Reliable and secure payment systems promote to increasing stability of the state’s financial system on the whole, ensure efficient use of financial resources and improve liquidity of financial markets, as well as guarantee timely settlement between sellers and buyers.

System of non-cash payments of Kazakhstan inherited from previous centralized planned system and supported by the State bank of the former Soviet Union was not suitable for new conditions of market-driven economy. In this connection, the National bank of the Republic of Kazakhstan proceeded to conducting the reform of payment system in 1991.  

At the initial stage of establishment the main purposes of the reform of payment systems of the Republic of Kazakhstan were acceleration of payment passing between banks and their clients (at the beginning of 90s period of one payment passing made up 3-12 days), as well as wider introduction into circulation of different payment instruments (transfer orders, cheques, payment demands).

The first step of reforming the payment system was transfer in 1991 of the accounts of inter-branch turnovers (IBT) of commercial banks to correspondent accounts opened in the branches of the National Bank of the Republic of Kazakhstan which enabled to close IBT, put in order arrangement of interbank settlements and provide execution of cash service of commercial banks.    

For the purposes of providing interbank settlements the National Bank in 1992 created cash-processing centers in all regions, cities, urban districts of regional centers, etc. and in Almaty city. By the middle of 1992, 19 regional CPC (cash-processing centers) and 274 district CPC of the National Bank were in operation.

In 1993, as soon as technical facilities become available the introduction of electronic payments has begun in settlements between the regions of Kazakhstan for the purposes of payment acceleration, as well as prevention of using fictitious letters of advice.    

In 1995, the first in Kazakhstan Almaty Clearing House (ACH) was organized  on the base of the National Bank which operated according to the method of multilateral clearing. The final settlements were performed at the end of transaction day in respect of net position of each participant. The main disadvantage of this system was the fact that the participating banks at the end of the day had to make an exchange of payment orders in hard copies. It was determined by the lack of normatively fixed notion “electronic payment order” and capability of making payments by electronic method.    

For the purposes of developing and improving payment system of the Republic of Kazakhstan under regional branches of the National Bank in 1996 regional clearing houses were created which carried out interbank clearing of intraregional payments. Total it numbered 19 clearing houses during this period.

Also in 1996 ACH was reorganized into Kazakhstan Interbank Settlement Center (KISC) where modern equipment was installed and software was developed enabling to work with electronic payment orders, not requiring confirmation in hard copies. It has become possible after a capability to make payments by electronic method was provided in the legislation of the Republic of Kazakhstan and the notion of “electronic payment order” was fixed.

One of the most important moments in the development of payment system of the Republic was creation in August 1996 of KISC-based System of large payments processing electronic payment orders, carrying out settlements on gross basis and having characteristics of perspective RTGS (real-time gross settlement system).

The important measure promoting to improvement of payment systems was centralization of correspondent accounts of second-tier banks in the central office of the National Bank which was executed during period from October till November 1998. Centralization of correspondent accounts has allowed the National Bank to carry out functions of settlement bank and central bank in an expeditious manner, to enhance effectiveness of control functions over payment system and banking system on the whole.  

For the purpose of developing the retail payment markets and improving quality of provided services in this sphere of banking the National Bank in 1999 closed the clearing houses attached to regional branches of the National Bank. At the present time the clearing of retail payments is carried out by clearing system of KISC.

At the end of 2000, the System of large payments KISC was transformed into the Interbank System of Money Transfer (ISMT) which carries out settlements in real-time mode (RTGS) within the limits of available funds at the participants’ accounts and meets all basic requirements imposed by the international financial institutions on payment systems on gross basis. Introduction of ISMT was the next stage of development of payment systems of Kazakhstan which allowed to improve facilities of system monitoring and liquidity risk management of the system’s participating banks.

At the present time two national payment systems function on the territory of the Republic of Kazakhstan: Interbank System of Money Transfer (ISMT) and Interbank Clearing System (ICS).