E-money circulation and cashless settlements in Ukraine became possible following the launch of the System of Electronic Payments of the National Bank of Ukraine (hereinafter referred to as the "SEP").
"Over 25 years of operating the SEP has proven to be a convenient, stable and continuous system. Today, the system fully meets the needs of the banking system in interbank transfers in the domestic currency. Owing to the proprietary cryptographic security and the digital signature in all these years there were no external disruptions to the system," noted Governor of the National Bank of Ukraine Yakiv Smolii at the celebratory meeting commemorating the 25th anniversary of the SEP.
According to the Governor, being aware of the trends and demands of the banking community, throughout 25 years the NBU has been improving the SEP operations and introduced new services and mechanisms.
"Our main goal is to preserve the stable and efficient SEP operations," highlighted Yakiv Smolii.
Deputy Governor of the National Bank of Ukraine Serhii Kholod added that banks could be sure in the system’s stability, "Payments are quick and secure. The NBU does everything possible to ensure the system’s efficient operating and at the same to continue its development and upgrading."
Volodymyr Nagorniuk, Director of the NBU’s Information Technologies Department, and Oleksandr Yablunivskyi, Director of the NBU’s Payment Systems and Innovative Development Department, told about the evolution and development prospects of the system.
Volodymyr Nagorniuk noted that already the third generation of the system is in use.
"The world does not stand still and the SEP as the key system for interbank transfers in our country should meet the present day challenges and drive innovations," he noted.
"Over the last years the payments business has developed quite rapidly. That is why while upgrading the system we should consider the global trends. Also, the structure of payments in the SEP shows that 98% of all payments are bank customers operations. So, we should be final-consumer-oriented and improve the time and quality of payments, as well as security and confidentiality of the financial information," noted Oleksandr Yablunivskyi.
The SEP upgrade priorities are as follows:
- converting to international standards of financial messaging (IBAN and ISO 20022)
- expanding the functionality and the informative element of messages
- in-depth upgrade of the cryptographic security system of the NBU
- introducing fast payments.
A round table was held as part of the celebratory meeting SEP: Milestones and Current Challenges attended by the NBU’s specialists directly involved in developing and introducing the system. The attendees included Viktor Yushchenko (President of Ukraine in 2005–2010, NBU Governor in 1993–2000), Oleksandr Kirieiev (NBU Deputy Governor during the SEP introduction), Anatolii Savchenko (Director of the IT Department during the SEP introduction), Viktor Kravets (Director of the Accounting Department during the SEP introduction), Iryna Ivchenko (worked on the information security in the system), Nataliia Lapko (now Deputy Director of the Payment Systems and Innovative Development Department), Ivan Koval and Yukhym Benderskyi (former heads of the Central Clearing House).
The attendees of the round table recalled that in 1993 the situation required dramatic changes, since the payment between business entities in Ukraine took from 10 to 20 days. Furthermore, the forged payment advice notes became viral threatening not only the payment system of the state, but its independence as well. The SEP brought money in the economy, strengthened financial discipline, cut down paper workflow, and put a stop to fraudulent schemes. The fact that not a single karbovanets and not a single hryvnia were lost during settlements is the testament of the SEP’ sustainability.
Thus, the NBU developed a simple and logical concept of a stable payment system. The cutting-edge system was launched in the shortest possible time and for decades it was one of the kind in neighboring states. According to Viktor Yushchenko, the economic effect and the GDP growth in Ukraine in the mid-90s since the commencement of the SEP and a significant speed-up of cash circulation can hardly be measured even today. Furthermore, the SEP ensured effective operations of the stock and FX markets.
NBU Governor Yakiv Smolii noted that the development of SEP became a milestone in building independent Ukraine and the Ukrainian banking system. He expressed profound gratitude to all NBU employees both the SEP developers in 1993, those operating the system later on, and those ensuring its effective operating today.
For reference:
On 5 August 1993 the SEP processed its first electronic payments. By the end of 1993, virtually all banks and branches were connected to the SEP.
Both paper and telegraphic payment advice notes were fully canceled for interbank settlements since the beginning of 1994. Ukraine converted to electronic payments.
Today, the SEP is Ukraine’s sole systemically important state payment system functioning in a reliable and stable manner.
The system ensures over 95% of interbank transfers in the domestic currency in Ukraine.
The ratio of payments processed annually in the SEP to Ukraine’s GDP is about 8.2.