Why Ukraine won’t see Apple Card soon: opinion of monobank executives

On March 25, Apple presented its virtual Apple Card with up to 3% cashback. The card is a product of a joint effort with MasterCard and Goldman Sachs on the basis of Apple Pay payment service and Wallet app. In physical format, Apple Card is a titanium card without number, expiration date, and CVV code — it bears only the name of the holder. The card will be available in the U.S. in summer 2019.

“Bankers from all over the globe became anxious. American bankers are more anxious, while bankers from such countries as Ukraine are less anxious. Unfortunately, it is unlikely that Apple will launch their banking product in Ukraine in less than five years from now,” notes the co-founder of Fintech Band and one of the monobank project managers Dmitriy Dubilet.

He and his colleague from Fintech Band and monobank projects Oleg Gorokhovskiy provided three reasons as to why Apple Card won’t come to Ukraine, or at least in the foreseeable future.

Ukraine without Apple Card

  1. Customer identification on Ukrainian banking market and, accordingly, the absence of the possibility to open an account without visiting a bank. “Unlike in the West, in Ukraine, it is mandatory for banks to meet a client in person to open an account. Clearly, all these problems can be solved, but in the nearest future Apple and Google are going to pursue other priorities,” notes Dubilet.
  2. Another reason is a solid monopoly of a single player on the banking market, which can seriously limit the payment infrastructure. For instance, 70% of the infrastructure of POS terminals belongs to “PrivatBank”. Will Apple Card be able to utilize it? “I did not understand this point from the presentation. I think that there’s going to be a model where a client would get a card in Europe and replenish it from a Ukrainian card. Same way they replenish Apple Store account,” comments Gorokhovskiy.
  3. Gorokhovskiy further notes that Apple still views Ukraine as a market with low purchasing power. Corruption and nontransparent regulatory framework do not do it any good either.

Undoubtedly, sooner or later global consolidation of banking sector, just like taxi, is bound to occur. However, launching a banking product on a new market is a monumental challenge. Each country has its own licensing process in place, own KYC/AML processes, own payment systems and credit reference bureau.”

It’s a win-win for everybody. Except for banks

Nonetheless, according to Dubilet, Ukrainians will also benefit from yesterday’s announcement. “Apple showed that Visa/Mastercard can bend their rules here and there to allow the issue of cards without any number, CVV or expiration date. We are already preparing papers addressed to these payment systems requesting their approval for monobank to provide their clients with the same option,” he announced.

All in all, Gorokhovskiy believes that yesterday’s announcement sends an important message to the entire banking sector. “In their model of the world (Apple – ed.), there’s no place for banks and other intermediaries in retail transactions. Banks would be left with KYC (identification and figuring out sources of funds), loans and capital management,” he notes.

In addition, loans could also be under question: considering the amount of cash on the company’s accounts, Apple could easily engage in issue of retail and medium loans for entrepreneurs.

“There are no local playgrounds, everything is global and no one should take it easy. But they are sending this signal all the time. Apple Pay is also a signal.”