Russia has developed its own microchip for the national payment card which is hoped will provide better information security.

Russia is ready to replace the technology used in foreign payment systems – Visa and MasterCard – with a chip created for Sberbank's Universal Electronic Card (UEC), Kommersant reports.

The chip was developed by Payment Technologies, a company owned by Igor Godowsky, who has been developing Russia’s first payment systems the STB Card since 1994.

Shortly before the announcement Russian Prime Minister Dmitry Medvedev said it was necessary to use Russian technology in the national payment system, which will counter security issues and provide data protection.

The EUC, however, isn't ready to start mass production of the cards with the chip, experts told Kommersant.

“At least 1.5 years will be needed to reach a full scale production until all needed infrastructure is established,” as at the moment the chip has only passed laboratory testing, one of the experts said.

Earlier in the week the Central Bank of Russia created a wholly owned subsidiary to operate the national payment system. It's now undergoing a state registration, according to the head of the bank Elvira Nabiullina.

“We have an infrastructure road map. A commission has been established in the central bank, which includes representatives from the State Duma, the Federation Council and the government, for technology decisions. It has to give its opinion on the basis of existing analysis and research by July 1," Nabiullina said.

The need to accelerate the development of Russia’s own national payment system became evident, after international firms Visa and MasterCard temporarily blocked operations with Russia’s Rossiya and SMP banks. The Russian lenders were sanctioned by the US administration, in an attempt to influence the stance of President Vladimir Putin on Ukraine.

The new card is expected to come into wide use by mid-2015 and will also be valid abroad. Operations will be processed within Russia, Itar–Tass reports.

The national payment system card will be co-branded with the Chinese UnionPay, Japanese JCB and the international Visa and MasterCard payment systems. The system will be based on the infrastructure of one of the existing payment system – Sberbank's PRO100 or Zolotaya Korona (Golden Crown).

On Wednesday, Russian Prime Minister Dmitry Medvedev said the national payment system would be an alternative to the existing operators, not a replacement.

“…we are not talking about struggling with foreign systems as this is incorrect and actually means a breach of competition fundamentals,” Itar-Tass quotes Medvedev.

In early May President Putin signed a law to create a national payment system, which also includes a requirement for a so-called “security fee” for foreign payment systems, which is hoped will compensate for possible future disruptions.

Under the new legislation coming into effect January 1, Russia will have the right to set an obligatory security deposit of up to 10 percent of the credit card companies' daily turnover, or about $100 million.

The 10 percent deposit is much lower than the initially set 25 percent. The concession was made at the Saint Petersburg International Economic Forum, where Russian authorities agreed with Visa and MasterCard that all processing will be done within Russia, or the international payment card firms will find a Russian owner for their subsidiaries in the country.

However, Visa has recently said it didn’t rule out leaving the Russian market, as it thought Moscow’s demand of a security deposit was still unacceptable.