The President of Ukraine Volodymyr Zelensky signed the Law “On Payment Services” № 1591-IX, which was adopted by the Parliament on June 30, 2021, according to an announcement from the president’s office.

The law is aimed at modernization and further development of the payment services market and will promote the introduction of innovations in the financial sector of Ukraine.

The document adapts Ukrainian legislation to the legal field of the European Union, which in the future will allow integrating Ukraine’s payment system with the EU system. The new law is based on modern requirements and takes into account the norms of European regulatory acts, in particular the Second Payment Directive (PSD2) and the Electronic Money Directive (EMD).

The document also strengthens the protection of the rights of consumers of payment services and ensures the transparency of their provision. In particular, requirements for risk management and user authentication are set.

According to the law, nine categories of payment service providers will be defined in Ukraine. There will be new market participants – electronic money institutions, branches of foreign payment institutions, providers of information on accounts, payment institutions.

There will be nine payment services, two of which are non-financial (payment initiation service and account information service).

Non-bank payment service providers (payment institutions, e-money institutions, postal operators and some other payment service providers) will be able to open payment accounts, issue payment cards and electronic money. Non-bank financial institutions will not be required to participate in payment systems for the transfer.

According to the document, the NBU will have the right to issue the “digital currency of the National Bank of Ukraine”, as well as create a regulatory “sandbox” – a platform for testing services, technologies and tools in the payment market based on innovative technologies. Its operation involves close interaction of the regulator with startups and understanding of their needs.

The law also creates conditions for the introduction of the concept of open banking in Ukraine, which should unite different payment service providers and technology platforms into a single payment ecosystem. It is planned that Open banking will start operating in Ukraine in 2023.

In addition, in order to minimize cyber fraud, the responsibility for illegal actions with payment instruments and means of access to bank and / or payment accounts, as well as security requirements for payment transactions – payment service providers will need to use enhanced user authentication in certain cases.

This law shall enter into force on the day following its publication and shall enter into force 12 months later, with the exception of certain articles.

Source: President of Ukraine Endorses A Law Allowing Central Bank To Create CBDC – Fintechs.fi