«VISIT TO NIZHNY NOVGOROD FOR THE CARDS » (Banking technologies, № 4, 2004)

The international payment systems came in Russia 12 years ago. Then all possible goods and services rushed in out country, and the first Russian businessmen quickly accustomed themselves in world capitals, having replaced roll of cash with plastic cards. However, the Russian banks had been forced for ten year else to purchase plastic cards of the most popular payment systems in Russia – Visa

International and MasterCard International – only abroad. At that all participants of the market admitted that transfer of the production in Russia was profitable either for the payment systems or the Russian banks. The advantages of domestic manufacture of plastics are evident: term of design approval is reduced as well as the term of cards production and their delivery, the cost of orders is reduced too.

Nevertheless, the international payment associations began to lead serious negotiations with the Russian manufacturers of plastics in the beginning of XIX century. One of the most significant events on the market of plastic cards was the certification of a Nizhny Novgorod company NovaCard by both the largest payment systems – Visa and MasterCard – in January 2004. At that NovaCard was the first in Russia that got the right to produce and personalize cards of the system MasterCard.

Why did the international payment associations show their confidence to the Russian manufacturer only a decade later? The CEO of NovaCard, Vladimir Krupnov, notices that significant investments and efforts were necessary to comply with the highest requirements of Visa and MasterCard to the level of organizing of the production. Besides, it took much time to overcome prejudice of the foreign financiers against the Russian companies, appeared after the crisis of 1998.

It took 10 years to achieve a success. In 1994 seven employees of NovaCard started producing plastic cards manually with use of table equipment, which was located in one of the rooms of the Nizhny Novgorod Institute of Applied Physics of Academy of Science. The first major clients of the company were banks, issued the cards of the Russian payment systems: Union Card and Golden Crown. In 1997-1998 the company had been expanded rapidly, implementing orders of the mobile operators, appeared in Russia. The clients of MTS and Beeline all over the world use the cards of NovaCard. Moreover, the company produces discount, club, insurance, medical cards and cards of access control.

Having rented all free offices of the Institute, the management team of the company realized the necessity to purchase its own production area.

The CEO of NovaCard, Vladimir Krupnov, talks: «When we realized the necessity of movement, the first variant, the most logical in that situation for us, was to buy some ruined plant, there were a lot of them in Nizhny Novgorod that time as well as everywhere in Russia. There was all necessary infrastructure at such a plant, it was necessary just to refurbish it. But we didn’t choose such an easy and cheap way. Certainly, the idea of restoration of Romodanovsky rail station was emotional to a considerable degree, and was connected with my personal feelings. I grew up near this station when it had been working. I always admired its beauty. And many years later I see that the building, through which thousands people passed daily, where life was, laid in ruins. It was not demolished or broken, it was forgotten and abandoned.

Having created the company on the production of plastic cards, I started visiting France – it is the most progressive European country in that regard, the country where this notorious chip migration was fulfilled. What was my amazement when I learnt that Orleans station in France was practically ruined too. However, when there was no need in Orleans station, it was not abandoned or broken, but was turned into one of the most beautiful museums of the world. These coincidences were sing for me and we decided to choose Romodanovsky rail station.

Romodanovsky – (in common parlance – Kazansky) railway station was built in 1904, in Nizhny Novgorod on the bank of the river Oka. Classical building of the station looked especially brilliantly and proudly against the background of eclectic and merchant architecture of Nizhny Novgorod. However, with the development of railways the traffic was concentrated on the other bank of the river Oka and the old building became unnecessary. In the beginning of 1970-ss the last train left Romodanovsky rail station, the railroad bed was dismantled, the building was desolate and began slowly to go to ruin. In 1993 the building of the station was recognized as an architectural monument, but this fact changed nothing in its fate. The company NovaCard saved the old building with hundred year history, and decided to restore it. Having collected the remained drawings and photos, the builders tried to restore its initial look most precisely. In 2003 the plant moved to the restored building, which area after the reconstruction accounted about 4 thousand of square meters.

