Samsung Electronics France has announced the compatibility of Samsung Pay services with PCS Mastercard payment cards from Prepaid Financial Services (PFS).

From today, the users of PCS cards in France and holders of Samsung smartphones will be able to use Samsung Pay to pay for their purchases in store with their smartphone. The payment solution is available and reloadable online at 32,000 stores across France. 
With Samsung Pay, PCS cardholders will now be able to make payments without having to take out their card and receive notifications of their purchases immediately. The service is also secure thanks to biometric identification (or PIN code) and data encryption by Samsung Knox. 

PFS is an e-money issuer that provides payment technology solutions, including e-wallets, physical and virtual prepaid cards and IBAN accounts in the UK and Eurozone. Prepaid Financial Services, trading as PFS, is Authorised by the Financial Conduct Authority in the United Kingdom.


Malta has a deep interest in the rapidly growing sector of digital technologies, Distributed Ledger Technologies in particular.

During the last few months, the Government of Malta has been working with private parties, across various sectors both locally and internationally, to identify the changes in their legislative and administrative framework that are required to accommodate disruptive technologies.

The ambition is for Malta and Blockchain Technology is to become the world’s first blockchain-regulated state with clearly established regulatory frameworks for DLTs, ICOs and virtual currencies.

As a result, Malta will have an opportunity to attract international businesses that seek regulation to establish their blockchain-based companies as well as those that will utilise virtual currencies.


Maxim Ivanchenko

Maxim Ivanchenko, CEO Canopus IT, Advapay project founder

In my opinion, there are at least 4 main reasons why it makes sense to create a payment business in Europe.

Improved legislation;
Capacity of the market;
Significantly better investment climate;
"Globalization". We place the last reason in quotation marks because the used term in this case is quite conditional and requires explanation.

Now let’s take a closer look at each of the reasons. Back in 2009, the so-called 64th European Union Directive regulating the activities of payment operators has started to work in the EU. Before that, in different European countries there were local laws regulating the activities of this kind of companies. In particular, in the UK, there was a law regulating the activities of the MSB.

Federal Law "On the National Payment System" (161-FZ) was adopted in June 2011. I have personally seen the literal translation of the 64th directive on the website of the Central Bank of Russia as soon as it was adopted, that is, about 2008 (the law was adopted in 2007). So, it is obvious that our Central Bank experts have carefully studied this legislative act.

However, if we compare these two legislative acts - the Russian and the European - it becomes absolutely clear that European law and Russian law, from the point of view of the opportunities offered by licensed payment companies are simply incomparable!

As mentioned, everything possible was cut and limited in Russia.

At the end of last year, I met with one distinguished man who is directly related to the development and adoption of the Federal Law 161. I got the same direct answer to my direct question on why there was no similar law simply established to the 64th directive in Russia: they wanted, but the banking lobby did not let them.

To be fair, I should mention the fact that in this regard everything is not so perfect in the EU, as well. The banks are very wary of the new, often more flexible and technologically advanced players of the payment services market. Although, the regulator does not follow the banking lobby. By the end of 2018 the new version of the Payment Directive - PSD-2 will come into force across the EU, which will significantly enhance the ability of payment companies and adjust their relations with banks at the legal level.

The second factor that I have mentioned is the capacity of the payment services market. Undoubtedly, the capacity of the European market is not comparable with the capacity not only of the Russian market, but also of other countries of the former post-Soviet space altogether. And it is not only about population. The size of the Russian economy, if I am not mistaken, is about 7% of the size of the economy of the united Europe. And if we take into account the level of penetration of the banking and payment technologies, the level of the financial literacy of the population, if you choose so, I think this comparison will obviously not be in favor of Russia and CIS countries, as well.

Of course you can argue that it is necessary to take into account the higher level of competition. Yes, this factor is difficult to argue. But I think that in this case we should not be afraid of competition. We have to be at the height of modern technologies, to attract the best professionals, consultants, managers and to create a competitive payment business, which will be in demand all over the world.

Regarding the investment climate, I think, it is not necessary to give too detailed comments. A lot of things are being said and published about this nowadays. Unfortunately, the facts that we are facing in our economy and in particular in the banking and financial sector, I think, are not very encouraging.

