronic purse) from load account;
- cash load of the card's payment instrument (e-cheque and electronic purse;
- receiving of cash from balance of account of card's payment instrument (e-cheque and electronic purse);
- receiving of cash from load account;
- payment from balance of account of card's payment instrument (e-cheque and electronic purse);
- payment from load account;
- overview of state of load account;
- overview of of balances of card's payment instrument (e-cheque and electronic purse);
- overview of payments log (up to eight latest transactions);
- modification of personal identification number (PIN) - this operation can be effected with all bank terminals and NSMEP ATM 's.

Recently the new NSMEP card was created by the developers of NSMEP technology.  The software of the financial instruments UkrCoin V2.0 provides for complete compatibility with the previous version of UkrCoin V1.02 and allows to create on one and the same chip (in the process of its initiation) such types of the NSMEP cards:

• Payment cards;
• Safety modules of payment terminals;
• Bank cards of access;
• Cards of access to the terminal equipment;
• Transfer cards.

Standard payment instruments can be placed in the new NSMEP payment card: electronic purse and electronic cheque. Additionally it is designed to combine the off-line payment instruments with other service instruments:  social, discount, loyalty and others. Functional performance capabilities of every type of the NSMEP cards are determined depending on the chosen chip (SLE66C42P, SLE66C82P, SLE66CL80P). Payment cards, which are made at the SLE66CL80P chip-module, have a double interface (contact and contact- free) and can be used to pay public transport fees. A maximum number of payment instruments (purses and cheques) on a card is limited by the 30 instruments and relies on the volume of permanent memory  (EEPROM) of a chip. UkrCoin V2.0 has a more higher degree of transaction protection due to the use of the TDES cryptographic algorithms.

When system switches to the algorithm of enciphering and data signing TDES number of payment instruments of NSMEP card can be increased up to 35.

Table 1. Basic characteristics of financing instruments of NSMEP payment cards:

The new card can be also used for the electronic-digital signature according to 4145-2002 Specification.

Technological procedure used in NSMEP cards manufacturing  for NSMEP member banks requires that a bank sends simultaneously an order to two addresses: to a card manufacturer who was granted a relevant license from the National Bank of Ukraine) and another copy to the NSMEP Payment institutions (currently National bank is acting as one). On agreeing with a bank the issues concerning graphic representation of its name and logotype on the card, card manufacturer shall execute the order in two weeks term.

The manufactured cards shall be given over to a customer, who pledges oneself, prior to their issue to perform system initialization with the National bank (a card shall be given an individual number, under which it is register with the system), as well as system personalization (at this stage, actual versions of system keys and other data are entered into a card). Then, a banking personalization is performed by a customer (banking keys, as well as other data are entered into a card), and immediately before issuing a card, a bank client's data are being entered into it.

The institutions, which intend to introduce NSMEP-cards have to address a bank, by which they are served or to banks - NSMEP - participants.

Mobile Payment Instrument

Mobile payment instrument (MPI) - is a special means of payment in a form of smart card, issued in the legislative order, which is a carrier of  the  NSMEP personified mobile payment instrument and a relative instrument of a mobile communication operator.

MPI can be used only in mobile telephones which are serviced by this mobile communication operator.

NSMEP Organizational Framework

NSMEP shall include:

• payment institution;
• members of the system of payments;
• participants of the system of payments.

In accordance with the Resolution of the Board of the National Bank of Ukraine # 620 of 10.12.2004, the National Bank of Ukraine shall be the NSMEP-payment institution.

NSMEP-members can be legal entities, which shall conclude agreement with the Payment Institution on joining the . An NSMEP-member can perform functions of an issuer and/or an acquirer.

NSMEP-participants are legal entities or natural persons - subjects of relations which occur by funds transfer initiated by an NSMEP-payment card (the Bank for Settlements, Head Processing Centre, Regional Processing Centres, Processing Centres of banking level, payment cards holders, trade institutions, etc.)

Operational division of the National Bank of Ukraine shall act as the Bank for Settlements. Functions of the Head Processing Centre shall perform the Central clearing house of the National Bank of Ukraine. Functions of the Regional Processing Centre in Kharkiv region shall perform the Branch of the National Bank of Ukraine in Kharkiv region.

Work models for NSMEP-members are the following:

• issuer;
• acquirer;
• issuer and acquirer.

NSMEP-members/participants

Table 2. Banks-NSMEP-members

Table 3. Nonbank institutions - NSMEP-members/participants

Table  4. Banks which were given a permission to conclude agreement with the Payment Institution on joining the NSMEP

Table 5. Nonbank institutions which were given a permission to conclude agreement with the Payment Institution on joining the NSMEP

Role of the National Bank of Ukraine in NSMEP

Ideological and coordinating

The National Bank has developed the general concept of NSMEP, requirements for all system elements, software/hardware decisions for the system upper level (Clearing bank, Processing Centers, safety systems), it coordinates execution of all works, develops normative and legal acts of the system, as well as drafts of legislative acts, works upon establishing competition among companies-developers of  NSMEP software/hardware, draws various legal entities to work together in the system.