Now, NovaCard bears a title of the most beautiful plant in Europe as of right.

However, not only the façade is worthy admiration: there is ultra advanced equipment, produced in West Europe, USA and Japan, in the old building. Climate control systems are installed in the building, tracking the temperature and humidity in the production area, the company has its own power station, water-purification system to drinking quality, advanced fire safety system. The production of plastic cards demands extraordinary security measures, so the hot developments are used in the safety building system, which is unprecedented for Russia. During several months the inspectors of Visa and MasterCard closely examined the plant and, finally, decided to certify NovaCard for the production and personalization of plastic cards of these payment systems.

The staff of NovaCard was sure that the certification would cause a greater growth of production volumes. In 2004 the Russian banks are going to increase the issuance of the cards Visa by 6 millions, MasterCard – by 4 millions. The Nizhny Novgorod plant expects to receive the order for the production not less than one third of cards of both payment systems of emission of 2004. Though, it is necessary to recognize that before the certification the company NovaCard annually increased the production output: in 2003 NovaCard produced 100 million cards – twice more than in the previous year.

Production facilities of the plant allow producing up to 20 million cards of the standard ISO per month. As of today the plant produces about 13 million cards monthly.

NovaCard possesses all the necessary equipment for the production of full spectrum of bank cards: from the ordinary cards with a magnetic strip to the most advanced smart-cards with dual interface. At the production of cards NovaCard applies all advanced technologies of printing and materials: off set printing of high resolution, micro-structure, safety colors, seen only in case of special lighting, optically variable inks, changing color depending on entrance angle, thermo-chromic colors, changing under the influence of temperature. Besides, at the production of cards the modern equipment is used for lamination, hologram plotting and assembly of smart-cards with dual interface. Continuity of the technological process is the important competitive advantage of the company NovaCard and the significant plus in the opinion of the international payment systems. All stages of transformation of plastics into a completed card occur in one place, this fact positively affects the production safety and the prime cost.

At the press conference, devoted to the certification of NovaCard, the Head of the Russian representative office of Visa International, Lue Naumovsky, underlined importance of the event for the payment system and the Russian banks. «The certification of NovaCard is a remarkable event not only for the company itself, showing world standard of organization of the production and quality management, but, undoubtedly, for the banking community of Russia as a whole. Approach of Visa to business development is based on maximum utilization of local resources in order to reduce the banks’ expenses of acquisition of plastic cards and program solutions», - Lue Naumovsky mentioned.

In his turn, the Vice President and the Head of the representative office of MasterCard Europe in Russia, Andrew Korolev, at the press-conference, devoted to the certification of the first Russian plant – NovaCard – expressed the hope that banks «would properly evaluate the convenience of work with local vendor as well as the quality of the products and professionalism of our partners».

The representatives of both payment systems marked high quality of the production of NovaCard, which complies with the strictest international standards. Profits for the banks are evident: they get the cards, not conceding in quality to the western analogues, at that the orders are implemented at a lower price and much quicker. The opportunity of perfect meeting requirements of the payment associations to the security level of the production, personalization and to the transmission of the cards from a manufacturer to a client. So Vladimir Krupnov said, in case of purchasing the cards from the foreign manufacturers it is difficult to differentiate responsibility by virtue of specificity of procedure of customs and transport. When receiving the cards from the certified company in Russia, the responsibility of parties is clearly definable by the procedure of shipment, jointly developed by the international payment systems, over the special sluice.

The CEO of NovaCard announced that the banks, ordered the cards Union Card and Golden Crown in NovaCard, had already expressed the intention to produce the cards Visa and MasterCard at the Nizhny Novgorod enterprise.

Interaction of the company with the international payment systems does not come to the end after the certification. NovaCard is going to use all the most advanced chip technologies in the production, considerably taking the lead over development of the Russian industry of plastic cards».