Ukraine launches fundamental overhaul of payments legislation
On 10 July 2019, the National Bank of Ukraine (“NBU“) published an outline of the future payment services law (“Concept of the Payment Services Law“), which will replace the currently effective Law of Ukraine “On Payment Systems and Funds Transfer in Ukraine.”
The Concept of the Payment Services Law has very ambitious aims, including (i) removal of certain regulatory barriers to entry to the payments market and (ii) implementation of certain EU laws applicable to payment services, such as Directive 2015/2366 (PSD2) and Directive 2009/110/EC (Second E-Money Directive). The NBU declared that these changes purport to promote competition in the financial market and to incentivize innovation in the payments market.
The following are the key features of the Concept of the Payment Services Law:
- At present, only a financial institution which is a member of a payment system may conduct a payments business. The plan is to lift the requirement of membership in a payment system as a prerequisite for rendering payment services. It is also proposed that all stages of accessing the payments business will be regulated by one regulator – the NBU.
- At present, certain payment services can be provided by a bank only (e.g., issuance of payment cards and e-money, and opening of current bank accounts). It is contemplated that non-banking institutions will be entitled to provide such payment services, which will increase competition in the market. Also, certain services may be rendered by so-called providers of “limited payment services,” e.g., telecom and internet providers etc.
- At present, payment services are defined narrowly and do not include the latest regulatory practices. It is contemplated to extend the list of such services in line with PSD2 requirements.
- It is also contemplated to give client accounts access to new market participants (so-called account information service providers and payment initiation service providers) in line with PSD2 requirements.
The NBU intends to proactively engage all stakeholders to work on the draft new Payment Services Law. The NBU expects to finalize the draft by the end of 2019.
This LEGAL ALERT is issued to inform Baker McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.