This limit applies to the following transactions:

• investments abroad
• depositing of funds in accounts abroad
• transfer of funds under a life insurance contract
• granting loans to non-residents

According to the regulator, in 2020, individuals transferred abroad about 274 million euros within this limit. In the future, the NBU plans to completely remove the limit on investments by Ukrainian individuals abroad.

It is a so-called e-limit: it is valid for transfers in foreign currency. It works for:

• foreign currency transfers under a life insurance contract;
• for investments abroad;
• for placing funds on your own account outside of Ukraine;
• in order to lend a foreigner an amount in foreign currency.

The raised e-limit can be used during the current year. Those Ukrainians who have already transferred 50,000 euros abroad within the previous limit will be able to transfer up to 50,000 euros by the end of this year.

As noted in the NBU, the regulator will be able to fully cancel the limit on currency transfer abroad only after the package of laws on BEPS actions will be adopted and put into effect in Ukraine.

Number of fintech companies in Ukraine

The number of fintech companies in Ukraine is increasing: in 2018 the market saw 21 new startups emerge. All in all, today there are over 100 fintech companies in Ukraine, over half of which have been established in the past three years.

Ukrainian fintech companies by year of incorporation

Until 2006, virtually no new fintech companies were created in Ukraine. The industry has begun rapidly growing since 2014, when as many as 9 technology companies were established in the field of financial services.

2017 and 2018 were record breaking years with 40 new fintech companies established within this period on the Ukrainian market.

Development directions of Ukrainian fintech

Ukrainian fintech comprises predominantly payment services that grew by 13%, though startupers do not consider this domain very interesting: in 2016 and 2017 the share of new companies in this domain was 38% of newly established companies, and in the last year the share was only 24%.

Personal finance/wealth management grew by 50% in the year 2018. All in all, five of six companies that furnish similar services to the domestic market emerged over the past two years. It signifies that the financial literacy of the population is on the rise.

More and more people are thinking about managing their financial assets: if previously it was solely the province of people with very high income, now this bar has significantly lowered.

At the same time, the interest to blockchain has not yet revived: after its peak in 2016 (38% of all new companies), in 2017 and 2018 each saw the emergence of only two companies operating in this domain.

The domain of consulting and analytical systems was quite popular among startups in the past three years and in 2018 it took over the domain of mobile wallets by popularity.

How developed are Ukrainian fintech companies

Most Ukrainian fintech companies are either at the stage of sales launch or business scaling, and only one in five is mature. A total of 8% of companies said they are at the stage of implementing the idea or a minimum viable product (MVP).

How many people do Ukrainian fintech companies employ

By and large, the fintech companies of Ukraine employ over 4,000 people. This is about 2.4% of the total number of employees in the field of information technology in the country.

Services geography

Today, 57% of companies work exclusively on the domestic market. However, most of them — 73% — plan to expand the field of activity and expand to overseas as well. Moreover, almost 60% of such companies are planning to do so as soon as this year.

Companies founded since the beginning of 2018 are more globally oriented: only 43% of them focus exclusively on Ukraine.

All in all, among the companies that provide services not only in our country, the most popular market is Europe, followed by post-Soviet countries and the U.S. Domestic fintech companies are least interested inexploring the markets of Asia and Africa.

In Ukraine, about 63% of fintech companies (both startups and mature companies) operate without attracting funds from thirdparty investors. And for companies established since 2018, this indicator is more than 70%. Such figures generally coincide with global trends, and some discrepancies are due to the small number of fintech startups in Ukraine.

Among companies that raise funding the sources of such funds are distributed roughly evenly between private investors and venture capital funds. At the same time, approximately one fifth of companies continue to rely on their own funds. Only one has held an ICO to raise investment and no one is going to do so in the future. 22% of companies in the market do not plan to raise additional funding at all. Others rely mainly on private investors and venture capital funds.

