Instituto de Estudios Políticos y Derecho Público "Dr. Humberto J. La Roche"
de la Facultad de Ciencias Jurídicas y Políticas de la Universidad del Zulia
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Vol.39 N° 69
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Recibido el 22/04/2021 Aceptado el 20/06/2021
ISSN 0798- 1406 ~ De si to le gal pp 198502ZU132
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Vol. 39, Nº 69 (Julio - Diciembre) 2021, 446-461
IEPDP-Facultad de Ciencias Jurídicas y Políticas - LUZ
Legal regulation of payment systems
in Ukraine: current situation and the
prospects for development
DOI: https://doi.org/10.46398/cuestpol.3969.28
Taras Protsenko *
Sobol Yevhen **
Yerpyntsev Pylyp ***
Koshchynets Viktor ****
Anheleniuk Anna-Maria *****
Abstract
The purpose of the article is to consider the main international
regulations on the introduction and operation of payment
systems in Europe, as well as national legislation providing for
the development of payment systems in Ukraine. The research
methodology includes the following general and special legal
methods: axiological, historical and legal, formal and logical,
comparative and legal, as well as the methods of analysis and synthesis,
induction and deduction, summarization. Results of the research. The
main international regulations on the formation and functioning of
payment systems in the European countries, which became the basis for the
development of relevant legislation of Ukraine in this area, are analyzed. The
legal acts that currently regulate this issue in our country are considered,
as well as Draft Laws aimed at resolving existing problematic issues in the
payment systems market are examined. Practical meaning. The positive
dynamics of the development of the Ukrainian payment legislation in
accordance with the needs of the market and changes in the payment habits
of the population are established. Value / originality. Emphasis is placed
* Doctor of Juridical Sciences, Professor, Chief Researcher of the Research Laboratory of Criminological
Research and Problems of Crime Prevention of the State Research Institute of the Ministry of Internal
Aairs of Ukraine, Ukraine. ORCID ID: https://orcid.org/0000-0003-0611-5258. Email: dndi@mvs.
gov.ua
** Doctor of Law, Professor, Head of the Department of State Legal Disciplines and Administrative Law
of Volodymyr Vynnychenko Central Ukrainian State Pedagogical University, Ukraine. ORCID ID:
https://orcid.org/0000-0002-0804-8354. Email: @cuspu.edu.ua
*** Vice-principal of Donetsk Law Institute Yeprintsev Philip Serhijovich, Candidate of Law ORCID ID:
https://orcid.org/0000-0002-9790-9565. Email postmaster@dki.donetsk.ua
**** Doctor of Law, Associate Professor, Professor of the Department of Legal Psychology of the National
Academy of Internal Aairs, Ukraine. ORCID ID: https://orcid.org/0000-0002-3694-4586. Email:
k015@naiau.kiev.ua
***** PhD in Law, Researcher of the 3rd NDV NDL on the problems of legal and organizational support
activities for the Ministry of the State Research Institute of the Ministry of Internal Aairs of Ukraine.
ORCID ID: https://orcid.org/0000-0001-5947-5105. Email: AnheleniukA-M@ukr.net.
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on the need for the further measures by the National Bank of Ukraine in
order to harmonize national legislation with the European regulations in
this area.
Keywords: payment systems; payment services; payment legislation;
payment directives; non-cash payments.
Regulación legal de los sistemas de pago en Ucrania:
situación actual y perspectivas de desarrollo
Resumen
El propósito del artículo es considerar las principales regulaciones
internacionales sobre la introducción y operación de sistemas de pago en
Europa, así como la legislación nacional que prevé el desarrollo de sistemas
de pago en Ucrania. La metodología de investigación incluye los siguientes
métodos legales generales y especiales: axiológico, histórico y legal, formal
y lógico, comparativo y legal, así como los métodos de análisis y síntesis,
inducción y deducción, resumen. Se analizan las principales regulaciones
internacionales sobre la formación y funcionamiento de sistemas de pago
en los países europeos, que se convirtieron en la base para el desarrollo
de la legislación pertinente de Ucrania en esta área. Se consideran los
actos jurídicos que actualmente regulan este tema así como se examinan
los Anteproyectos de Ley dirigidos a resolver las problemáticas existentes
en el mercado de los sistemas de pago. Se establece la dinámica positiva
del desarrollo de la legislación de pagos de Ucrania de acuerdo con las
necesidades del mercado y los cambios en los hábitos de pago de la
población. A modo de conclusión se hace hincapié en la necesidad de que
el Banco Nacional de Ucrania adopte nuevas medidas para armonizar la
legislación nacional con la normativa europea.
