loader image

Perspectives for fintech development in Ukraine

Perspectives for fintech development in Ukraine

The Law of Ukraine “On Payment Services” has been  adopted, but will come into force from August 1, 2022. The section regarding open banking will come into force from August 1, 2025. Below we analyse what opportunities this Law opens up for the development of financial technology activities in Ukraine.

The Law establishes the framework for the functioning and regulation of electronic money, payment networks and central bank digital currency (CBDC) on the territory of Ukraine.

It is important that updating of the payment services rules makes it possible to adapt the legislation of Ukraine to the EU legislation, forming a legal basis for the integration of the Ukrainian payment market with the European one. The law seeks to remove certain regulatory barriers for entering the Ukrainian payment services market and implement certain EU laws applicable to the payment services, such as Directive 2015/2366 (PSD2) and Directive 2009/110/EC (Second E-Money Directive).

The concept of open banking, which brings together various payment service providers and technological platforms into a single payment ecosystem, will be a powerful incentive for the modernization of existing payment solutions, as well as push for the further development of fintech in Ukraine.

Key points:

  1. Nine categories of payment service providers will be defined in the payment services market in Ukraine, among them postal operators and even public authorities under certain conditions. New participants will appear – electronic money institutions, branches of foreign payment institutions providing services for providing account information, payment institutions – an analogue of non-banking financial institutions, but with an expanded list of payment services.
  2.  There are nine payment services, of which seven are financial, two are non-financial (a service for initiating a payment transaction and a service for providing account information). New market participants will be able to choose one payment service and concentrate on developing convenient services for it.
  3. Non-bank payment providers will be able to open payment accounts, issue payment cards and electronic money. Please note that now this option is only available to banks.
  4.  The market will be transformed and non-banking financial institutions will not be required to participate in payment systems to make a transfer. Now these institutions will be able to work independently in the payment market, which will simplify their activities.
  5. The National Bank of Ukraine will continue to have the right to create interbank settlement systems, retail payment systems and other types of payment systems to perform payment transactions.

In addition, the central bank received the right to issue the “digital currency of the National Bank of Ukraine”, as well as to create a regulatory platform for testing services, technologies and tools in the payment market based on innovative technologies, the functioning of which requires close interaction between the regulator and startups and understanding their needs.

Also, payment service providers (in particular, banks) will have to open their APIs for other payment service providers and provide the ability to connect to banking service interfaces, exchange data with them to each market participant providing payment services and having the permission of the regulator.

The conditions for providing payment services will become more transparent, and customers will receive more information about them. Particular attention will be paid to protecting users of payment services from cyber threats. Thus, in order to minimize cyber fraud, liability for illegal actions with payment instruments and means of access to bank and payment accounts is increased. As well as requirements for the security of payment transactions – payment service providers need to use enhanced user authentication in certain cases.

Therefore, thanks to the new legislation in Ukraine there will be a more reliable, safe, harmonized with European legislation legal environment for companies operating in the field of financial technologies. In turn, this will improve the quality of national fintech treatment, providing better  opportunities for development business in Ukraine.

You will succeed with Mayon Solutions!


© 2024 Mayon Solutions Limited. All rights Reserved.