Who are the customers

Since 2010 there is a trend according to which the majority of fintech companies are working to meet the needs of the business. At present, the share of such companies is 37% for small and medium businesses and large businesses.

The mass market of services for individuals has a share of 21% in the business activities of the companies, while the premium segment for private individuals is only 6%. But at the same time, no company in 2018 began to work in the field of business lending.

Business models

Today, revenue models are still dominated by one-time revenues – commission fees and revenues from licensing activities. At the same time, there is upward trend in the popularity of the transaction model, subscription (regular payments), freemium, etc.

Geography of locations

The lion’s share of Ukrainian fintech companies has head offices in Kyiv. Other popular cities include Dnipro, Odesa, Kharkiv, Rivne, and Lviv but regional fintech companies put together make less than 20% in total.

This distribution is primarily due to the fact that the capital has headquarters of large banks, the general centralization of business life in the capital, etc.

The survey was conducted in the form of an online survey among fintech companies and banks of Ukraine during the period from February to May 2019.

Such decision was made in response to requests made by businesses engaged in international trade. In the past, the companies were allowed to transfer up to 2 million euros per year to its foreign representative offices.

“From now on, direct transfers to accounts of foreign units are no longer subject to the limits and will not be restricted as to amount,” informs the regulator.

Nonetheless, the NBU has established conditions for additional oversight of such payments. Ukrainian businesses wanting to fund their overseas representative office must provide their bank with a detailed budget and other documents supporting the necessity of such funding.

This decision does not apply to transfer of funds to the Russian Federation, offshore territories and countries that do not comply with FATF recommendations.

Coins with a nominal value of 1, 2 and 5 kopiykas will be withdrawn from circulation from the beginning of October. The same fate will eventually befall the Ukrainian quarter (25 kopiykas). Ukrainian banks are obliged to accept these coins in the course of this year.

The obverse side of the banknote depicts a portrait of the scientist Volodymyr Vernadsky, one of the founders of the Ukrainian Academy of Sciences. Its reverse side features the building of the Presidium of the National Academy of Sciences.

This banknote is different from others in terms of size and color. It is larger (75 x 160 mm) than other notes and its main color is blue.

Among the security features that can be used to distinguish the original Hr 1,000 banknotes from fakes are the following:

• Security thread: a purple iridescent polymeric thread that is partially incorporated into the paper. It shows the denomination of the banknote and a trident. The direction of the image changes if you shake the note.
• Optical SPARK effect: if the banknote is tilted, you can see the overflow of color from golden to green on the image.

The last time the NBU introduced banknotes with new nominal value was back in 2006 when it introduced Hr 500 bills.

• Previously, the limit was 7 million euros per month. The NBU took this step within the framework of currency liberalization. “This relief will not be critical for maintaining macro-financial stability. At the same time, it will contribute to the improvement of the investment climate in Ukraine,” the regulator said.
• This is the second increase in the limit during the year. In February, the NBU expanded the limit on repatriation of dividends from $7 million to 7 million euros per month.

Previously, AIN.UA published that the National Bank of Ukraine simplified account opening for foreign entities.

• payment organization of an international payment system;
• its representative office in Ukraine;
• an authorized foreign institution;
• settlement bank of a foreign international payment system in Ukraine.

Second, in order to register the international payment system the following documents must be submitted to the National Bank of Ukraine:

• application for approval of terms and procedure of operation in Ukraine;
• questionnaire;
• copy of registration documents of a payment system operator;
• brief information note or copies of internal documents covering the operating procedures of the international payment system

The regulator considers the documents within 60 business days after the complete set of documents have been submitted that meets all established requirements.

A simpler procedure for non-residents to open an account in Ukrainian banks

The National Bank has updated the applicable Guidelines for banks and by doing so it simplified account opening for non-residents. The changes include:

• From now on account operation will be executed in accordance with a list of persons who pursuant to the legislature have the right to do so without notarial certification. Previously, clients had to produce signature cards to open an account.
• Сhange of a legal entity’s name does not lead to a closure of current accounts.

