{"id":14956,"date":"2019-10-04T09:59:51","date_gmt":"2019-10-04T07:59:51","guid":{"rendered":"https:\/\/kmp.ua\/?p=14956"},"modified":"2019-11-29T16:00:51","modified_gmt":"2019-11-29T14:00:51","slug":"when-can-we-open-a-current-account-not-only-in-the-bank-or-what-s-interesting-about-the-second-payment-services-directive","status":"publish","type":"post","link":"https:\/\/kmp.ua\/en\/analytics\/exclusive\/when-can-we-open-a-current-account-not-only-in-the-bank-or-what-s-interesting-about-the-second-payment-services-directive\/","title":{"rendered":"When can we open a current account not only in the bank, or what&#8217;s interesting about the Second Payment Services Directive?"},"content":{"rendered":"<p>The National Bank of Ukraine has announced further steps on revision of payment market and transfer of funds. The primary goal is to make payment legislation similar to the European one, foremost to the EU Second Payment Services Directive No. 2015\/2366<sup><a href=\"#_ftn1\" name=\"_ftnref1\">1<\/a><\/sup> (hereinafter \u2013 PSD2). The full list of pending innovations is available at the official <a href=\"https:\/\/bank.gov.ua\/control\/uk\/publish\/article?art_id=98763666&#038;cat_id=55838\" target=\"_blank\" rel=\"noopener\">website<\/a> of the National Bank of Ukraine or in the concept<sup><a href=\"#_ftn1\" name=\"_ftnref1\">2<\/a><\/sup> presented by the National Bank of Ukraine (available by the <a href=\"https:\/\/bank.gov.ua\/doccatalog\/document?id=99904490\" target=\"_blank\" rel=\"noopener\">link<\/a>). We are interested in one question &#8211; what benefits may be granted to (not fintech) business?<\/p>\n<p><strong>General concept<\/strong><\/p>\n<p>Based on the PSD2 Directive, we can briefly identify the following main areas of development of Ukrainian payment legislation:<\/p>\n<ul>\n<li>expanding the list of payment services suppliers (more details below);<\/li>\n<li>introduction of open banking system (API banks opened for other financial institutions); as a result: ability to engage third-party account management services and receive consolidated financial information from all accounts;<\/li>\n<li>direct relations between a consumer and a service provider, without monopoly of payment systems.<\/li>\n<\/ul>\n<p>It is expected that this year PSD2 is going to be fully implemented in the EU after all related technical standards are finalized. Although PSD2 does not apply to Ukraine, but its provisions may be binding on Ukrainian financial institutions, operating in the European space or in partnership with European payment companies. As for the Ukrainian legislation, the beginning of the active updating phase is tentatively expected at the end of 2019.<\/p>\n<p>We consider that the key innovation of PSD2 is providing the non-bank financial institutions with a possibility to fully manage current accounts for both individuals and business. It means, that the bank may no longer be required for performance of settlements. But, what benefits will be granted to entrepreneurs? Let&#8217;s settle this matter.<\/p>\n<p><strong>Characteristics of non-bank financial institutions<\/strong><!--more--><\/p>\n<p>At first, let\u2019s consider the current situation in Ukraine: in general, relations between the client and the bank related to money transfer are divided into two types: (1) a bank deposit<sup><a href=\"#_ftn1\" name=\"_ftnref1\">3<\/a><\/sup> and (2) a bank account<sup><a href=\"#_ftn1\" name=\"_ftnref1\">4<\/a><\/sup> (apart from that there is an escrow account and numerous other peculiarities, but that\u2019s another story). There is a fundamental difference between these two types: a deposit actually means your loan to the bank for a certain period or until it returned on demand; a current account means accounting of your right to monetary funds by the bank (for more details on this difference please follow the <a href=\"https:\/\/kmp.ua\/blog\/victim-complex\/\" target=\"_blank\" rel=\"noopener\">link<\/a>). To make a long story short, in the former case a bank is empowered to manage your money, on the second case \u2013 it is not (theoretically). Below we focus on managing current accounts.<\/p>\n<p>Opening and managing current clients\u2019 accounts are included to the bank services<sup><a href=\"#_ftn1\" name=\"_ftnref1\">5<\/a><\/sup>, and the banks have an exclusive right to render such services<sup><a href=\"#_ftn1\" name=\"_ftnref1\">6<\/a><\/sup>. Other (non-bank) financial institutions are not granted with the right to manage monetary accounts. It means that now due to the low limit of cash transactions allowed<sup><a href=\"#_ftn1\" name=\"_ftnref1\">7<\/a><\/sup>, bank services are vital to the business. Instead, the implementation of PSD2<sup><a href=\"#_ftn1\" name=\"_ftnref1\">8<\/a><\/sup> may change the current situation by providing payment institutions with an ability to open and manage current (transactional) accounts without the involvement of banks. In other words, in the field of payments such institutions are considered to be equal to banks, as well as the obligatory membership in payment systems (as it is now in Ukraine) is not required for such institutions. It will decrease a role of banks and, in fact, payment systems.