Activists have been battling to bring PayPal’s full service to Ukraine for over a year, and the fight is far from over.
While Ukrainians can use the internet-based money transfer service to send funds from their bank accounts to other PayPal users, they can’t withdraw money they’ve received back.
The lack of the full PayPal service complicates the entry of small Ukrainian e-businesses to foreign markets – any Ukrainian e-business that wants to sell products on foreign markets and receive payment via PayPal is faced with several problems.
The main one is their inability to access virtual marketplaces like Amazon, eBay, Etsy, Craftsy, Ravelry and many others, where PayPal may be the only payment option.
The young companies that want to raise money with the help of crowdfunding platforms like Indiegogo have to use PayPal as well – the system ensures that backers can get their money back if the campaign isn’t successful.
Vladyslav Rashkovan, one of the four deputy governors of the National Bank of Ukraine, says PayPal is widely used not because its service is unique, but simply because this company has come to dominate the global market for electronic payments.
“(PayPal’s) name has become so outstanding and innovative, that we now associate the online payment system with it,” Rashkovan said at a June 9 press conference held by consulting company E-Commerce Expert.
“When Xerox came out with Xerox (photocopying) machine, they were monopolists, too. Yes, others quickly caught up with them, but we still call this invention the Xerox, after the name of the company,” Rashkovan said.
PayPal currently provides its full range of services in 116 countries, including Mozambique, Guadeloupe, and Russia.
The NBU’s Rashkovan said the government should ensure they “give small and medium-sized businesses access to the external markets.” According to him, PayPal and other global electronic payment systems can help.
The first step towards establishing an e-commerce foreign payment system was taken earlier this year, when the National Bank of Ukraine introduced regulations that allow citizens of other countries to transfer money electronically to accounts in Ukrainian banks.
“One would like to (live) in a normal country and do not have to think about bringing in PayPal,” Rashkovan said. “And we’re not living in a part of the third world, but in at least the second or the first one.”
Currently, to start operating in Ukraine, NBU obliges foreign payment systems to register, sending them a hefty package of documents, including one that confirms the registration of the payment system in its home country, another that explains the technical aspects of the operations it carries out and a petition from the company.
Ukrainian lawyers are not impressed.
“Why not require the registration of all the websites that Ukrainians can visit, including Facebook and Amazon?” the partner of law firm Baker & McKenzie Ukraine Ihor Olekhov told Ukrainska Pravda.
Olekhov said that if NBU does not simplify the operating conditions for international payment systems like PayPal, they will never enter Ukraine.
According to PayPal, when offering its service to a country, the company “needs to ensure that it is compliant with both local and international laws” before launching its full service. And the company sees no prospect of this happening any time soon.
“While we are undoubtedly committed to operating within the regulatory framework applicable to the service we offer, we believe that PayPal does not fall within the scope of the Law of Ukraine on Payment Systems and Money Transfers in Ukraine,” PayPal Europe senior director David Ferri wrote in an official letter to NBU dated June 4, 2015.
“We are very thankful to the National Bank of Ukraine for expressing readiness to cooperate with PayPal,” Head of Communications, PayPal Russia and Central and Eastern Europe Galina Skatkina said to the Kyiv Post in an email on June 18.
“While we do not comment on future plans, we can confirm that we are evaluating ways to improve our product offerings to best serve the needs of merchants and consumers on this market,” Skatkina writes. “Send Only functionality doesn’t mean that we take our obligations to our customers in Ukraine lightly, nor does it mean this market is excluded from our most important global, consumer updates.”
Kyiv Post staff writer Denys Krasnikov can be reached at [email protected]. The Kyiv Post’s IT coverage is sponsored by Beetroot, Ciklum, Steltec Capital, 1World Online and SoftServe. The content is independent of the donors.
