How to Choose a Reliable Payment System for Business and Personal Finances

Vyacheslav Dvornikov

Mar 31, 2025

At the second meeting, Movchan’s Group founding partner Andrey Movchan and managing partner of GSL Law & Consulting Alexander Alekseev discussed the key aspects of payment systems. On our Telegram channel, we have already briefly shared the main ideas formulated during the conversation. And now you can read a more detailed text version of the conversation on our website.

How payment systems appeared and what they represent now

Andrey Movchan (hereinafter referred to as A. M.): The banking system is one of the last vertically integrated systems in the world. Payment systems (payments) are an example of disintegration, where the payment service goes beyond traditional banks. This largely happens because the burden on banks in terms of transaction costs, 50% of which is compliance, is becoming greater. Banks need to separate less profitable business and hand it over to those who will be faster and more efficient. New, smaller payment systems can afford — especially with venture investors' money, not bank shareholders' money — to try, search, develop, and offer the market something different.

Alexander Alekseev (hereinafter referred to as A. A.): The idea to disintegrate the financial system appeared 10-15 years ago. In fact, this led to the birth of those payment systems that are now well-known and more visible: Revolut, Wise, Paysera, and so on. The payment systems boom started on February 19, 2018, when the Latvian bank BLV was forced to suspend banking activities due to a report by the American financial regulator. As a result, in those countries that previously actively practiced relationships with offshore companies, opening accounts for non-residents, and so on, banking practices began to change. After the Baltic countries, these were primarily the banks of Southern Europe — Cyprus and Malta. Then the banks of Eastern Europe — the Czech Republic, Bulgaria.

A. M.: But it cannot be said that the payment systems market now is a market of offshore settlements. What we see is a "cavalry raid" of payment systems on the banking world. Banks in Europe continue to be quite slow and traditional. They take a lot of time to make decisions, are extremely reluctant to open accounts, and do so mainly only for clients that are very clear to them. Payment systems, on the other hand, can open an account in half an hour — without office visits, etc. Their fees today are not as inferior to banking ones as they used to be.

A. A.: Payment systems are tailored for working with individuals. They were offered more adequate tariffs, easier account opening procedures, and so on. But for legal entities or those conducting business through an individual's account with relatively serious payment amounts, the requirements of payment systems coincide with those of banks.

What determines the success of payments

A. A.: Five criteria can be highlighted.

First: the founders must have client management experience, preferably banking.

Second: they must have compliance experience.

Third: the presence of software.

Fourth: financial resources, because very often it is about capital reservation.

And the last criterion: banking experience, that is, connections that allow opening correspondent accounts.

How payments work

A. M.: A payment system is an IT program that allows money to be redirected between correspondent accounts opened by this system in banks. And then a very important part of the payment system is the orchestration of placing money in different places and earning on client balances.

It seems that the payment system has no risks: the clients' money is not really theirs, plus there is capital and some insurance, and so on. But in fact, there are, of course, many risks because the payment system often consumes more shareholder money than it earns in commissions.

How payments differ from each other

A. A.: Payment systems are mainly registered in 3-4 countries: the United Kingdom, Hong Kong, and Lithuania. Cyprus can be added. There are American payments. What else? Bulgaria, Romania, Malta, Australia, Georgia.

Further, payment systems can be divided into two large groups: for businesses and for individuals. Very often, a business payment system provides acquiring opportunities, that is, accepting client bank cards as payment. This is a narrower group, it operates on different principles. Payment processing also allows some payments to earn, primarily on servicing the riskiest businesses, such as casinos or crypto.

A. M.: We talked with representatives of different payment systems to open backup accounts in these systems. As a result, we did not open a single account, except for an English company. Sometimes we were refused due to such a complex structure as ours. But more often we faced huge commissions. Given that payment systems are clearly not a panacea, how and where can they be used, should they be used, and are they convenient?

A. A.: Apart from those cases when I aimed to simply check how a particular payment system works, I opened accounts only for specific tasks. For example, so that in an [emergency] case, it would be possible to quickly switch to another payment system or accept crypto, which could then be withdrawn to some bank. Choosing a financial institution for the latter task is by no means simple. For example, in Cyprus, banks are alarmed at the word "crypto" and may close the account.

The choice of payment system depends on the specific tasks for which they are needed: to open an account when banks do not open it, to accept crypto, to convert currency, to issue cards, to connect acquiring.

Another payment system used to issue Visa and Mastercard cards, which did not have a name, surname, or organization name. Such cards are given to an employee who goes on a business trip.