<\/p>\n<p>Provided that the regulation of activity of non-bank financial institutions may become its competitive advantage. Thus, PSD2 stipulates<sup><a href=\"#_ftn1\" name=\"_ftnref1\">9<\/a><\/sup>, that payment service providers must have transactional accounts solely, which may be used for payment transactions only; any monetary funds received by payment institution within rendering of payment services may not be considered as a deposit; in general payment institutions are prohibited from deposit engagement activity<sup><a href=\"#_ftn1\" name=\"_ftnref1\">10<\/a><\/sup>. Besides, PSD2 provides<sup><a href=\"#_ftn1\" name=\"_ftnref1\">11<\/a><\/sup>, that payment institutions should ensure the safety of customer\u2019s funds by applying one of the following ways:<\/p>\n<ul>\n<li>consumer\u2019s funds shall not be &#8220;mixed&#8221; with funds belonging to non-users of payment services; if at the end of the day following the day of the funds\u2019 receipt by a financial institution such funds were not transferred to the receiver, these funds shall be deposited at separate account in credit organization or invested in low-risk assets; or<\/li>\n<li>funds shall be covered with a warranty of the institution not being related to control relationships with payment institution which renders services.<\/li>\n<\/ul>\n<p>This model is not perfect, but we adhere a position that client\u2019s funds may not be subject to disposal by the financial institution (for more details please find our <a href=\"https:\/\/kmp.ua\/blog\/on-unlawful-bank-management-of-clients-money-and-the-credit-emission\/\" target=\"_blank\" rel=\"noopener\">newsletter<\/a>). However, in this case things are much better than the current situation in the Ukrainian banking system, when in practice bank may &#8220;mix&#8221; all the client\u2019s funds (deposits or funds from current bank accounts \u2013 whatever) and uncontrollably dispose of such funds at its sole discretion. Under such circumstances if the bank goes into bankruptcy even those companies that had no deposits but just used bank settlement services, may be left without money. In fact, it is the basic advantage of PSD2 implementation, as it creates new preventing measures from misappropriation of client\u2019s funds by non-banking financial institutions.<\/p>\n<p><strong>When to expect in Ukraine?<\/strong><\/p>\n<p>First of all, it is critical to change legislation, in particular the Law of Ukraine &#8220;On Banks and Banking Activity&#8221; and the Law of Ukraine &#8220;On Payment Systems and Money Transfer in Ukraine&#8221;. However, respective efforts have been already made<sup><a href=\"#_ftn1\" name=\"_ftnref1\">12<\/a><\/sup>, but they left a lot to be desired: along with breakthrough legal provisions on non-use of the client\u2019s funds the legislator still has to clean the Augean stables (e.g. such an archaism as &#8220;saving&#8221; money<sup><a href=\"#_ftn1\" name=\"_ftnref1\">13<\/a><\/sup>).<\/p>\n<p>In general, according to the Concept on Ukrainian Payment Legislation Reform presented by the National Bank of Ukraine<sup><a href=\"#_ftn1\" name=\"_ftnref1\">14<\/a><\/sup>, the Law of Ukraine &#8220;On Payment Services&#8221; is contemplated to be adopted in 2019-2020, and all innovations are contemplated to be fully implemented in 2022. Along with that, even now we can observe, that PSD2 and Ukraine&#8217;s intention to implement it together provide a theoretical chance that in foreseeable future the Ukrainian payment system is going to be like that:<\/p>\n<ul>\n<li>provide an ability to open current account not only in banks, as well as to perform transactions without involvement of banks; to select third-party services on initiation of payments and receipt of accumulated analytics for all accounts;<\/li>\n<li>without payment system dominancy;<\/li>\n<li>with preconditions for development of fintech start-ups and productions of new products for consumers and business.<\/li>\n<\/ul>\n<p>However, there is still a disappointing forecast made upon results of recent meetings between the National Bank of Ukraine and business: it is hardly to be expected that in Ukraine there will be a real alternative to current bank accounts. In particular, representatives of the National Bank of Ukraine gave a passing mention to the fact that accounts of the new payment institutions <em>&#8220;will not substitute bank accounts in full&#8221;<\/em>, as well as that<em> &#8220;final clearing will be performed by the banks&#8221;<\/em>. Let\u2019s wait and see what the legislative acts drafted by the National Bank of Ukraine will be about. Discussion of real documents is about to begin already within year.