SMEP

Mass Electronic Payments System (MEPS)

The Mass Electronic Payments System (MEPS) is a payment system of the Republic of Kazakhstan designed to process payments and/or money transfers between its participants and to enable the provision of a wide range of payment services based on fast, low-cost, guaranteed small-value transactions.

MEPS was established in 2011 in accordance with a mandate of the National Bank to ensure guaranteed and prompt customer payments of system participants with minimal financial costs. The system enables urgent low-value payments without affecting participants’ scheduled interbank settlements.

MEPS combines mechanisms for guaranteed real-time payments and transfers (similar to IMTS) with multilateral clearing and end-of-day net settlement (similar to ICS). Settlement of funds based on clearing results in MEPS is carried out via the Interbank Money Transfer System (IMTS) in accordance with each participant’s net position. For customers, payments are executed in real time, while final settlement for participants is performed once per day.

MEPS is included in the register of payment systems of the National Bank of the Republic of Kazakhstan as an “other payment system.” The operator of the system is the National Payment Corporation of the National Bank of Kazakhstan (NPC).

A prerequisite for participation in MEPS is the existence of a correspondent account in tenge opened with the National Bank in accordance with the Rules for Establishing Correspondent Relationships (Resolution No. 209 dated August 31, 2016). An additional requirement is the availability of a guarantee commitment and the conclusion of an agreement with the National Bank for the provision of an intraday overdraft facility.

The system’s activities are governed by the resolution of the Board of the National Payment Corporation dated October 3, 2024, “On Approval of the Rules for the Functioning of the Mass Electronic Payments System.”

Key Features of MEPS

• The sending bank (Bank A) submits pacs.008 / pacs.009 messages to MEPS to initiate a transfer.

• Upon execution of a transfer, MEPS notifies:

  • the sending bank (Bank A) via camt.054 (Debit), and

  • the beneficiary bank (Bank B) via camt.054 (Credit).

• If an error is detected in a pacs.008 / pacs.009 message, MEPS sends a pacs.002 (RJCT) message to the sending bank specifying the error code and description.

• MEPS forwards pacs.008 / pacs.009 messages containing payment details to the beneficiary bank (Bank B).

• Upon receipt of pacs.008, the sending bank debits the payer’s account, while the beneficiary bank credits the recipient’s account.

Purpose: to enable fast, real-time electronic payments for small-value transactions.

Functionality: execution of payments and transfers in real time with subsequent net settlement based on clearing results.

Operating mode: operates on a 24/7 basis with continuous acceptance and processing of payment messages.

Recall, blocking, and priority change: not supported.

Finality and irrevocability: payments are final and irrevocable once accepted for execution.

Partial payment processing: allows processing of one or several underlying documents within a bulk payment message (non-register-based). Only the erroneous underlying document may be returned rather than the entire message.

Limitation: the maximum amount of a single payment document (including bulk messages) must not exceed KZT 500,000.

Payment guarantee: requires a guarantee commitment and provides access to an intraday overdraft facility.

Risk management: includes the establishment of a debit cap (maximum allowable net debit position) for each participant as determined by the National Bank.

MEPS Operating Day

• 18:30 – automatic closure of the current operating day and opening of a new operating day

• 18:30–19:00 – calculation of participants’ net positions in IMTS and issuance of final statements

• Final statements for weekends or public holidays are generated on the next business day

• 18:30 (current day) – 18:30 (next day) – continuous acceptance and processing of payment and informational messages

To manage liquidity, credit, and systemic risks, the National Bank provides intraday overdraft facilities to participants with net debit positions (excluding the authorized budget execution body). The maximum allowable net debit position is set by the National Bank.

If funds are insufficient in a participant’s IMTS position, settlement of MEPS clearing results is performed after liquidity is provided by the National Bank. Liquidity is first sourced from funds blocked under guarantee commitments; if insufficient, it is provided via intraday overdraft.

Settlement is executed via the IMTS based on participants’ net debit and credit positions, with the system’s net position reduced to zero upon completion.

After closure of the operating day, newly received payment messages are processed with the new operational date.

Following settlement, participants receive final statements containing information on processed payment messages and their net positions.

Validation Controls in MEPS

MEPS performs format and logical validation of payment messages to verify:

• compliance of the message structure with ISO 20022 formats

• validity of the digital signature

• uniqueness of message and transaction references

• correctness of the BIC of sending and receiving banks

• correctness of account check digits

• compliance with value date

• authorization of sender and receiver

• presence of mandatory details (IIN/BIN, payment purpose code, country of residence, etc.)

If validation fails, the payment is rejected and an error message is generated specifying the error code and description.

Message Formats: From MT to MX (ISO 20022)

Previously, financial information was transmitted using MT formats with fixed field structures and character limits, limiting flexibility. Transmission of additional data required system modifications.

MX formats now enable the inclusion of extended data, ensuring transparency of payment flows and accurate identification of all participants, including additional parties such as the ultimate debtor and ultimate beneficiary in accordance with ISO 20022 methodology.

Mapping of MT and MX core message formats in MEPS:

Payment Message Processing Conditions:

1. successful authentication

2. validation of data integrity, message structure, and field values

3. alignment of the operating day date with the payment date specified in the payment message

4. the payment amount does not exceed the maximum limit for a single payment message (including bulk payment messages)

5. participant status in the System for both the sending participant and the beneficiary participant

6. the participant’s net debit position does not exceed the maximum allowable limit