VTB launched international cash transfers

VTB, which is under sanctions, launched cross-border transfers with cash withdrawal. This functionality can be used by recipients who do not have an account in a foreign bank or have problems servicing IT

VTB Bank began conducting international money transfers with the possibility of issuing money in cash without opening a bank account. Alexey Khranilov, Head of the “translations” department of VTB’s transactional retail business department, told RBC about this. This model for conducting cross-border transactions is usually used by money transfer systems “Zolotaya Korona”, “Unistream”, Contact, etc.; Western Union previously also used it in Russia.

At the first stage, you can transfer money in this way to Azerbaijan , Armenia, Belarus, Moldova, Mongolia, Serbia and Abkhazia. By the end of the year, the bank plans to increase the number of partner countries to 20, Khranilov specified.

You can send a transfer in the VTB Online application on Android and in the web version, indicating your full name. recipient and country. Transfers are sent in rubles and paid in foreign currency. You can pick up money at partner branches by providing the transaction number and showing your passport. There is no need to open a bank account. The maximum amount of one transfer is 350 thousand rubles, the monthly limit is 500 thousand rubles, the commission is 1.5% of the transfer amount (minimum 100 rubles).

Since 2022, VTB has been under blocking sanctions from the US , EU and UK , and is also disconnected from the SWIFT financial messaging system, which is used for cross-border transfers. Due to sanctions, it cannot conduct transactions in dollars, euros and some other currencies. After the introduction of sanctions, VTB, along with other large banks, experienced problems with cross-border transfers, but then began to restore them using other schemes - however, mainly in the currencies of friendly countries.

According to Khranilov, now VTB clients can also make cross-border transfers using bank details, card number or phone number. Over the nine months of 2023, the number of transfers in the currencies of friendly countries exceeded 180 thousand, which is 3.7 times higher than the same period last year. Their volume amounted to 23 billion rubles. In the VTB web version, when trying to arrange a transfer to another country, 17 directions are shown.

Who else makes transfers without a bank account?

Transfers with cash withdrawal without opening a bank account are carried out by money transfer systems “Zolotaya Korona”, “Unistream”, Contact, etc. In 2022, the Bank of Russia stopped publishing statistics on cross-border transfers made through these systems, however, the Central Banks of neighboring countries in 2022 recorded a multiple increase in transactions received from Russia.

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Banks have also begun to launch such transfers. Sberbank now offers cash transfers to two countries - Uzbekistan and Kyrgyzstan. Uralsib has implemented such functionality in partnership with money transfer systems; transfers can be sent to more than ten countries. MTS Bank has been developing this area since the beginning of 2021; its users can send transfers with cash withdrawal to 16 countries, including Azerbaijan, Armenia, Cyprus, Serbia, Uzbekistan, Tajikistan and others (representatives of the credit institutions themselves told RBC about the directions of transfers). All three banks are also under blocking US sanctions.

Customers of Pochta Bank have access to Unistream money transfers, which can be made from a card and received in cash at partner offices, says its representative; the main destinations are the CIS countries. In July 2023, Unistream came under US blocking sanctions , which led to a reduction in the number of destinations.

According to the head of the team for developing the partner network and integration connections of MTS Bank, Mikhail Sharakin, the top 3 popular directions for money transfers include Uzbekistan, Kyrgyzstan and Armenia: “We see a constant demand for transfers with cash withdrawal, but at the same time we note that for our For users, a more convenient way to receive it is through targeted transfers using a phone number or card.” He added that the bank has set up about 90 direct integrations with other partner banks to carry out these transactions, so as not to use third-party solutions. Since the beginning of this year, Pochta Bank clients have transferred money abroad in the bank’s mobile application three times more often compared to the same period last year, and the total volume of such transfers has doubled - most often they send money to Kazakhstan, Azerbaijan and Uzbekistan, said the head of the department digital business development of Post Bank Vladislav Ermakov.

Why does VTB launch transfers without opening an account?

There is a demand in the market for such transfers, but the supply does not correspond to this demand, so it may be profitable for banks to enter this niche, says Egor Krivosheya, head of the blockchain and fintech laboratory at the Skolkovo School of Management. According to the managing partner of the legal company Enterprise Legal Solutions, Yuri Fedyukin, the demand for such transfers remains high both from migrant workers working in Russia and from citizens living outside of Russia but receiving ruble income .

A number of money transfer systems do not support cards from banks under sanctions, including VTB, so their clients cannot use these services. VTB’s own service can become a replacement for them, Krivosheya continues. Also, the ability to transfer without opening a bank account can simplify transfers for those clients who have accounts in sanctioned Russian banks, adds Kira Vinokurova, co-head of sanctions law and compliance practice at Pen & Paper.

The launch of such transfers is not an attempt to bypass sanctions restrictions, but an opportunity to enter a new market segment where customers have inconvenience due to the inability to use cards abroad, Krivosheya argues: “This is relevant for those customers who go on a trip and cannot use the card, or for those who cannot send money to a foreign account due to reasons of blocking, problems with crediting or the absence of such an account.” In March 2022, the international payment systems Visa and Mastercard left Russia, which is why their cards from Russian banks stopped working abroad. In order to continue using non-cash payments abroad, Russians began to open accounts in foreign banks en masse. But foreign credit organizations have complicated the conditions for opening accounts for Russians or completely closed this opportunity. There are also cases of cards being blocked after a positive decision to open an account.

The main difficulty of such transfers is the organization of issuing points abroad, says Ermakov: “In this case, it can be solved with the help of branches of partner banks in friendly countries.” However, even such transfers that do not require the use of SWIFT and inclusion in the chain of correspondent banks are likely to be unavailable in countries where sanctions apply to Russian banks, says Fedyukin. If a bank is under sanctions, then it may have a smaller network of partners abroad than payment systems, says Krivosheya, one of the disadvantages of transfers from VTB. But both experts agree that customers may have more trust in the bank’s brand than in other services.