<\/p>\n<p><em><strong>The above commentary presents the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.<\/strong><\/em><\/p>\n<p><em>Footnotes:<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">1<\/a><\/sup>Directive (EU) 2015\/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002\/65\/EC, 2009\/110\/EC and 2013\/36\/EU and Regulation (EU) No. 1093\/2010, and repealing Directive 2007\/64\/EC (the EU Second Payment Services Directive \u2116 2015\/2366).<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">2<\/a><\/sup>Available by <a href=\"https:\/\/bank.gov.ua\/doccatalog\/document?id=99904490\" target=\"_blank\" rel=\"noopener\">link<\/a>.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">3<\/a><\/sup>\u00a73 of Chapter 71 of the Civil Code of Ukraine.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">4<\/a><\/sup>Chapter 72 of the Civil Code of Ukraine.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">5<\/a><\/sup>Paragraph 2 of part 1 of Article 47 of the Law of Ukraine &#8220;On Banks and Banking Activity&#8221;.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">6<\/a><\/sup>Article 2 of the Law of Ukraine &#8220;On Banks and Banking Activity&#8221;.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">7<\/a><\/sup>Transactions between business entities \u2013 in amount of UAH 10.000 (ten thousand) inclusive, as stipulated by the Resolution of the National Bank of Ukraine No. 148 as of December 12, 2017.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">8<\/a><\/sup>Actually, ability to open current accounts not only by banks was provided in the first PSD too.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">9<\/a><\/sup>Parts 2, 3 of Article 18 of the Directive (EU) 2015\/2366.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">10<\/a><\/sup>Part 5 of Article 18 of the Directive (EU) 2015\/2366.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">11<\/a><\/sup>Article 10 of the Directive (EU) 2015\/2366.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">12<\/a><\/sup>Draft Law on Amendments to Certain Legislative Acts of Ukraine on Funds Transfer Regulation (No. 7270 as of November 09, 2017).<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">13<\/a><\/sup>If You are interested in this topic please find our newsletters &#8220;<a href=\"https:\/\/kmp.ua\/blog\/on-the-immanent-property-of-money-and-the-victim-complex\/\" target=\"_blank\" rel=\"noopener\">On the immanent property of money and the victim complex<\/a>&#8220;, &#8220;<a href=\"https:\/\/kmp.ua\/blog\/on-the-apparency-of-right-for-money\/\" target=\"_blank\" rel=\"noopener\">On the apparency of right for money<\/a>&#8220;, &#8220;<a href=\"https:\/\/kmp.ua\/blog\/on-the-nature-of-money-and-the-functions-of-the-national-bank-of-ukraine\/\" target=\"_blank\" rel=\"noopener\">On the nature of money and the functions of the National Bank of Ukraine<\/a>&#8220;.<\/em><\/p>\n<p><em><sup><a href=\"#_ftnref1\" name=\"_ftn1\">14<\/a><\/sup>Available by <a href=\"https:\/\/bank.gov.ua\/doccatalog\/document?id=99904490\" target=\"_blank\" rel=\"noopener\">link<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u041d\u0430\u0446\u0456\u043e\u043d\u0430\u043b\u044c\u043d\u0438\u0439 \u0431\u0430\u043d\u043a \u0423\u043a\u0440\u0430\u0457\u043d\u0438 \u0430\u043d\u043e\u043d\u0441\u0443\u0432\u0430\u0432 \u043f\u043e\u0434\u0430\u043b\u044c\u0448\u0456 \u043a\u0440\u043e\u043a\u0438 \u0437 \u043e\u043d\u043e\u0432\u043b\u0435\u043d\u043d\u044f \u043f\u0440\u0430\u0432\u0438\u043b \u0440\u0438\u043d\u043a\u0443 \u043f\u043b\u0430\u0442\u0435\u0436\u0456\u0432 \u0442\u0430 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[&hellip;]<\/p>\n","protected":false},"author":308,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[117],"class_list":["post-14956","post","type-post","status-publish","format-standard","hentry","category-exclusive","tag-bank"],"_links":{"self":[{"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/posts\/14956"}],"collection":[{"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/users\/308"}],"replies":[{"embeddable":true,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/comments?post=14956"}],"version-history":[{"count":8,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/posts\/14956\/revisions"}],"predecessor-version":[{"id":14964,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/posts\/14956\/revisions\/14964"}],"wp:attachment":[{"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/media?parent=14956"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/categories?post=14956"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kmp.ua\/en\/wp-json\/wp\/v2\/tags?post=14956"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}