Palabras clave: sistemas de pago; servicios de pago; legislación de
pagos; directivas de pago; pagos no monetarios.
Introduction
Payment systems are an important component of the stable functioning
of the State’s nancial system and its economy as a whole. The development
of payment systems around the world has been characterized by a rapid
reduction in the use of cash and paper payment documents, the transition
to new payment instruments and modern payment technologies in recent
448
Taras Protsenko, Sobol Yevhen, Yerpyntsev Pylyp, Koshchynets Viktor y Anheleniuk Anna-
Maria
Legal regulation of payment systems in Ukraine: current situation and the prospects for
development
years. Besides, payment systems are an element of the e-commerce
infrastructure, which has been developing rapidly both around the world
and in Ukraine. Thus, electronic payments using payment systems are
becoming more common in Ukraine and are steadily increasing their share
in the payments segment.
Dynamic development of payment systems plays an important role in the
formation of new mechanisms for the functioning of the country’s payment
infrastructure, the emergence of new types of payment instruments, as
well as the forms of settlements execution, signicantly aects all spheres
of society, while contributing to or inhibiting stable economic growth.
Given this, it is important to consider the current development of payment
systems in our country, to conduct the analysis of their reliability, which
can ensure nancial security of the customers and economic security of
Ukraine’s economy as a whole, as well as the prospects for the further
operation taking into account the challenges of our time (Dzhusov and
Piliak, 2020: 196).
At present, Ukraine is gradually moving to the non-cash form of payment,
although it still has a high ratio of cash to GDP in most developed countries,
which is inuenced by a number of negative factors such as high level of
underground economy and low condence in nancial institutions. There
is also a lack of public awareness of the benets of non-cash payments,
accompanied by a still high level of distrust in their use. Therefore, the low
level of use of non-cash payments, underdeveloped nancial infrastructure,
the habits of the population that hinder the development of payment systems
are among the key problems of Ukraine’s payment systems nowadays.
The purpose of the article is to consider the main international regulations
on the introduction and operation of payment systems in Europe, as well
as national legislation providing for the development of payment systems
in Ukraine.
1. Methodology
The methodology of the article is based on general and special methods of
scientic knowledge, the use of which is determined by the purpose, object
and subject of research. In particular, the axiological method was used to
substantiate the importance of international and domestic regulations in
the formation and development of the payment systems in Ukraine. The
method of hermeneutics was applied in the process of studying international
and domestic legal acts (as well as their drafts), governing the issue, with
their further interpretation. Historical and legal method allows to trace
the historical development of the studied phenomena. Formal and logical
(dogmatic) method allowed to outline the range of circumstances that aect
the formation of the existing payment systems in Ukraine.
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The method of analysis and synthesis helped to clarify the content of
the legal mechanism of functioning of payment systems. The method of
induction and deduction allowed to determine the directions of improvement
of the payment legislation of Ukraine taking into account the challenges of
the time and its harmonization with European legislation. The legal and
comparative method was used to compare the state of development of
payment systems in Ukraine and some countries of the European Union.
With the help of the method of summarization the relevant conclusions and
suggestions were drawn.
2. Literature Review
The formation and development of modern payment systems have been
the subject of research by many foreign and domestic scholars.
Thus, Santiago Carbó-Valverde and Charles M. Kahn (2016) studied the
current state and prospects of payment systems in Europe and the United
States. They pointed out that the existing dierences in the regulation
of payment systems are the result of dierent initial conditions and,
consequently, they need dierent solutions to overcome technological
challenges. Thus, if the way to unify the payment market and payment
instruments in Europe was the introduction of a single payment zone of
the European Union in euros (SEPA), the United States did not have a
single comprehensive system program to regulate payment systems. In the
course of the study, the authors found that the formation and development
of payment systems is signicantly inuenced by the relevant legal acts.
However, while European countries have developed unied regulatory
framework in order to establish uniform standards for the development
of payment systems, the United States is still having problems with the
application of unied solutions to control the payment services market.