Financial:

• financing of implementation of the NSMEP principal units (Bank for Settlements, Head and regional processing Centers, Center for key information generation, Center for initialization and cards system personalization);
• financing of software development and maintenance for smart-cards and system safety modules.

NSMEP development

The National Bank of Ukraine completes development of specifications for data presentation extended structures on financial transactions effected with terminal devices.

Data presentation in the form of Extended structure is an attempt to provide a unitized presentation with NSMEP terminal devices of any financial or other information. It enables decrease of cost for software modification, shorten term of development and reduce cost for development of new financial and service applications in the NSMEP, as well as to decrease volumes of SW terminal devices and other system components.

At this stage only data applicable to individual Off-line transaction will be presented as extended structures, as well as authorization on On-line transaction (including transactions on social cards, etc.).

At present data presentation extended structures on financial transactions are intended to be used when making financial documents on the following transactions: "Fund transfer",  Payment with a mobile payment instrument", "Internet payment", "Cash payment", as well as "social payments", information on discounts, etc.

NSMEP accompanying project

NSMEP payment cards can be provided with complementary characteristics and contain data, which allows to use them as a technical means for securing:

• customer's identification (identification card, pensioner card, etc.);
• services in insurance medicine and other insurance categories;
• servicing of privileged categories of population;
• service benefits in trade.

Creation of files containing additional data in payment cards shall be made according to an issuer order to the Payment institution.

Payment cards can contain several payment applications, each of them supporting only one code of payment unit (currency code) (main or complementary) or accounting code, further Complementary Currency Codes.

Payment cards with Complementary Currency Codes, the use of which is based on NSMEP technology, can be used  in systems for provision and accounting of specified  services, created with participation of these cards issuers and other proper institutions, as well as for creation of non-banking payment systems.

Payment cards with Complementary Currency Codes can be both personal and corporate and can be used by their holders as a technical means for:

• procurement of goods (services) paid in advance;
• receiving of cash in foreign exchange;
• payment for goods and services of end use;
• payment for goods and services for individuals who have privileges (fare, medical drugs, public utilities, etc.);
• receiving of public assistance, subventions, etc.

Nowadays the following NSMEP accompanying projects are being implemented: “Electronic student card” (in cooperation with the Ministry of Education and Science of Ukraine and the Research Institute for "Applied Information Technologies"; “Pension card” (the possibility of pension payment out of  the state pension fund as well as the  private (non-governmental) pension fund); “Social card" (in cooperation with the Ministry for Labour and social Policy of Ukraine); з “Medical card”; “Bonus card”. Electronic student card Since September 2006 the Ministry of Education and Science of Ukraine in cooperation with the National Bank of Ukraine has been carrying out a pilot project "Electronic student card" based on information manufacturing technology "Education" and NSMEP technology. The multifunctional electronic student (pupil) card of a uniform pattern, which combines the functions of a student card and a payment card, has been implemented through the use of NSMEP technology within the framework of the project. This experiment provided for the implementation of the system of servicing electronic student cards at the establishments of Ukrainian Railways with the functions of providing an automated travel privilege for students traveling by railway, that is the first step in the development of the technology of functioning of the computer-based system of providing social benefits to the citizens of Ukraine. (the system "Social card"). "Electronic student (pupil) cards" have been implemented on the basis of NSMEP-2 cards, in which the new generation chip-modules possessing a number of technological and functional advantages are used. Electronic student (pupil) cards are produced by the State Centre of Applied Information Technologies of the Ministry of Education and Science of Ukraine in cooperation with the Scientific Research Institute of Applied Information Technologies of the Cybernetic Centre of the National Academy of Science of Ukraine. In accordance with the Decree of the Ministry of Education and Science of Ukraine #801of 9 August 2010 "On the Approval of the Outcomes of the Conduct of an Experiment "Electronic student card" and on account of the completion of an experiment, the Report on the conduct of an experiment on the implementation of the project "Electronic student card" has been approved. The outcomes of an experiment were recognized as successful and a step-by-step implementation of a student/pupil electronic card is scheduled to recommence from 1 September 2010 along with the introduction of amendments to the effective legal framework with respect to the description of a student/pupil card. The recommendations to the banks regarding an order of electronic student/pupil cards.(In Ukrainian) A list of the regions of Ukraine, in which the banks – NSMEP-members that can issue "Electronic student cards" operate.(In Ukrainian) NSMEP Software and Hardware products List of NSMEP Software and Hardware products (as of 07.07.2010) (in Ukrainian) NSMEP Publications 5 years of commercial operation of NSMEP! Ukrposhta’s postal money transfers via the Internet