Nickolas Likhachov told what restrains free circulation of electronic money in Ukraine today
The National Bank of Ukraine has recently made some important steps towards international payment systems (such as PayPal, ApplePay, GoogleWallet, etc.).
We would like to remind that among all the regulatory legal acts (regulations) regulating operation of such systems in Ukraine, the following three main ones can be highlighted:
a. NBU Resolution No. 481 dated November 4, 2010 “On Amending Some Regulations of the National Bank of Ukraine on the Regulation of Issue and Circulation of Electronic Money”, as amended on July 24, 2015;
b. NBU Resolution No. 480 dated July 24, 2015 “On Amending Some Regulations of the National Bank of Ukraine”; and
c. Guidelines on the Procedure for Opening, Using and Closing National and Foreign Currency Accounts, as approved by NBU Resolution No. 492 dated November 12, 2003, as amended on September 1, 2015.
The key step of the NBU was its willingness to make changes to the industry-specific regulations for the process of liberalization and facilitated regulation and registration of activities of international payment systems in Ukraine. This willingness of the National Bank was declared in the so-called Letter of Comfort from the NBU (being a standard international instrument in the negotiations between major corporations and government authorities of any country, to confirm the seriousness of intentions), which was also posted on the official website of the NBU in the press release dated August 3, 2015.
A number of experts are working with the National Bank of Ukraine on the issue of reforming the industry-specific legislation, including representatives of the United States Chamber of Commerce in Ukraine, who have prepared their comments and proposals for making amendments to the legislation to facilitate the entry and operation of international payment systems in Ukraine.
However, disagreements on the approach to reforming the key regulations have become the main difficulty on the way of starting their operation in Ukraine. Changes to the legislation proposed to the National Bank by the US Chamber of Commerce in Ukraine, which meet the expectations of the PayPal representatives (who are most actively involved in the negotiation process) were not adopted in full.
The key changes expected by the US Chamber of Commerce and PayPal, which have not been fully adopted in the NBU yet, included the following:
a. Obtaining electronic wallets by PI resident users for foreign currency replenishments from other users
b. Possibility of transferring and crediting funds in foreign currency to PayPal user accounts in Ukraine
c. Possibility of payment by businessmen (both legal entities and private entrepreneurs) for services/goods on websites in foreign currency
d. Crediting funds in foreign currency from a PayPal account to a Ukrainian bank account with the possibility of conversion into hryvnias and transfer to a hryvnia account
Among those adopted by the National Bank, section 8 of NBU Resolution No. 481 can be highlighted, according to which a user may only pay for goods from his/her own wallet in foreign currency in favor of a non-resident vendor. This is not about simply transferring money between Ukrainian PI residents, which is totally unacceptable for PayPal representatives, as according to their statements, PayPal like other international electronic transfer systems was primarily created to transfer funds between private individuals and only then vendors. According to their statistics, 80-90% of PayPal users are common private individuals.
For the time being, it is the most constraining factor for full-scale start of the PayPal operations, as well as other payment systems. However, the reforming has not been completed yet, and the NBU in its press release dated August 3, 2015, states its readiness to make advances and make additional amendments to enable extended use of electronic money. According to the Regulator’s statements, in the first quarter of 2016, it is planned to implement the third stage of liberalization of the currency legislation to ensure utilization by Ukrainian residents of the full spectrum of the opportunities provided by international electronic payment systems.
NIKOLAS LIKHACHOV, Counsel, Head of Corporate and M&A practice at Spenser & Kauffmann, special for YURLIGA