In my opinion, the discussions about the taxes lower than in Europe, do not stand up to criticism. The point is not in the amount of taxes, but in their structure. When many things cannot be attributed to costs, even a flat income tax rate schedule of 13 % does not help.

The massive "shooting" of the banks does not encourage optimism, as well.

Creation of own payment business in the EU could be a good alternative, or at least, an additional opportunity to these people.

Finally, the last factor that I have mentioned is "globalization". I'll try to explain what I mean by this term in the context of topic of our conversation. Russian business seeks more and more to integrate into the global economy. Russian beneficiaries buy and register the foreign companies, including in Europe. In some cases, the use of the licensed payment companies for cross-border financial transactions seems to be highly effective. And we have some experience in making such decisions.

Another point relates to the fact that in many European countries there is a quite large Russian-speaking expat community, including people who still have a Russian citizenship. Quite a lot of Russians live in the Czech Republic, Germany, Great Britain and other European countries. This means that we can offer payment services to these people, focused on Europe-Russia cross-border transfers and vice versa.

I would like to give you an example quite interesting from my point of view to illustrate how such a system might work. However, it is not about Europe but about the United Arab Emirates. About a year ago one entrepreneur from Novosibirsk, who had already been living in Dubai for a few years with his family, contacted us. It turned out that there is a quite large Russian expat community in the UAE. Some people live there only part time. People buy property there or rent housing. In any case, they have two constant problems: payment of the utility bills at that time when they are physically outside the UAE and receiving rental payments from tenants when they lease the purchased property. We have proposed a fairly simple solution: to create a payment service on the basis of a licensed payment company, whose clients would be individuals, property owners and tenants, on the one hand, and on the other - legal entities: managing and service companies in the sphere of housing and public utilities. Such a decision could be relevant to any country where there is a large percentage of the real estate purchase by foreign investors: Spain, Bulgaria, Cyprus and other countries.

Benefits of payment business in Europe to Russian customers.

Building of payment business in Europe gives various advantages to Russian customers. Firstly, it is a new market, much more capacious than the domestic market of Russia and CIS countries. Secondly, this is a market with clearer rules and an improved legislative framework.

Creation of payment business in Europe gives our customers a tool enabling to solve a number of new challenges that cannot be solved only with the help of the Russian companies, banks or NSCA, or at least a tool to do so more effectively. Finally, there are a number of "niche" applications to these solutions for various branches of payment services, such as cross-border transfers or payment of services in other countries.

Our Advapay project regularly conducts business and educational activities in the field of payment business.

The experience of previous conferences gave us an idea to change the format of the event.

We will hold an international seminar RUNNING PAYMENT PROCESSING BUSINESS IN EUROPE 2016 in Estonia in October 28 and 29.

The event will take place in the club workshop format and is designed for a small number of delegates - about 50 people. The peculiarity of this format is the panel discussions at the end of each block of speeches. Thus, each participant will be able to take an active part in the discussion of the speakers’ reports, put direct questions to the experts and to exchange views with other participants.

This format ensures maximum involvement of each participant in the discussion process, makes it possible to listen to different points of view, exchange contacts and just spend time in a pleasant informal atmosphere. The primary audience of the event is the first persons and top-managers of Russian and foreign companies, representatives of the banking business and payment service providers (PSP).

Besides the business part, the guests will be offered an entertainment program and an opportunity to continue the dialogue on the sidelines.

During two days of the seminar the guests will be staying in Vihula Manor Country Club & Spa, located in the middle of the Lahemaa National Park, 4 km away from the Baltic Sea and an hour's drive from Tallinn. The club is located in a luxurious manor house of the 16th century, where you can not only organize a business event, but also relax.
Andrey Borisenkov

Andrey Borisenkov, CDO Advapay

When choosing the jurisdiction for future payment business it is necessary to consider a large number of different aspects: these are license cost, license acquisition time, office costs and salary of employees in the licensing country (requirements of each regulator provide for at least one staffed operating office).

There is another important aspect that often remains unaddressed or at the end of the line. These are AML/KYC requirements.

The abbreviation stands for Anti Money Laundering (AML) procedures ordering each company to "know its customer" (KYC – Know Your Customer). In simple terms, each payment company when opening an account for its new customer shall be confident that the customer is the very same person whose documents he/she submits.

