Three Simple Financial Things That Amaze Europeans in Ukraine

Many Ukrainians who have emigrated abroad (mostly to European countries) after the Russian invasion have encountered the fact that European payment infrastructure lags behind Ukraine in terms of quality, speed, and the number of services. The reason is quite simple - the financial sphere itself is quite conservative. In Europe, it is also heavily regulated, making it easier for banks to adhere to established rules that have been in place for decades rather than implementing innovations.

In Ukraine, the situation developed differently. After the collapse of the USSR, the country essentially started building its banking and financial system from scratch. After experiencing turbulent times in the 1990s, including hyperinflation and the rise of financial pyramids, the modern financial system began to take shape from the mid-2000s, becoming more open to various innovations, especially in the private sector.

Therefore, it is not surprising that as early as 2001, Ukraine had "Privat24," an internet banking system operated by the country's largest bank, "PrivatBank" (in 2010, its version for smartphones on iOS and Android operating systems was introduced). In 2011, the first contactless payment using NFC technology took place in the country. And in 2017, the first "branchless bank" - Monobank - was launched in Ukraine.

Moreover, the financial technology sector is actively developing in Ukraine, with tools that enable the implementation of convenient and innovative financial services. Even despite the ongoing war, according to research by the specialized organization "Ukrainian Association of Fintech and Innovative Companies," this market is currently estimated at $1 billion, shared among 246 companies.

Simple Card Operations

Photo: Simple Card Operations

For most European Union countries, banks are restricted in providing direct transfers from one user to another through banking apps or internet banking. Conducting P2P payments carries a high risk of indirectly violating a range of laws (both local and pan-European) and falling under financial monitoring and anti-money laundering requirements.

Recently, non-banking institutions like Revolut, N26, Chime, and others have become active in this sector. Despite their success in attracting millions of users, the majority of Europe's financially stable population still prefers more traditional banks. The primary focus for these banks is clear compliance with legislation rather than expanding their customer base or ensuring their comfort. As a result, the lion's share of money transfers goes through bank branches or specialized systems and services like SWIFT, SEPA, Western Union, or PayPal.

In contrast, Ukraine has a different situation. All major banks have their own apps and internet banking systems through which people can easily send money to cards of any other bank. Many financial institutions (especially non-banks) even offer this service without any fees, and the funds are transferred almost instantly - within minutes or even seconds. For Europeans accustomed to money transfers taking several working days, this is truly astonishing.

Some non-banks also offer innovative card payment methods, such as splitting taxi fares or restaurant bills. Any major bank or non-bank allows people to pay for utilities, traffic fines, government services, make charitable donations, and more directly from their smartphones.

This has also made collecting charitable contributions to support the Ukrainian Armed Forces much easier. Donating to charitable platforms like United24, one of the major charitable funds supporting the army ("Come Back Alive," "Sergiy Prytula Foundation," "Kolo," etc.), or contributing directly to specific military units, can be done in just a few clicks from a mobile application.

In Ukraine, it is not necessary to go to a bank branch to deposit cash onto a card. In all cities, there are hundreds of payment terminals installed in shopping centers, stores, train stations, and other crowded places. These terminals allow not only card top-ups but also payment for a wide range of other services.

Integration of payment cards into smartphones and NFC payments through services like Google Play has led to Ukrainians gradually abandoning physical plastic cards. According to Mastercard data, in 2021, Ukraine entered the top 10 countries in the world for the number of NFC payments made with smartphones and gadgets. In Ukraine's physical retail sector, every third transaction (37%) with Mastercard is already made via NFC. For comparison, in Denmark, it's 36%; in the Netherlands - 29%; in Germany - 19%; in the UK - 17%; while in Sweden and Italy, it's only 7% and 3%, respectively.

This preference for cashless payments and transfers played a crucial role in helping the Ukrainian economy withstand the initial days of the full-scale Russian invasion. At that time, the country faced significant challenges with cash collection and the functioning of bank branches. However, banks and payment systems continued to process electronic transactions, allowing people to pay for goods and services.

Simple Opening of Bank Accounts and Cards

Photo: Simple Opening of Bank Accounts and Cards

To open a bank account in most European countries, one must visit a bank branch where a clerk will process the necessary documents for account opening and verify the client's identity. In Ukraine, many banks (especially non-banks) allow the opening of accounts and new cards without leaving one's home.

Of course, verifying one's identity is still required, but it is incredibly straightforward. Clients can either take photos of their documents and/or undergo video identification, upload their information from the unified portal of state services called "Diia," or confirm their identity through systems like Bank ID or similar methods (for which they need to already have an account with one of the participating banks). Thus, gaining access to banking services in Ukraine is incredibly easy.

Moreover, most major banks and non-banks also enable their clients to open new digital cards in just a few clicks. These cards can be used for online payments or added to services like Google Pay or Apple Pay for contactless payments at physical retail locations.

Developed Network of Payment Terminals and Payment Diversity 

Photo: Network of Payment Terminals and Payment Diversity

In large European supermarkets, hotels, or restaurants, you won't have any issues paying with a card. However, the situation is quite different when it comes to small shops or minor services such as dry cleaning or courier delivery. Many small businesses in Europe, whether located in big cities or small towns, do not offer card payment options.

According to the European Central Bank's report, in 2020, 73% of all offline purchases in Europe were still conducted with cash. At the same time, the National Bank of Ukraine reported that during the same period, cashless transactions accounted for 87% of the total number of operations made with banking cards in Ukraine.

Indeed, payment terminals in Ukraine can be found even in small rural stores, coffee stalls, and street food vendors, and even in public restrooms. Recent regulatory changes have allowed Ukraine to use smartphones as terminals for receiving payments and utilize QR codes for payments. In many restaurants in major cities, there's no need to request a bill from the waiter anymore - each table has a QR code, which, upon scanning, displays the establishment's menu and allows customers to settle their bill and even leave a tip for the waiter. Additionally, the leading Ukrainian cryptocurrency exchange, Kuna, has launched its own crypto-acquiring platform for businesses. It enables both large and small entrepreneurs to receive payments from clients in cryptocurrencies and convert them into regular currency. 

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Integration of Ukraine into the European Union and the expansion of Ukrainian companies into European markets can have positive consequences not only for Ukraine but also for the EU, particularly in terms of spreading innovative financial services. Perhaps it is the Ukrainian entrepreneurial spirit and preference for simple and convenient payment methods that will eventually overcome the conservatism in the European financial sector.