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Siberians Using Smart Card, Russia Remains Cash Society

By Kathy Lally
The Baltimore Sun

Russia is still mostly a cash society. Contraptions such as cash registers have been accepted, but grudgingly. Even cash registers are regarded as suspicious contraptions, though they have grudgingly become more accepted. The prudent clerk often verifies totals with a clicking calculation on the abacus.

There are no checking accounts. People pay their taxes by going to the bank, pulling wads of rubles out of their pockets and plunking them down on the counter. They buy cars by filling up a couple of suitcases with multimillions of rubles and handing them over - though private sellers insist on dollars, the crisper the better.

Credit cards belong to the future. They are beginning to appear, but only the richest of the New Russians have them.

So it's astonishing to find that remote Siberia has long been a technological leap ahead of the rest of the world. While smart cards were being introduced as the latest thing in New York last week, Siberians have been using them since 1994.

The smart card was born of necessity here. The cashless society had already arrived in Siberia - employers simply didn't have enough rubles to pay their workers, making a plastic card to which funds could be assigned highly attractive.

Debit cards were not feasible. They require sending information over phones lines, and the lines in much of Russia are so poor they couldn't reliably transmit such data.

The lack of currency led to the creation in 1994 of a smart-card business called Zolotaya Korona in Novosibirsk, known as the capital of Siberia. Zolotaya Korona issues a plastic card bearing a micro chip programmed with the user's bank account information. The cardholder presents it at a cash register when making a purchase, punching in his personal identification number. At the end of the business day, the merchant can make a single call to the bank and the transfers are completed.

"Some people refused to use it at first," said Alexei Maslov, public relations director for Zolotaya Korona. "But, you know, when something is profitable, people change pretty quickly."

Maslov estimates that 5,000 retailers across Siberia now use the cards. There are 350,000 cardholders, he says, growing at a rate of 15,000 a month.

The card has been relatively easy to adopt because many Russian cities are one-company operations.