The National Bank of Ukraine (hereinafter referred to as the “NBU”) has for the first time published the Annual Report on the Oversight of Payment Systems (hereinafter referred to as the “Report”).
Regular publishing of the Report will improve transparency of the oversight of payment and settlement systems by the NBU in line with law.
The first Report on oversight findings of payment systems was prepared for 2018. In general, this document details:
- the framework for oversight of payment systems
- monitoring findings of payment systems operating in Ukraine, in particular developments on the market and main performance indicators of the payment systems
- assessment of payment systems
- development prospects for oversight in Ukraine
- international cooperation on oversight.
The first Report outlines such facts on the payment system oversight:
- in 2018, the NBU strengthened its oversight of payment systems, their participants, and payment service provider
- in the future, according to the international standards the regulator will expand oversight functions to stock market infrastructures that are commonly regarded as systemically important for the national economy; in Ukraine these are the central securities depository (at present, the National Depository of Ukraine) and the central counterparty (at present, Settlement Center PJSC, with limited functionality)
- at the end of 2018, Ukraine had 42 national and international payment systems operated by residents and nonresidents, plus two systems operated by the NBU. Also, last year, the world’s top payment card issuer UnionPay International (payment system operator – UnionPay International Co., Ltd. of the People’s Republic of China) has entered the Ukrainian market. Besides, a new international payment system was registered and one national payment system expanded the list of the services and became international payment system
- the System of Electronic Payments (hereinafter referred to as the NBU SEP) remains the only systemically important payment system in Ukraine based on 2018 performance. Socially important payment systems include the following five payment systems: Poshtovyi perekaz, FORPOST, MasterCard, Visa, Western Union. Other six payment systems classified as important are: InterPayService, City 24, Finansovyi svit, MoneyGram, INTELEXPRESS, RIA
- the first payment system ever assessed by the NBU for its compliance with international standards was the NBU SEP as the only systemically important payment system in Ukraine (assessed in 2015). This year, the NBU intends to conduct targeted assessments of individual operational aspects of the NBU SEP
- in 2018, the NBU conducted a targeted assessment of national payment system Finansovyi Svit operatred by Ukrainska platizhna systema LLC. From 2015 to 2018, the payment system was categorized as important. Based on the findings of the assessment, the NBU drafted and issued recommendations on the business continuity of this system
- the National Bank of Belgium and the NBU conduct collective oversight in Ukraine (based on a memorandum) over the MasterCard payment system, which handles about 70% of all cashless card operations in Ukraine. Since collective oversight of payment systems is one of the best practices of central banks in developed countries, a promising area for the NBU is cooperation on oversight of the Visa card payment system and participation in collective oversight of the SWIFT global provider of secure financial messaging services with the National Bank of Belgium and other central banks also playing a role in the collective oversight of SWIFT.
“Release of the Report on oversight is common practice of most central banks of developed countries. And from now on the NBU will publish this Report on annual basis”, noted NBU Deputy Governor Sergii Kholod.
He added that all participants of the payments market will be able to perform comprehensive assessment and analyze the payments market developments as a whole.
For reference:
Oversight is one of the key functions of the central bank to ensure the secure and effective operation of payment systems that serve the interests of individuals, businesses, and the government.
The stable operation of the financial system and the national economy depends on the effective functioning of payment systems. Increasing the reliability of payment infrastructure is one of the key goals of oversight in ensuring financial stability.