Ukrainian parliamentarians want to simplify the possibility of working on the territory of Ukraine for foreign electronic payment systems

The constant demand for electronic payments could not but affect the Ukrainian market, which until today remained, perhaps, one of the most conservative and established in Europe. What prevented the entry of such foreign payment leaders as PayPal, Payza, Neteller and others?

05 June this year, the Verkhovna Rada Committee on Financial Policy and Banking, having considered it back in November 2017, finally approved and recommended that the Rada adopt as a basis Bill No. 7270, which introduces a number of changes to the legislation of Ukraine in the field of regulation of the transfer of funds.

The bill, along with the liberalization of the use of various electronic payment instruments, proposes stricter state control (in the form of tougher criminal liability and the emergence of new articles of the Criminal Code), and also introduces a number of innovations designed to unify the current legal system with the EU requirements set out in its Directive No. 2015/2366 (PSD2). 

At the same time, according to many experts, the project brings obvious improvements, creates equal competitiveness for operators and payment service providers, including all the necessary conditions for protecting client rights.

Such innovations will allow PayPal, ApplePay and other international payment systems to enter the market, since to this day in Ukraine it is banks that remain monopolists in terms of the right to issue electronic money, which is a key obstacle to presence in our market foreign players. This is due, first of all, to the fact that to issue “units of value that are stored on an electronic device” (the current concept of electronic money), a banking license is required.

Loyalty, which with the adoption of this bill may contribute to the emergence of international payment systems in Ukraine, is expressed in the following parliamentary initiatives:

- to give residents of Ukraine the right to carry out activities and receive payment for goods, services and work performed with electronic money issued non-residents;

- launch a Payment Infrastructure Register, which will contain information about payment system participants, their agents, and providers of funds transfer services;

- provide payment institutions (if they meet the requirements for authorized capital and have received a license to transfer funds from the NBU) the right to open accounts and electronic wallets for clients, issue prepaid payment cards and electronic money..

Similar initiatives had already been taken earlier in 2016 and 2017, but were not successful. The current proposals voiced by Ruslan Demchak are even bolder. Because in addition to banks and financial companies with a license to transfer funds, even ordinary legal entities will be able to issue electronic money. To become an issuer, it is enough to form an authorized capital of at least 10 million hryvnia, as well as to be accredited by the NBU by registering in the Payment Infrastructure Register.

Of course, there are opponents who can unite as a united front and prevent the adoption of Bill No. 7270. The hawkish wing in parliament in this case is represented by representatives of large banking groups who do not like such a simplified approach. The adoption of the law will give green light to electronic payment systems, and will also create serious competition for bankers, cutting off a tasty piece from the “pie” of payment services by increasing the share of so-called non-bank payments.