In addition, guidelines do not contain provisions regarding the restrictions on account transactions. They only contain definitions of transaction peculiarities for accounts of certain clients.

The regulator believes that these changes will positively affect the business environment in Ukraine.

The new version of the Guidelines as approved by the decree of the Board of NBU on April 1, 2019 No 56 Concerning the Introduction of Amendments to Regulations of the National Bank of Ukraine. Updated Guidelines come in effect on April 4, 2019, i.e. today.

Though now they are subject to financial monitoring

The NBU explains that this deregulation increases the risk of misuse of the Ukrainian banking system by shell companies for laundering the proceeds from criminal activities. Therefore, to prevent the above, on April 2, the NBU amended its Regulation concerning financial monitoring activities of banks.

The main objective of the amendments is the introduction of a mechanism for banks to detect shell companies among non-resident legal entities. Amendments also come into effect today.

In particular, the NBU introduces the following innovations for non-resident accounts:

• shell company detection,
• procedure for analysis of documents to detect such companies,
• actions of a bank in the event of establishing the fact that a client is a shell company (for example, if a client refused to provide the bank with necessary documents or provided an incomplete set, the bank is at liberty to block some account transactions).

It further notes that these requirements do not apply to non-resident legal entities that are holding companies or their corporate enterprises with a transparent structure of ownership, beneficiaries, and owners, and economic activities of such legal entity are completely transparent.

“We have identified the priorities, and restrictions that we want to remove in the first place, namely, sales of foreign exchange earnings, T+1 (the requirement of funds pre-booking for the purchase of foreign currency – ed.), removing restrictions on the repatriation of dividends … I think that if we carry out the next wave of liberalization in the nearest future, we will remove or reduce all these restrictions,” he said.

The obligation to sell part of the currency earnings can be removed in the first place. “In regard to the abolition of compulsory sales, we will reduce it from 50% to, perhaps, 30%. However, it will depend on the macroeconomic situation. Perhaps, we will completely cancel this restriction once,” the official said.

What is IBAN? 

IBAN is a standard bank account system in the EU. Each country independently establishes the structure of the IBAN account number, according to ISO 13616. For Ukraine, IBAN will consist of 29 alphanumeric characters: the first ten characters are the country code, the control number and the bank code, the last 19 are the bank account number of the customer.

By the first two letters, it will be possible to recognize the participating country – Ukraine (UA) immediately, and with the help of the check digit – to provide a unique check of the client’s account for correctness.

Banks will be able to open new IBAN accounts for customers from April 1, 2019, and existing accounts to change them by this standard from April 1 to October 31, 2019. Thus, the valid account numbers for customers will be supplemented with the country code and the bank code. From April 1 to October 31, customers will be able to indicate in their account details both a valid account number and a bank code, as well as a number in the IBAN standard.

The use of IBAN will become mandatory for all bank customers to transfer funds both in local currency and in foreign currency, including for international transfers. All transfers will be made using IBAN only.

What will change with the introduction of IBAN? 

This, according to NBU experts, gives bank customers the opportunity to:

• identify the payer and the recipient of money, the bank that serves them;
• avoid errors in account details;
• transfer money faster and receive funds;
• in the future, the use of IBAN will also provide an opportunity to apply QR-codes with information about it, which will simplify the payment of bills and exchange of payment information.

The NBU notes that in general the use of IBAN will reduce the bank details and due to this it will become easier to issue settlement documents.

According to the regulator, non-cash transactions account for 44.3% of total card transactions of the Ukrainian banks. These are 2.8 bln transactions, which is 5% more than in the previous year. The volume of non-cash transactions has exceeded UAH 2 tln. These indicators have increased by 27.2% and 38.5%, respectively. In addition, the NBU published statistics for the past 8 years.

The largest share, 1.1 bln or 51.7%, of payments accounted for retail networks. Thus, the Ukrainians have spent over UAH 902 bln, and most of all, online.