Inna Oliinyk and William Echikson (2018) conducted a thorough
study of the so-called “payment revolution” in Europe resulting from the
adoption of the payment directives. They analyzed payment innovations
in the process of protecting the privacy of consumers of payment services.
In particular, the latter drew attention to the fact that in order to comply
with these directives, the banks need to upgrade the existing systems
of security measures through the introduction of new IT technologies.
Although the Directive provides easy and secure access to a wide range of
payment services for the consumers, a number of issues remain unresolved
(the problems with the access to the Application Programming Interface
(API), whether individuals and small businesses will receive appropriate
protection, etc.).
450
Taras Protsenko, Sobol Yevhen, Yerpyntsev Pylyp, Koshchynets Viktor y Anheleniuk Anna-
Maria
Legal regulation of payment systems in Ukraine: current situation and the prospects for
development
Inna Romanova, Simon Grima, Jonathan Spiteri, and Marina Kudinska
(2018), having studied the importance of the payment directives noted that
their implementation in payment legislation will promote competitiveness
in the payment services market, innovation and its development in general.
Thus, despite the possible risks associated with the implementation of
their provisions, the high speed of payment transactions and security and
condentiality remain a priority. Providing access to the payment services
market to non-nancial companies will make adjustments and promote
competitiveness among traditional nancial service providers and banks.
Raynor de Best (2021) studied common payment methods in dierent
European countries, determining that each country of the Eurozone has its
own most popular payment systems, which are evolving in line with market
trends and demands of the population. It is also noted that such powerful
payment systems as Visa and Mastercard were not leading in all countries
of the continent. For example, in 2018, MasterCard had a 95% market share
in the Netherlands, but was 12% of the German market. In Belgium, an
internal solution called Bancontact was much more popular than Visa or
Mastercard. In short, the European payment market is fragmented and
heterogeneous.
However, these works do not pay enough attention to the study of the
dynamics of the main indicators of development of this part of the nancial
system and its impact on other areas of activity, as well as the consideration
of existing problems and prospects for payment systems in Ukraine
resulting in the relevance of this study.
3. Results and Discussion
Article 1 of the Law “On Payment Systems and Money Transfer in
Ukraine” (Law No. 2346-III, 2001) denes the payment system as the
payment organization, participants in the payment system and the set of
relations that arise between them during the money transfer. It is enshrined
that the money transfer is a mandatory function to be performed by the
payment system. The legislator divides payment systems into domestic
(in which the payment organization is resident and which carries out its
activities and ensures the transfer of funds exclusively within Ukraine) and
international ones (payment system in which the payment organization can
be both resident and non-resident and which carries out its activities in two
or more countries and ensures the transfer of funds within this payment
system, including from one country to another).
The purpose of creating payment systems is obvious – to reduce the cash
supply and, accordingly, to minimize the cost of issuing cash and reduce the
cost of its maintenance, collection, and re-calculation. Besides, the payment
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systems guarantee the smooth operation of all elements of the system
itself, ensure the security of transactions, insure against any disruption
of nancial transactions. Given the intensication of globalization and
the implementation of European integration measures, in particular for
Ukraine, the issue of acquiring an internal market regime with the European
Union in the area of nancial services, including payment ones, is relevant.
In view of the above, it will be appropriate to determine the most
important stages in the formation of legal regulation of payment service
providers and the functioning of payment systems in the EU Member
States. The process of unication began with the creation of the Single Euro
Payments Area (SEPA) in 2007, which is characterized by the complete
elimination of the dierence between internal and external payments in
euros, which speeds up monetary transactions. The SEPA implementation
process was completed in 2014 (Deloitte, 2017).
The next signicant step was the adoption in 2007 the Payment
Services Directive 1 – PSD1 (Directive of the European Parliament and
of the Council, 2007) on payment services in the internal market. This
Directive laid down the principles for the provision of payment services,
the procedure for supervision and special payment instruments, etc.
Following the adoption of the Payment Services Directive 1, the process of
digitalization of the European economy was launched, which gave impetus
to the creation of new products and accelerated online payments. However,
most new companies did not control the implementation of this Directive,
which hindered the further development of the payment services market.
Thus, in 2009 the Directive 2009/110 / EC (Directive of the European
Parliament and of the Council, 2009) was fully adopted. It was this Directive
that included the rules for the conversion of electronic money, as well as
the requirements for the establishment, implementation and prudential
supervision of the activities of electronic money institutions.
