According to analysts, the introduction of the digital ruble is certainly going to benefit retailers because they will be able to save on acquiring fees.
But, the real loser will be the Russian central bank itself. Moreover, there are no obvious benefits to consumers of using the digital ruble because they will not be paid any cashback or interest.
Digital ruble’s consequences
Financial experts have put together a forecast, which reveals that annual losses for commercial banks due to the launch of a digital ruble in Russia will amount to 50 billion rubles, or $715 million.
In comparison, retail chains will be able to enjoy benefits from the introduction of the digital ruble because their income will go up by almost 80 million rubles every year.
The authors of the said research also added that consumers will not be able to get any cashback on their digital ruble transactions and they will not be able to earn any interest on their digital ruble balances.
According to the specialists, due to the benefits, it offers to retailers, the digital ruble is likely to occupy a niche as far as the domestic retail payments market is concerned.
They believe that it will be able to take over some of the shares of card payments in this market.
No obvious advantages
Commercial banks are likely to suffer from losses due to the digital ruble because their revenue generated via commissions from processing such payments would go down.
As far as retailers are concerned, they will be able to enjoy higher revenues because they will get instant payments that would be much quicker than card transfers and they will not have to pay any acquiring fees.
Unfortunately, there are no guaranteed benefits of the digital ruble for consumers. The central bank digital currency (CBDC) of the Bank of Russia is electronic cash.
Therefore, as compared to bank deposits, it will not accrue any interest on its holdings. In addition, consumers will not receive any cashback that is currently paid by banks when their cards are used for transactions.
There are no obvious advantages that the digital ruble can offer to consumers in terms of convenience in daily use.
As a matter of fact, international experience has shown that only retailers see a rise in profits due to a reduction in the acquiring costs because there is no slowdown in price growth or any price reductions.
The Bank of Russia is currently working on the digital ruble, which is expected to become the country’s third form of national fiat, with cash and electronic money being the first two.
It has been designed to function as a store of value and payment method, but not for replacing bank payments or deposits.
The project’s pilot phase had begun last year in January and the monetary authority of Russia is planning on starting trials in April this year with real users and transactions.
The goal is to fully launch the digital ruble in the country next year.