I opened accounts for a client in several payment systems implementing acquiring. When one payment system does not work for a client, does not accept this card, the right to debit is then transferred to another payment system. By the way, in payment processing, the compliance of payments received from cards is the lowest.

Also, payment systems open accounts for clients with Russian citizenship without a residence permit in a third country. As a rule, these are payment systems operating in the CIS countries. Another task they implement is receiving funds in rubles. For example, to convert them into euros, dollars, yuan, or dirhams.

Therefore, when asked which payment system is best to open an account with, I answer that it all depends on what purposes you intend to use it for. And there are no perfect payment systems.

A. M.: From the perspective of client questions, I would classify payment systems as follows. There are payment systems for "very good" clients, for example, Americans. They will charge $5 a month and provide all possible services. If you are a worse client, for example, with a Russian passport, the payment systems will be expensive. There is a third group of payment systems that can work with complex clients with non-standard schemes, and the payment systems will be very expensive. These three categories intersect little with each other.

How payment system requirements are changing

A. A.: Many payment systems are also becoming more like banks in terms of their attitude towards people with Russian passports. They do not want to see any connections with Russia. And they require proof that these connections are severed. Not just declarations, but proof of asset sales, office closures. I heard this not only in relation to Russian companies but also in relation to a Swiss family fund that worked in Russia for 20 years. Therefore, I do not agree that a European residence permit removes questions for such a client.

The fact that Revolut does not ask questions is now an illusion. It is becoming more like a bank. In practice, there was a requirement from Revolut to go on a video conference to discuss issues regarding a specific incoming payment. There are other compliance questions as well.

And if a payment system does not ask questions, then questions arise about its reliability. Very often, questions are initiated not by the payment system itself, but, for example, by the regulator or the correspondent bank. And if suddenly the payment system does not answer the questions of the correspondent bank, it will simply lose it.

How to determine the attractiveness of payment systems

A. M.: At the same time, you may have an excellent payment system, but you still need to transfer money into it and then somewhere out of it. There are good banks, but they cannot operate in dollars because they do not have correspondent accounts, or they cannot serve certain regions where they cannot be served. How is this arranged in the case of payment systems?

A. A.: Suppose an individual opens an account in a payment system in a country where all their material interests are located. If the payment system is registered in this country, then there will be no problems with transfers within it. But international transfers can be achieved if there is a holding of payment systems in different countries. For example, one in the European Union, one in Hong Kong, one in the United Kingdom.

Very often, the main criterion that will determine how great the possibilities of a payment system are is the list of correspondent accounts: for each currency, the correspondent bank should be indicated. Very often, the answer will be a list of, at best, two payment systems or banks where this payment system has an account. Financial institutions specializing in opening accounts for payment systems are generally known in the market.

The next criterion for how adequate a payment system is can be called the date of its foundation. If it is later than 2018, there is a high probability of encountering incompetence, and sometimes fraudsters.

Reliability is the main criterion that separates payment systems from banks. Because we see that license revocation [for payment systems] happens everywhere. To assess reliability, you need to understand who the owners are. If this is not stated, I would be wary of working with them.

The main downside of payment systems is the remote interaction model. Yes, from a certain point of view, this is a big advantage. As a rule, for the purpose of opening an account, this seems to be a big advantage of payment systems. Real problems begin when interaction is required, and there is nowhere to call, it is impossible to come to the office to demand a quick solution. When payment systems contact us with a cooperation offer, we immediately send a list of questions. Among them are questions about the main shareholder, the list of correspondent accounts, and some other things. And very often, there is no response to our first letter. This indicates that growing payment systems lack the experience to build a normal customer service. The situation may be different with large payment systems.

Here I move on to the next advantage of payment systems — confidentiality and information exchange. All countries, except the most notorious ones, have joined the protocol on mandatory exchange of financial information. According to it, all banks must annually submit information to the tax inspectorate of their country on accounts with passive income. All banks do this, but not payment systems. Many users of payment systems, including those living in the European Union, have happily opened accounts in Revolut and have been using them for many years, assuming that information about them is not available to local tax authorities. I think this issue will soon begin to be raised in many countries — depending on how capable these countries are of effectively administering tax relations.

What is the future of payment systems

A. M.: What do you think, where will payment systems be in 10 years, where is all this going?

A. A.: Some payment systems will become banks — not in the sense of obtaining licenses, but will follow their requirements and other criteria. Let's hope they don't catch up too much in terms of tariffs. But in all other respects, there are no particular differences anymore.

Payment systems that were supposed to be disruptors now coexist with banks, solving some narrow problems, but they are not cheaper, not more universal, and not more convenient than banks. The best payment systems will become banks, the worst will die out. And no serious innovations on this horizon are yet visible.