Particular attention should be paid to the Second Payment Services
Directive 2015/2366 / EC (Payment Services Directive 2 PSD2) (Directive
of the European Parliament and of the Council, 2015), which was developed
and adopted in 2015 to improve the protection of both customers and
payment services in general, to promote competitive environment and
develop innovation in this area. PSD 2 introduced two new forms of
payment agents to the payment services market, namely the payment
service providers (PISPs) and payment organizations (AISPs). This
Directive also made adjustments to the procedure for ensuring the security
of users during payment transactions empowered the European Banking
Association (EBA) to develop requirements for security of transactions and
the methods of correct authentication of the users. The Directive further
applies the rules for the provision of SEPA Direct Debit and SEPA Credit
Transfer technologies, within the rulebooks, which are based on the XML
452
Taras Protsenko, Sobol Yevhen, Yerpyntsev Pylyp, Koshchynets Viktor y Anheleniuk Anna-
Maria
Legal regulation of payment systems in Ukraine: current situation and the prospects for
development
protocol (messaging) ISO 20022 (Husiev and Kim, 2017). Besides, the
Directive guarantees free access to the European market to various payment
systems, including non-bank payment services, which can perform money
transfers not only through banks but also through various paying agents,
telecommunications networks and information technology operators. All
this promotes competition and development of innovations in the area
of nancial technologies, as well as the free exercise by the client (user,
consumer) of their right to choose the most acceptable payment service,
which will generally aect the competitiveness of European banks and
payment companies in the global electronic payment network.
It is worth noting that the Payment Services Directive 2, which regulates
payment systems in Europe, is considered much more eective than similar
initiatives in the US, and therefore the global impact of the SEPA legal
framework on regulating the payment services market (Valverde & Kahn
2016).
Although, Romanova et al., (2018) note that based on the analysis
of the latest trends in FinTech, Payment Services Directive 2 creates
additional risks and security responsibilities for the nancial services and
banking sectors, consumer data protection, and does not exclude certain
reputational risks connected with the opening of the market for non-
nancial institutions. Another risk of the Directive is a potential security
risk in data exchange with the Third Party Payment Providers, as well as
the associated reputational risks and “grey areas” of liability for any data
breaches by the third party.
However, the above-mentioned changes in European legislation have
not bypassed our State. The borrowing of European experience in regulating
the payment sector and the desire to meet European standards for further
integration into the EU is reected in the activities of the National Bank
of Ukraine, which implements measures to harmonize national payment
legislation with the European one in accordance with the Association
Agreement with the EU. As Avdeev et al. (2019) correctly pointed out in
the context of the globalization of international life, one of the key areas for
the progressive and fruitful development of international relations is the
integration of the legislation of States to ensure economic security.
The key factor inuencing the development of payment systems in
Ukraine is the activity of the National Bank of Ukraine, focused on eective
and continuous operation of the payment mechanism – oversight of
payment systems. Such activities are regulated by the relevant Regulation
on the supervision (oversight) of payment systems and settlement systems
in Ukraine, which is based on the European standard on the supervision
(oversight) of payment systems and settlement systems (The Eurosystem’s
oversight) (Resolution of the Board of the National Bank of Ukraine, 2014).
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The supervisory function is dened in the Treaty on the Functioning
of the European Union and the Statute of the European System of Central
Banks (ESCB) and the European Central Bank (ECB) as facilitating the
smooth operation of payment systems and ensuring their eciency and
security. In turn, the National Bank of Ukraine developed “Guidelines for
risk management in payment systems” (National Bank of Ukraine, 2018),
which provides a clear delineation of payment system risks (legal risk,
operational risk, credit risk, liquidity risk, systemic risk), and developed a
so-called prole for each of them (source, location, form of implementation,
assessment of the possibility and consequences of relevant risks).
Characterizing the current state of payment systems in Ukraine, it
is necessary to analyze the data of the annual Report on the oversight
of payment systems, which is formed by the National Bank of Ukraine.