• online payments — UAH 312 bln;
• card to card transfers — UAH 300.7 bln;
• payments in retail networks — UAH 267.8 bln;
• transactions through ATMs and payment terminals — UAH 22.2 bln.

Transactions worth UAH 26 bln using the Ukrainian bank cards were conducted abroad.

The NBU informs about the increased payment cards popularity. Their number has increased by 1.3%, i.e. up to 60.6M. Among them, 36.6M cards are active that is 5.1% higher than in the beginning of 2018. Contactless payments are available in 3.6M cards, but this segment showed the highest growth with 31.4% increase.

MasterCard takes leading positions in the market. This payment system boasts 24.9M cards, while Visa has 11.3M cards, and national payment system Prostir with 0.4M cards. By the volume and quantity of transactions, MasterCard also takes the lead with 70.2% of the market per each indicator. The largest card issuers are PrivatBank, Oschadbank and Raiffeisen Bank, however, the details are not disclosed.

Moreover, the quantity of payment terminals is on the rise in Ukraine (+ 12.1% – up to 282,000 pcs.), while ATMs are becoming less popular (− 0.7% – to 185,000 pcs.). Currently, there are 6.7 payment terminals per 1 thousand people. This indicator is the highest in Kyiv, i.e. 17.8 pcs. per 1,000 people. The NBU also notes that three fourth of the Ukrainian payment terminals (78.7% or 2,073,000 pcs.) support contactless payments, including ApplePay and GooglePay.

The main purpose of creating BankID in Ukraine is to provide reliable and convenient user identification for the provision of administrative and banking services via the Internet on special portals. We have already reviewed which electronic services are available in Ukraine, and on which portals.

BankID solves the problem of user identification via the Internet: in order to provide, for example, a certificate of payroll, the service first needs to make sure that exactly the specific person is requesting information. If a citizen chooses identification via BankID, he/she enters the login and password of his/her Internet banking, passes the second stage of authorization (for example, entering a one-time password from SMS) and thus confirms his/her identity.

How does BankID login work?

Login with BankID is very similar to the popular “Login with Facebook” or “Login with Google” button on registration pages and works based on the OAuth 2.0 protocol:

Below is a real example of what it looks like when entering a portal or when ordering a service, it can be a button or a banner:

To order a certificate, enter the data in the registry, etc., two conditions are sufficient:

1. To be a client of a bank connected to the BankID system;
2. The portal must be connected to the same BankID system.

We will explain the second point in more detail: in Ukraine, two BankID systems operate in parallel, one is built on the basis of Oschadbank, the second one is PrivatBank. And although the administrative services portals can support both systems simultaneously, Dmitry Dubilet previously explained the situation with two different systems.

What services and banks are connected to each of the BankID systems?

At the moment, only two organizations are connected to the NBU system on the basis of Oschadbank: Oschadbank itself, and Radabank. A number of other banks are at different stages of preparation, testing and connection to the system now.

More banks are connected to the system built on the basis of PrivatBank, among them: PrivatBank, A-Bank, Pivdennyi Bank, and Concord Bank, FUIB Bank (PUMB) is also indicated, however, when it is selected, an unavailability message is displayed. “Wait, FUIB will connect to the BankID system soon.”

In addition to banks, the following are connected to the PrivatBank system:

• online lending services: UltraCash, Global Credit, POZYCHAIko, CreditUP, СreditPlus, KF.UA and others;
• hosting and Internet providers: Hosting Ukraine;
• online business: FreelanceHunt, Bezplatka and RIA.com.

Also, you can pass identification using an Android-smartphone through the “PrivatBank” system. If you have an ID-card (plastic passport), your smartphone must have an NFC-chip, if you have a digital signature (EDS), then it’s not necessary.

Next, we consider a system on the basis of which in October the NBU allowed banks to open accounts for individuals through the BankID system, and which is the main one when it comes to interaction with government agencies – a system based on Oschadbank.

