In the ever-evolving digital finance landscape, Central Bank Digital Currencies (CBDCs) have emerged as a promising innovation. CBDCs are digital payment instruments issued and backed by central banks, denominated in the national unit of account. Unlike privately issued cryptocurrencies, CBDCs offer the stability and value of traditional fiat currency while leveraging the benefits of digital technology. CBDCs aim to combine the best features of existing payment options, offering the anonymity and data protection of cash, the convenience and security of digital payments, and blockchain technologies' speed, immutability, and security. Based on permissioned Distributed Ledger Technology (DLT), CBDCs enable secure and immutable transaction recording while maintaining central bank oversight.

Global CBDC Adoption and Kazakhstan's Digital Tenge

As of 2024, over 130 countries, representing 98% of global GDP, are actively researching or developing CBDCs. Kazakhstan has been a pioneer in the region with its Digital Tenge project, becoming the first nation in Eurasia to launch CBDC cards

OpenWay's Way4 Platform: Powering CBDC Innovation in Kazakhstan

Central to Kazakhstan's CBDC success is OpenWay's Way4 digital payments software system. This advanced platform has allowed banks to swiftly integrate with the Digital Tenge infrastructure. On November 15, 2023, the first CBDC card transaction in Eurasia was successfully processed using a card issued by Eurasian Bank JSC on the Way4 system. Within six months, plastic cards in Digital Tenge currency were in use for both in-store and eCommerce purchases, with global acceptance through Mastercard and Visa networks.

OpenWay's Way4 platform powers card issuing and acquiring innovations for key members of the Digital Tenge ecosystem, including the National Payment Corporation of Kazakhstan, Eurasian Bank, Altyn Bank, Halyk Bank, and Kazpost (national postal service).

Customizable CBDC Solutions with Way4

One of the most significant advantages of the Way4 system is its flexibility, allowing each bank to craft unique CBDC offerings tailored to their customers' needs. This customization capability has resulted in a diverse range of Digital Tenge services. For instance, while all participating banks issue virtual CBDC cards, Eurasian Bank and Halyk Bank additionally issue plastic cards linked to Digital Tenge accounts. Eurasian bank is the only one to process retail transactions without conversion to regular non-cash tenge and to enable P2P transfers in Digital Tenge between its customers. Altyn Bank supports cash withdrawals from Digital Tenge accounts using other banks' ATMs, while both Altyn Bank and Halyk Bank support payments in Digital Tenge from legal entities to individuals. Additionally, Altyn Bank and Eurasian Bank process eCommerce transactions in Digital Tenge.

Comprehensive CBDC Services Powered by Way4

The Way4 platform has enabled participating banks to offer a wide range of CBDC services. These include opening Digital Tenge accounts for individuals and legal entities, issuing Mastercard or Visa virtual cards linked to Digital Tenge accounts, and processing card payments in Digital Tenge on POS terminals (both closed-loop and open-loop). The system also facilitates real-time conversion between Digital Tenge and regular non-cash tenge, as well as enabling cash withdrawals in Digital Tenge across ATM networks.

Conclusion: OpenWay's Way4 Driving CBDC Innovation

As CBDCs gain global traction, OpenWay's Way4 platform is well-positioned to enable rapid and efficient CBDC implementation. By providing a flexible, customizable solution, Way4 has played a crucial role in Kazakhstan's successful launch of the Digital Tenge, setting a benchmark for CBDC adoption in Eurasia and beyond.

With its proven track record in powering CBDC card transactions and facilitating seamless integration with existing financial infrastructures, OpenWay's Way4 platform is poised to play a pivotal role in shaping the future of digital currencies worldwide. As more countries explore and implement CBDCs, the experience, and capabilities demonstrated by Way4 in Kazakhstan's Digital Tenge project position OpenWay as a key player in the global transition to digital central bank currencies.

According to Pradnya Gugale, Senior Analyst at Quadrant Knowledge Solutions “Kazakhstan's Digital Tenge launch marks a significant milestone for CBDC adoption in Eurasia, with OpenWay's Way4 platform playing a pivotal role by enabling rapid integration and customization of CBDC services, allowing banks to offer innovative solutions tailored to local needs. The Way4 platform's ability to process real-time conversions between Digital Tenge and traditional currency, coupled with its support for global card networks, not only bridges the gap between emerging digital currencies and existing financial infrastructures but also markedly improves financial accessibility for Eurasian consumers, who can now seamlessly use CBDC for in-store and online purchases, P2P transfers, and cash withdrawals. This successful implementation sets a compelling precedent for other countries considering CBDC adoption, highlighting the potential of robust, adaptable platforms like Way4 in driving financial innovation.”

“OpenWay has a long history of helping clients lead the way in the most innovative payments trends and technologies tailored to regional demands," comments Sophocles Ioannou, Regional Director, Business Development Europe and Latin America. "Today, for instance, Generative AI seems more applicable for our banking clients in Europe and North America, while fintech leaders in many African and Asian countries prioritize financial inclusion wallets. CBDCs, on the other hand, is a truly global trend, gaining traction across all continents. We take pride in the fact that our Way4 platform has enabled Eurasia's first CBDC cards, positioning Kazakhstan at the forefront of this global innovation.”

Author: Pradnya Gugale, Senior Analyst at Quadrant Knowledge Solutions