Consider the case of a bank account opening. It's simple physics: a future customer comes to a branch bank, shows his/her documents, a banker makes copies of the documents, makes sure that the customer is the very same person who is specified in the documents (by comparing with photographic image), offers the customer to sign necessary papers and the bank account is open!

One would think nothing is easier than repeat the same steps within the framework of the payment institution. But what's to be done if your company is located, for instance, in Czech Republic and your customer resides in some other country? You wouldn't be able to bring all your customers to a suitable country for contract signature. Nor refuse customers from other countries since it is ridiculous because in doing so you lose the prime advantage of the payment institution vs. conventional banks, i.e. openness, simplicity and funds management speed for the customer: the same bank account opening may take several days while an account in the payment institution may (and must!) be open within few hours. The main requirement is to follow the abovementioned AML/KYC procedures.

There are several ways to do that. The first option is to open branches in those countries where your customers reside. This option is rather expensive and time consuming one. It will be necessary to collect documents and submit them to the local regulator for consideration. In other words, it would take several months and it is clear that running offices in each country is a very costly affair affordable for major companies having a lot of customers.

The second option of customer identification lies in company agents. This option is cheaper since a payment system agent can be even a private individual having no license. That individual meets a prospective customer, proves his/her identity, signs documents with him/her confirming potential account opening. The problems of this method involve the necessity to send customer's documents to your main office and the necessity to deal with a great number of agents in each country to support prompt accounts opening. Moreover, it is necessary to take into consideration the fact during routine inspections, the regulator will ask to provide all documents for each identified customer of the company; that is why it stands to the reason that the procedure shall be followed in strict adherence to the rules and any violations thereof may entail suspension or revocation of the license.

Finally, there is the third option. It seems to be the easiest and most rational and entails no extra expenses if the customer identification aspect is taken into consideration right away. In spite of the fact that the basic legislation is the same for all European countries, it is just the foundation base on which each particular jurisdiction builds its own legal superstructure. Accordingly, there are countries where the remote identification of customers for the payment institution is allowed. The simplified procedure is as follows: a customer files an account opening application via the company website, accepts the reliable data provision conditions, fills out the forms and attaches scanned copies of his/her passport and residential address confirming document. Your employee checks the data and… the customer is identified! In such a case, the whole procedure takes less than an hour even with allowances made for filling out the forms. At a later time, with customer's account turnover growth, some additional procedures may be needed, for instance, a small interview by Skype or a scanned copy of an additional document, but at any rate there will be neither personal visit to the office, signing of papers nor mailing of the papers. You must admit that this is a solid competitive advantage!

In what countries is the remote identification possible?

One of them is the UK – the leader in financial systems that has already issued more than 500 licenses. From the end of 2016, in Lithuania, the country that passed an amendment about the remote identification within the framework of its financial system development plan. In Malta as well, but it shall be taken into account that the remote identification application issues are to be resolved by the regulator and it is far from certain that it will make the decision in your favor. It has to be argued into it.

What's to be done if you need the remote identification but the license is obtained in the country that has no remote identification? There is a way out. The European legislation allows to use KYC procedures of third party companies that have payment licenses in the countries where the remote identification is permitted. Coming around to the example with the Czech Republic, the following plan can be offered: working under the Czech legislation you may engage a company having a license in UK or Lithuania for customer identification. That company will carry out all the procedures and confirm identification of your customer.

Your customer will not be even aware of the fact that he/she has been identified by a third party company since the whole procedure can be automated via API gateway.
You can ask questions to Andrey Borisenkov - This email address is being protected from spambots. You need JavaScript enabled to view it.

Ongoing research of innovative business practices, Russian payment regulations, local and global trends in retail payments, microfinancing and financial inclusion policies is one of the primary goals of the Russian E-Money Association. Russian Electronic Money Association provides consulting services and holds seminars in the spheres of our expertise.

Russian E-Money Association

Up to date, we have taken part in providing lectures to the officers of the Russian Financial Intelligence Unit, Federal Anti-Drug Service, Russian Central Bank, Central Banks of Malaysia, Thailand and Brunei, and a number of Russian commercial banks.