The list of services that support the use of the BankID service from the NBU:

Ministry of Justice of Ukraine, Unified State Portal of Administrative Services, Government Services Portal, Electronic Petitions to the Cabinet of Ministers of Ukraine, Unified System of City Petitions, Online System “Public Budget”, State Agency for E-Government of Ukraine, Public Project “Budget of Urban Initiatives”, State Geocadastre of Ukraine, Public Initiative Platform “My Voice”, as well as Lviv City Council, Kharkiv Electronic Services Portal and Kyiv Electronic Services Portal.

The logic of the system is based on the organization of online requests from service portals to the banking system of a particular bank through a single gateway, which is the central hub of the BankID system of the NBU, and address data transfer in a signed and encrypted form. All requests go exclusively through the central node BankID of the NBU and only at the click of a button by the client.

The data that the bank can transmit to the portal is as follows:

• Full Name;
• Date of Birth;
• series and passport number;
• identification number (TIN);
• scan copies of passport and TIN;
• registration address;
• phone number;
• email address

Identification through BankID is practically the same as checking documents at banks in person. When opening an account, Ukrainian banks record and save client data, such as full name, scanned copies of a passport and TIN, registration address, etc. This is approved by the standards of registration and storage of customer data and is controlled by the State represented by the National Bank of Ukraine. An access to the customer data when using BankID is protected as reliably as access to funds through the Internet Bank.

Current situation

Despite the permission to open accounts by individuals using BankID, banks do not yet provide such an opportunity. Currently, BankID is still used to identify the user via the Internet when providing administrative services, meaning that the first stage in the NBU concept continues. Connection to the system for all participants is free.

At the second stage, in addition to agreeing on regulatory and regulatory acts that will finally implement the concept of remote identification for remote opening of accounts by banks, the NBU accepts proposals for the pricing of services and the procedure for mutual settlements. Fees may be charged by the bank providing the services (the bank did the work – identified the client in its branches) from another bank or service that wants to identify the client through BankID.

The beginning of the second stage was started by amending the NBU Resolution No. 116 of November 5 of this year. Within the nearest future the service will provide access to banking and commercial services. In addition to banks, mobile operators and non-bank financial institutions are also very interested in this.

The company was established upon an initiative of the State Council and the People’s Bank of China in 2002, now it ranks the first in the world in the number of issued cards. UnionPay International is a subsidiary of China UnionPay. The system is already operating for payments acceptance in 169 countries, and cards are issued in more than 40 countries.

At first, in Ukraine UPI will provide services of acquiring, cash withdrawal, payment for goods and services with branded payment cards. In the future, it is planned to issue UnionPay payment cards by Ukrainian banks. Thus, when signing a partnership agreement between PrivatBank and UPI in July 2018, it was reported that the state bank is considering the launch of service of cards of the UnionPay International payment system in its network of ATMs and terminals in 2019. The PrivatBank cards issue is announced at a later time.

According to the NBU direction, enter of a new financial player will increase trade and economic processes between Ukraine and China, as well as confirm the attractiveness of Ukraine for investors. UnionPay is the fourth financial system in Ukraine with a non-resident payment company along with MasterCard, Visa and American Express.

In total, the NBU should develop seven key resolutions that will simplify the rules for this market. Recently, the regulator published the first three decrees that regulate:

• The structure of the foreign exchange market and the rules of trade in foreign currency and banking metals.
• The procedure of payments, transactions for the purchase and transfer of foreign currency on the territory of Ukraine and abroad.
• Cross-border movement of cash national and foreign currency, banking metals and documentary securities by banks, legal entities and individuals.

These decrees will be constantly in effect when Ukraine moves to the model of regulating the foreign exchange market “everything that is expressly forbidden is allowed”. Until that time, temporary regulatory legal acts will be in effect. Norms that will introduce permanent and temporary decrees of the NBU can be seen from this table (the norms of the said decrees are given in the last green column):