Ukrainian Payment System

The general principles of functioning of payment systems in Ukraine shall be regulated by the laws of Ukraine “On the National Bank of Ukraine” , “On Banks and Banking”, “On Payment Systems and Funds Transfer in Ukraine”, “On the Postal Communication” and other legislative acts of the National Bank of Ukraine.

In accordance with Article 7 Of the Law of Ukraine “On the National Bank of Ukraine”, the National Bank of Ukraine shall create, coordinate and control the creation of payment systems.

Domestic bank and non-bank payment systems may be created in Ukraine.

Domestic bank payment systems include interbank settlement systems, mass payment systems and intrabank payment systems.

The National Bank of Ukraine has created and ensures functioning of the interbank settlement system (the System of Electronic Payments) and retail payment system (the National System of Mass Electronic Payments).

The procedure for operation of the payment system is determined by the rules established by the payment institution of the corresponding payment system. If a payment institution is a resident, the rules of domestic payment system and international payment system have to be agreed by the payment institution of the payment system and the National Bank of Ukraine.

The mandatory function of the payment system is to transfer funds.

The interbank funds transfer is carried out within three business days.

The intrabank funds transfer is carried out within a time period established by internal bank enactments, but it cannot exceed two business days.

The funds transfer involves the use of payments instruments.

The payment instruments include transfer documents (settlement documents, cash transfer documents, interbank settlement documents, clearing claims and others) as well as other means of payment (payment cards, mobile payment instruments, etc.)

Processing and transfer of electronic and paper transfer documents, documents required for transactions involving special means of payment  and withdrawal documents can be carried out through national (domestic) and international payment systems operating in Ukraine.

The international financial institutions, in particular, the Bank for International Settlements and the European Central Bank acknowledge the leading role played by the payment systems and settlement systems (hereinafter the payment systems) in supporting financial stability of the country. In view of the above, and in order to facilitate the uninterrupted and efficient operation of payment systems, the central banks have commenced exercising supervision (oversight) over payment systems.

With a view to determining the policy fundamentals with regard to exercising supervision (oversight) over payment systems operating in Ukraine, the National Bank of Ukraine approved the Framework for introduction of supervision (oversight) over payment systems in Ukraine (Resolution of the Board of the National Bank of Ukraine No 426 of 15 September 2010).

The proper exercise of supervision (oversight) function by the National Bank of Ukraine requires the development of domestic legislation. In order to develop a legal framework for supervision (oversight) over payment systems and entrust them with the relevant powers, the National Bank of Ukraine has prepared proposals with regard to introducing amendments to certain laws of Ukraine with taking into account recommendations and standards developed by the international financial organizations.

The National System of Mass Electronic Payments is a domestic banking multi-issuing mass electronic payment system, in which all payments for goods and services, receiving cash and other transactions are carried out by means of smart cards, incorporating technology developed by the National Bank of Ukraine.

The NSMEP is a modern, high-tech and highly protected system. The key element of the system is a smart card. The NSMEP payment cards have a high level of protection against unauthorized access. The high level of confidence in this system is based upon the guaranteed software protection of chip-based payment cards and acknowledged security of transactions, which is confirmed by the increasing volume of transactions involving payment cards and their growing issuance.

The NSMEP introduction enabled the citizens of Ukraine to pay for goods and services on cashless basis and withdraw cash with the help of special means of payment (payment cards, mobile payment instruments, etc.), as well as to keep and accumulate their savings on current accounts with banks.