According to the Report of 2019 (National Bank of Ukraine, 2019), the
structure of the payment systems market in Ukraine includes public payment
systems (created by the National Bank of Ukraine) and private ones (created
by residents and non-residents). As of the end of 2019, 46 domestic and
international payment systems created by the residents and non-residents
were registered in Ukraine, as well as two systems created by the National
Bank (Electronic Payment System of the National Bank (EPS) and National
Payment System “PROSTIR”). The total number of participants in payment
systems (excluding EPS) was 128 nancial institutions, including 69 banks
and 59 non-bank nancial institutions. According to the results of 2019,
EPS remained the only systemically important payment system in Ukraine.
The category of socially important payment systems includes ve
payment systems – “MasterCard” (MasterCard International Incorporated,
USA); Visa (Visa International Service Association, USA); Western Union
(Western Union Financial Services Inc. USA / Western Union Network,
SAS, France); NovaPay (Post Finance LLC); “Postal transfer” (PJSC
“Ukrposhta”).
The category of important payment systems includes six more payment
systems – “Financial World” (LLC “Ukrainian Payment System”);
MoneyGram (Money Gram Payment Systems Inc. USA); City 24 (Phoenix
Financial Company LLC); “FLASHPAY” (PJSC “Family Bank”); RIA
(Continental Exchange Solutions Inc, USA); “INTELEXPRESS” (JSC
Micronance Organization “Intellexpress”, Georgia) (National Bank of
Ukraine, 2019).
If we characterize the market of payment systems in some European
countries, we can note that one of the most common payment systems is
also “MasterCard” (MasterCard International Incorporated, USA) and
Visa (Visa International Service Association, USA). However, the market
for payment services is heterogeneous and each country has its own
features, which determines the introduction and operation of dierent
454
Taras Protsenko, Sobol Yevhen, Yerpyntsev Pylyp, Koshchynets Viktor y Anheleniuk Anna-
Maria
Legal regulation of payment systems in Ukraine: current situation and the prospects for
development
payment systems. For example, the most popular way to make payments in
Belgium is Bancontact, SEPA and Sofort are also popular. Cartes Bancaires
dominates the payment environment in France, and most French cards
are Cartes Bancaires, together with Visa or Mastercard. Germany is one
of the most fragmented markets when it comes to payment methods.
Most online payments use payment methods such as SEPA Direct Debit,
SOFORT and Giropay. Popular method of payment in retail is an invoice;
the third party pays for goods and services, and then charges the buyer
after delivery. Popular payment methods in Italy are American Express;
Ewallets; Mastercard; Visa; Klarna Pay Over time. In Poland, internet
banking known as Pay-by-links is the most popular payment method and
accounts for 75% of all electronic payments.
MultiBanco, which accounted for about 85% of total sales, is the most
popular payment system in Portugal. This is a post-pay option, when the
link is generated at the time of payment and is paid later through an ATM
using a debit card or through Internet banking. Cash is still the most popular
payment method in Spain, and the number of ATMs per million inhabitants
is one of the highest in Europe. Cards are also popular as more than 85%
of the population have at least one Visa or Mastercard debit or credit card.
Buyers in the UK are the world leaders in terms of online shopping, and
debit cards for non-cash payments are popular (the average buyer owns
2-3 bank cards). Cards account for about 90% of all online payments,
another popular option is digital wallets, and online banking is virtually
non-existent. Popular payment methods in the UK: Visa; Mastercard;
BACS Direct Debit; Digital wallets; American Express; Klarna Pay Later)
(National Bank of Ukraine, 2020a).
According to the results of monitoring in 2019, the important operators of
payment infrastructure services in Ukraine are PJSC “Ukrainian Processing
Center” and LLC “TAS LINK”. The National Bank of Ukraine has established
strict requirements for ensuring the continuity of activities based on
international oversight standards for such signicant operators of payment
infrastructure services. The Resolution “On Approval of Amendments to
the Regulations on Supervision (Oversight) of Payment and Payment
Systems in Ukraine” (Resolution of the National Bank of Ukraine, 2020)
further established the procedure and criteria for determining important
operators of payment infrastructure services.
It is worth noting that at the end of 2018, the world’s largest (by the
number of issued payment cards) international payment system UnionPay
International entered the Ukrainian market. Besides, such giants as
GooglePay and ApplePay have also shown interest in Ukraine due to the
active development of contactless payment technology. PayPal payment
systems are among the available payment systems in Ukraine (however,
only one of the payment system’s options is available to Ukrainians – to
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spend money from your account but not receive it) and AVERS №1 (Uteka,
2018).
