Why is it profitable to create a payment business in Europe

According to Maxim Ivanchenko, CEO of Canopus IT, founder of the Advapay project, there are at least 4 main reasons why it makes sense to set up a payment business in Europe.

1. Improved legislation;
2. Market capacity;
3. Significantly better investment climate;
4. “Globalization”. Put the last reason in quotes, as the term used in this case is a bit conditional and needs clarification.

Now a little more detail on each of the reasons.
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Legislation

Back in 2009, the so-called 64th directive of the European Union, regulating the activities of payment operators, was launched in the EU. Prior to this, in different European countries there were local laws regulating the activities of such companies. In particular, in the UK, there was a law governing the activities of the MSB.

The federal law “On the National Payment System” (161-) was adopted in June 2011. I personally met the literal translation of the 64th directive on the website of the Central Bank of the Russian Federation almost immediately after its adoption, that is, somewhere in the year 2008 (the law was passed in 2007). Those. It is obvious that the specialists of our Central Bank have carefully studied this legislation.

However, if we compare these two legislative acts - Russian and European - it becomes absolutely obvious that European law and Russian law, in terms of the opportunities provided by licensed payment companies, are simply not comparable!

We have, as they say, cut and limited everything that is possible.

At the end of last year, I met with one respected person who is directly related to the development and adoption of the 161 FZ. To my direct question, why they simply did not take the 64th directive and did not make on its basis a similar law for Russia, I received the same direct answer: they wanted it, but the banking lobby did not allow it.

In fairness, it must be said that in the EU, in this sense, not everything is so good. Banks are very wary of new, often more flexible and technologically advanced players in the payment services market. True, the regulator does not go at the bank lobby on the occasion. By the end of 2018, a new version of the Payment Directive, PSD-2, will come into effect throughout the European Union, in which the possibilities of payment companies will be significantly expanded and their legal relations with banks will be regulated.

Payment Market Capacity

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

You may, of course, object to me that a higher level of competition must be taken into account. Yes, it is difficult to argue with this factor. But it seems to me that in this case one should not be afraid of competition. We must be at the peak of modern technology, attract the best specialists, consultants, managers. And create a competitive payment business that will be in demand around the world.

Investment climate

As for the investment climate, I think you should not give too detailed comments. About this, and so now quite a lot of talk and write. Unfortunately, what we see in our economy and in particular in the banking and financial sector, I think very few people are happy.

Talking about lower than in Europe taxes, just do not hold water in my opinion. The point is not in the amount of taxes, but in their structure. When you can’t attribute many things to the cost, even a flat scale with a 13% income tax rate does not save you.

Mass "shooting" of banks, just does not inspire optimism.

Creating your own payment business in the EU could be a good alternative or at least an additional opportunity for these people.

"Globalization"

Finally, the last factor that I called “globalization”. I will try to explain what I mean by this term in the context of our topic of conversation. Russian business seeks to increasingly integrate into the global economy. Russian beneficiaries buy and register foreign companies, including in Europe. In some cases, using licensed payment companies to handle cross-border financial transactions appears to be very effective. And we have some experience building such solutions.

Another point is connected with the fact that in many European countries there is a rather large Russian-speaking diaspora, including people who still have Russian citizenship. Quite a lot of Russians live in the Czech Republic, Germany, Great Britain and other European countries. And this means that these people can be offered payment services focused on Europe-Russia cross-border transfers and in the opposite direction.



I will give one quite interesting example in my opinion, illustrating how such a system can work. True, it is not connected with Europe, but with the United Arab Emirates. About a year ago, we were approached by an entrepreneur from Novosibirsk, who for several years already lives in Dubai with his family. It turned out that the OAU is a large enough Russian diaspora. Some people live there only part time. People buy property there or rent housing. In any case, there are always two problems for them: payment of utility bills at a time when they are physically located outside the United Arab Emirates and receiving rental payments from tenants when they rent out the acquired property. We offered a fairly simple solution: to create a payment service on the basis of a licensed payment company whose clients would be, on the one hand, individuals, property owners and tenants, and on the other, legal entities: management and service companies in the housing and utilities sector. Such a decision could be relevant for any country where there is a large percentage of real estate purchases by foreign investors: Spain, Bulgaria, Cyprus, etc.

The advantages of the payment business in Europe for Russian customers

For Russian clients, building a payment business in Europe offers a number of advantages. First, it is a new market, significantly more capacious than the domestic market of Russia and the CIS camp. Secondly, this is a market with clearer rules of the game and a better legislative base.

Creating a payment business in Europe gives our customers a tool to solve a number of new tasks that cannot be solved using only Russian companies, banks or NNCO. Or at least, a tool that allows you to do it more efficiently. Finally, there are a number of “niche” applications of these solutions for various branches of payment services, for example, cross-border transfers or payment for services in other countries.

Our project Advapay regularly conducts business and educational activities in the payment business. The experience of holding previous conferences brought us to the idea of ​​changing the format of the event.

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

The event will be held in the format of a club seminar and is designed for a small number of delegates - about 50 people. A feature of this format is the presence of panel discussions at the end of each block of speeches. Thus, each participant will be able to take a lively part in the discussion of the speakers' reports, directly ask their questions to the experts, and exchange views with other participants.

This format guarantees the maximum involvement of each participant in the discussion process, provides an opportunity to listen to different points of view, exchange contacts and just spend time in a pleasant informal atmosphere.

The main audience of the event is top officials and top managers of Russian and foreign companies, representatives of the banking business and payment service providers (PSP).

In addition to the business part, guests will enjoy an entertainment program and the opportunity to continue communication on the sidelines.

For two days, the workshop guests will stay at the Vihula Manor Country Club & Spa located in the middle of the Lahemaa National Park, 4 km from the Baltic Sea and an hour from Tallinn. The club is located in a luxury estate of the 16th century, where you can not only hold a business event, but also have a great rest.