The National Bank of Ukraine (NBU) presents for discussion the proposal on the Draft Law of Ukraine On Payment Services intended to regulate the operation of the Ukrainian payments and transfer market.
“The purpose of revising the legal framework for payments is to boost competitiveness, versatility and flexibility of this market. As a result, new payment products and services will appear, costs of services for customers will reduce,” noted Sergii Kholod, NBU Deputy Governor. “The draft law will consider not only formal requirements of the EU regulations, but local specifics of the Ukrainian market as well. This market is vast and comprehensive and expands to issues of financial monitoring, currency regulation and electronic money.”
The effective Law On Payment Systems and Money Transfer in Ukraine was adopted back in 2001 and is obsolete and does not respond to the present demands.
At the same time, proposals to the draft law were drawn up by the NBU together with foreign legal experts and technical support of the European Bank for Reconstruction and Development (EBRD).
This document is based on the effective requirements considering the EU regulations, including the Revised Payment Services Directive (PSD2), the E-Money Directive (EMD), as well as safeguards to prevent issues that occurred in the EU.
The draft law will streamline certain legal issues, including:
- the legal framework will have a new term the “payment market of Ukraine”, where players, providers and users interact to render and consume payment services. At the same time the NBU will be the payment market regulator
- the list of payment market participants and their capacities will expand
- the notion “fund transfer” will expand into a payment transaction covering crediting, transfer and payout of funds. The notion “funds” implies national and foreign currencies (cash and noncash), as well as electronic money and digital money of the NBU
- payment systems remain at the core the payment infrastructure. Simultaneously, to be considered a payment system, a system shall have at least three direct participants.
Also, the new payment market regulation framework prescribes the following changes on the payment services market:
- a list defining nine payment services, whereof seven are financial payment services, and two – nonfinancial, will be prepared
- a range of financial institutions will automatically be authorized to provide individual payment services based on the license to provide financial services. Furthermore, the best world expertise will be introduced. Small payment institution with simplified registration procedure with the NBU are to be established and to operate.
- payment services providers will provide payment services without the need to establish and register a payment system. At the same time, requirements to payment system operators will be established in order to ensure an equal, proportional and nondiscriminatory access to such systems for any authorized payment services provider
- electronic money institutions will not only cover banks, but also other payment market participants with a respective license
- simple operating conditions will be introduced for “open banking” in the payment infrastructure of Ukraine
- a list of accounts will be determined for payment transactions, as well as the procedure to open such accounts
- special attention will be paid to consumer rights protection
- requirements to security of payment transactions will be tightened, including the advanced authentication of users by payment services providers in defined cases
In the next month, the NBU plans to hold joint meetings with the expert community in order to discuss the vision of necessary legal provisions on the payment market. The outcome of these meetings will be joint work on proposals to the draft law.
The NBU maintains partnership and dialogue with market players and thus is interested in effective feedback on the new regulation of payments market. The regulator encourages all stakeholders to take an active part in the discussion and submit proposals that may improve and supplement the ideas behind the draft law on reforming the legal framework on payments.
Proposals and comments can be send until 1 March 2020 to e-mail [email protected] with the reference “Draft law provision: Proposal/Comment: Rationale”.