The introduction of the IBAN was also an important step in Ukraine,
which is the result of the implementation of the Payment Services Directive
2 in the national legislation. The Resolution no. 118 (National Bank of
Ukraine 2018) enshrined that the international bank account number is
mandatory for customers of all Ukrainian banks when money transferring
in both national and foreign currency. This made it easier to identify the
payer and the recipient of the funds, as well as provide information about
the IBAN using a QR code. This number is 29 letters and numbers for
Ukraine (includes the country code, control digit, bank code and account
number).
A positive trend for Ukraine is the increase in the share of non-
cash transactions over the past 5 years. Modern payment systems allow
consumers to make money transfers, make settlements in the payment
terminals of trade and service enterprises by using the Internet access and
bankcard number to buy goods, pay for services; the sellers, in turn, can
safely check and receive payments instantly.
Now let us turn to the experience of European countries on this issue. The
study conducted in 2019 indicates that Iceland, Sweden, Norway, Denmark
and the United Kingdom were the countries with the lowest levels of cash use
(payments were made, in particular, by using debit cards). Digital wallets,
such as Apple Pay or Google Pay, were the least popular payment option
in 2019 in such countries as France, Germany, Italy, Poland, Sweden and
the United Kingdom. This is a marked dierence from, for example, China
or the United States. One reason for this may be that some countries have
adopted contactless options on debit cards. The market share of contactless
payments in various European countries was, for example, 83% in Poland
and 50% in Italy. There is also a signicant impact of services provided on
the Internet on the development of cashless payments in the future (Raynor
de Best, 2021).
Recent events (such as the pandemic and quarantine restrictions) have
made adjustments to the payment habits of Ukrainian citizens towards
non-cash payments, including on the Internet. The total number of
transactions (non-cash and cash) using payment cards issued by Ukrainian
banks in the rst nine months of 2020 amounted to 4310.2 million
items, and their amount was UAH 2,807.9 billion. The number of these
transactions increased by 18.0%, and the amount by 8.7% compared to
the same period in 2019. This is primarily due to the increase in the amount
and number of non-cash transactions – their share predominates in the
total amount of payment card transactions. Thus, the amount of non-
cash transactions amounted to UAH 1,550.1 billion or 55.2% of the sum
of all card transactions in 2020, compared to 49.7% in 2019 (for the rst 9
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months). At the same time, the number of transactions for withdrawal from
payment cards decreased by 11.3%, and the amount by 3.3% compared
to the rst 9 months of 2019. The total number of issued payment cards
in Ukraine as of October 1, 2020 amounted to 73.4 million units. This is
7.4% more than in January 2020. The payment infrastructure continued to
expand steadily during the rst 9 months of 2020. The number of business
entities accepting payment cards increased by a third (by 31.7%) during
this period – to almost 316.4 thousand (National Bank of Ukraine, 2020b).
Thus, the increase in the number of non-cash payments, including using
payment cards, necessitates further improvement in the area of payment
services.
To this end, the National Bank of Ukraine in 2020 began work aimed
at updating the payment legislation, which will ensure the process of
market recovery and increase public condence in payment systems. Thus,
based on the need for regulation of innovative payment services and the
implementation of European regulations, in particular Payment Services
Directive 2, Electronic Money Directive (EMD), the Verkhovna Rada of
Ukraine registered the Draft Law 64 4364 on payment services (Draft law
of Ukraine No. 4364, 2020). It envisages a number of key changes in the
payment services market, in particular: dening the range of payment
service providers; establishing requirements for the authorization of
payment service providers and introducing the possibility of creating and
operating small payment institutions with simplied requirements for
them; granting permission to non-banking nancial institutions to carry
out payment transactions without mandatory participation in payment
systems; granting the right to issue electronic money and payment cards
not only to banks, but also to other payment service providers that have
received the appropriate license; creating the basis for the introduction
of “open banking” in the payment infrastructure of Ukraine; ensuring
the possibility of opening and maintaining payment accounts by non-
bank payment service providers; strengthening measures to protect the
customers’ rights, in particular in order to minimize cyber fraud, increase
liability for illegal actions with payment instruments and means of access
to bank and / or payment accounts, etc.; increasing the requirements for
the security of payment transactions, in particular regarding the need for
payment service providers to use enhanced user authentication in certain
cases.
