At the end of last month the Bank of Russia shared the business model for its central bank digital currency (CBDC). All digital ruble transactions will be free through to the end of 2025, with the first batch of banks and merchants expected to go live on July 1. The central bank plans to earn fees for operating the system. Meanwhile, last week at a hearing in Russia’s State Duma, the Association of Russian Banks (ABR) said that banks are unhappy.
They are concerned with the potential outflow of bank deposits and the costs of implementation. Russia is not planning CBDC holding limits. According to ABR chair, Anatoly Kozlachkov, the set up cost is around 100 million rubles ($1 million) per bank, Info24 reported. He noted that some banks only have $3 million in capital. Senior legislator, Anatoly Aksakov, who chairs the Financial Markets Committee of Russia’s State Duma, is irritated by the pushback from banks. Given Mr Aksakov’s previous remarks, it’s surprising banks aren’t objecting harder.
Last year Mr Aksakov said, “Perhaps a bank is not needed as an institution, since the digital ruble will be very much automated.”
The digital ruble business model
Turning to the central bank’s plans for charging, all transactions with the digital ruble will be free for consumers. That includes transactions between consumers (C2C) and from businesses to consumers (B2C). However, consumer to business (C2B) transactions will attract fees from 2026 onwards.
The model works with all revenues going to the platform operator, which is the central bank, and then the central bank paying some fees out to payment providers. The central bank keeps a cut, which is a third for business to business (B2B) transactions and around one sixth for consumer to business (C2B) payments.
For C2B payments, the business recipient has to pay 0.3% fees with an upper limit of Ruble 1,500 ($14.34). For the same transaction, the central bank will give the payment provider used by the consumer 0.1% with a maximum of Ruble 500. And the recipient’s payment provider will receive 0.15% with a maximum of Ruble 750. Payments relating to housing and community services attract a lower central bank charge of 0.2% rather than 0.3% with a maximum charge of Ruble 10. The payment providers receive lower fees for these housing payments.
Business to business (B2B) payments attract a flat central bank rate of Ruble 15 (14¢). The payment provider for the payer receives Ruble 10 for the B2B transaction.
Meanwhile, it’s not only banks that are pushing back. Merchants are concerned about the timetable. So much so that the Ministry of Trade is now involved on their behalf.
