The fight to bring PayPal’s full service to Ukraine has been going on for a year, and it’s far from over yet.
While Ukrainians can use the Internet-based money transfer service to send funds to other PayPal users, they are not able to receive money from other users.
While PayPal says that’s because Ukrainian legislation puts obstacles in the way of such transactions, campaigners hoping to bring the company’s full service to Ukraine believe that if PayPal had the will to operate fully in Ukraine, they’d find a way.
Leading the campaign to bring full-service PayPal to Ukraine is Ilia Kenigshtein, the CEO of innovations hub Creative Quarter, who has also participated in launching third generation mobile telecommunications technology in Ukraine.
In the latest development, Kenigshtein and NBU Deputy Governor Vladyslav Rashkovan on March 2 travelled to Warsaw to discuss extending PayPal’s services in Ukraine with the company’s representatives in Poland. But they didn’t bring back any good news.
“No miracle happened,” Kenigshtein told Ukrainian online tech journal AIN.UA. “Currently there’s no place for Ukraine in PayPal’s development strategy.”
Kenigshtein started trying to bring PayPal’s full services to Ukraine almost a year ago.
First, in spring 2015 he sent an official letter to PayPal Holdings, Inc. asking why they had put off their rollout in Ukraine. In summer he worked out a road map to remove possible obstacles for the U.S. payment system and sent the plan to the National Bank of Ukraine.
Despite the recent bad news, Kenigshtein told the Kyiv Post he is now sure he’ll be able to achieve mutual understanding with PayPal. However, he said that the Ukrainian government has to be involved as well.
“There should be a meeting between (Ukrainian) government officials and PayPal in Washington during the IMF’s annual assembly, for instance,” Kenigshtein told the Kyiv Post on March 3. “(NBU Chairwoman Valeriya) Hontareva should call the United States Department of State and start asking them to convince PayPal right now.”
Currently, the famous U.S. global payment system works in Ukraine using their Send Only operating model. This means the system can be used only to send money abroad – no withdrawals are allowed. So money can be sent out of the country with PayPal, but it can’t be sent in.
That means Ukrainians can’t benefit from PayPal’s low service rates (from 3.4 percent + $0.30 to 2.4 percent + $0.30, depending on the amount transferred) when making international money transfers – they have to use “traditional” bank transfer services, which are more expensive.
Apart from that, there are security advantages – PayPal does not require information from users’ cards to be given to the paying party when a transaction is carried out. That prevents user banking data being scooped up by swindlers’ fake websites, making PayPal a safer way to send money. Moreover, once a user account is set up carrying out a transaction abroad only takes a minute.
On March 9, it will be exactly a year since “the saga with PayPal began,” Kenigshtein said. In the past year the company has done absolutely nothing to get closer to our country, he said.
However, some companies don’t see a problem with PayPal’s limited functionality in Ukraine.
Vladyslav Chechotkin, the CEO Rozetka, the country’s biggest online retailer, told the Kyiv Post that PayPal’s half-presence in Ukraine has no effect on his business.
“In general, I don’t see that there are any benefits (that the system can bring to) Ukrainian small businesses,” Chechotkin told the Kyiv Post on March 3.
Oleksandr Kosovan, the CEO MacPaw, a Ukrainian software developer, says PayPal is not important for his company either, despite the fact that MacPaw exports about 80 percent of its software to the United States and European countries.
However, he told the Kyiv Post that he understands that there is demand for payment system from the public in Ukraine.
“The FastSpring payment system allows (smartphone) applications to be bought via PayPal, including by clients from Ukraine,” Kosovan told the Kyiv Post. “But I think that PayPal could make life easier for startups and IT businesses, helping them avoid bureaucratic delays and the long procedures inherent in Ukrainian legislation.”
Kenigshtein told the Kyiv Post he would not stop trying to persuade PayPal to open up its full service in Ukraine.
“We can’t just give in like that – it’s a point of principle now,” he said. “We need practical steps, governmental help. But it’s just a matter of time.”
Kyiv Post staff writer Denys Krasnikov can be reached at [email protected]. The Kyiv Post’s IT coverage is sponsored by Ciklum, Steltec Capital, 1World Online and SoftServe. The content is independent of the donors.