As already mentioned, strengthening measures aimed at protecting the
rights of payment system users is one of the areas in the process of updating
national payment legislation. Given the latest global trends related to
the development of Internet services, as well as the mass transition of
users of payment services online, the National Bank of Ukraine plans to
increase information security and cyber security in the area of money
transfer. In particular, the regulator intends to set clear requirements for
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Vol. 39 Nº 69 (Julio - Diciembre 2021): 446-461
payment market participants to build a system of information protection
and cybersecurity, as well as regulation of the procedure for detecting
cyber-attacks that reduce the reliability of payment systems. The relevant
innovations are outlined in the Resolution of the National Bank of Ukraine
on the Approval of the Regulation “On information protection and cyber
protection in payment systems” (Resolution of the Board National Bank of
Ukraine, 2021).
It is worth noting that according to the provisions of the Payment Services
Directive 2, there are two options for data protection of the customers of
payment services: 1) to allow third parties to identify themselves; or 2)
to provide access through a separate interface, for example through the
application programming interface (“Application Programming Interface –
API”). Otherwise, a fall-back mechanism should be used. Such an interface
should be standardized and include a set of requirements that the software
of one company can be used to communicate with the software of another
one. Banks will use the APIs and customer authentication will remain
mandatory. The proponents of the API insist on the eectiveness of this
security system for users of the payment services market. For example,
as part of the implementation of the Directive, it is planned to provide
a common API platform for access and protection of payment data. The
Berlin Group, as an independent coalition of 25 players in the payment
services market from 10 Eurozone countries, has developed common API
standards. Some other similar European initiatives in this area exist in
other countries – the Polish API and STET in France. Probably the most
important and inuential is the API initiative in the UK, called Open
Banking. It provides joint APIs for the country’s nine largest banks (Oliinyk
and Echikson, 2018).
In view of the above, transforming the national payment legislation in
order to comply with the Payment Services Directive 2 should also take
into account the experience of other European countries in implementing
measures to ensure the protection of condentiality and security of payment
market participants.
Besides, the National Bank of Ukraine continues to modernize the
Electronic Payment System of the National Bank (hereinafter – EPS) and
the payment infrastructure of Ukraine in accordance with global trends, as
well as the requirements of the time and business. In particular, in 2021
the regulator plans to work on the transition of banks to the international
standard ISO20022, which will ensure further automation of payment
transactions at a qualitatively new level. Among the main advantages of
using the international standard ISO 20022 in the payment infrastructure
of Ukraine are: harmonization of the Ukrainian payment market with
the world one; emergence and operation of new payment market players
and payment instruments in accordance with the Second EU Payment
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Legal regulation of payment systems in Ukraine: current situation and the prospects for
development
Directive (PSD2); introduction of new and expansion of the functional
content of existing payment instruments for the benet of banks and their
customers; implementation of new automated processes that cover the full
life cycle of payments; increasing the level of providing services, eciency
and transparency of payments; expansion of payment details due to the
necessary additional information; strengthening information security
(National Bank of Ukraine, 2021).
Conclusion
Given the above, we can summarize that at the present stage of
development of the payment systems market in Ukraine there is a
positive trend due to the expansion of services provided, integration of
payment system infrastructure of various types, the spread of modern
security technologies for payment system users (including biometric user
authentication technologies). Besides, systematic measures are being taken
to improve the legal regulation of relations in the area of payment systems
and harmonize national legislation with European legislation in order to
ensure further eective cooperation in this area.
However, despite the generally stable development of payment systems
in Ukraine, there are a number of problems that need to be addressed.
Thus, international payment systems have an advantages in the domestic
market, with which it is dicult for national agents to compete. Therefore,
it is necessary to stimulate and support national enterprises in the creation
of domestic payment systems and related services by providing benets
(tax or credit) for residents who wish to open their business in this area.
Payment systems play one of the most important roles in the modern
economy – they are a guarantee of stable operation of both the banking
system and the economy as a whole. In addition, signicant money
amounts are transferred with the help of individual payment systems, so
violations in their work can cause systemic risks and negatively aect not
only nancial stability but also the overall economic security of the State.
That is why the rational organization of their work will contribute to the
smooth functioning of the nancial sector of the country as a whole and
accelerate the implementation of payments in international and national
directions.
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