The summer has brought a set of amendments to the existing laws, as well as the adoption of new laws in Serbia's financial sector. This overview focusses on the changes made to the Law on Payment Services (the "PS Law"), while additionally the Law on the National Bank of Serbia ("NBS") has also been slightly amended, and two new important laws have been enacted: the Law on Consumer Protection in the Distance Selling of Financial Services and the Law on Interchange Fees and Special Rules for Payment Card Transactions ("IF&PCT Law").
The amendments to the PS Law entered into force on 16 June 2018, but they will be applicable as of 17 March 2019, save for the provisions that will apply from the date of Serbia's accession to the EU. The NBS should enact the relevant bylaws for the implementation of the changes until 17 December 2018.
At the beginning of this year, the NBS published a draft law on the basis of the Directive 2014/92/EU of the European Parliament and of the Council on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features ("Directive"). The intention was to ease the administrative procedure of switching accounts between the banks, thereby increasing the market competitiveness and transparency. In the end, the legislators opted to incorporate the mechanisms from the Directive related to the switching of accounts and payment services, generally, into the PS Law while the matters related to interchange fees and the special rules on payment cards have been regulated in the new IF&PCT Law.
Apart from the said aims and harmonisation with the Directive and the acquis, the amendments are designed to improve the protection of payment service users, intensify the development of non-cash payments and enhance the comprehensibility of basic concepts related to the payment account services.
The central novelties of the amendments to the PS Law are as follows:
- Introduction of the payment account switching service – Payment service users will no longer be burdened with administrative and time-consuming procedures to change banks (or other payment service providers). Once the user grants authorization to the new bank, the switching process will be conducted entirely between the banks and it will not require further interference of the payment service users. This simplified procedure for payment account switching is aimed to further develop the competitiveness between the payment service providers, and reduce the time and costs for users in this area.
- Definition of the payment account with basic features – By unifying the concept of a payment account with basic features, the amendments are aimed to give access to the basic features of a payment account to all payment service users, regardless of their financial standing. This account is defined as an account used for executing payment transactions in dinars. Subject to the applicable anti-money laundering rules, local banks are bound to enable a consumer with a lawful residence in Serbia to open and use a payment account with basic features, if the consumer does not already have such an account. The amendments also expressly ban any sort of discrimination when opening an account for a consumer who lawfully resides in Serbia. The banks will be bound to provide certain prescribed services related to the payment account with basic services free of charge or with reasonable charges.
- Increased transparency of payment account services / List of representative services – The NBS will start to publish a list of the most representative services linked to a payment accounts and the fees thereof. This comparative data is intended to help the payment service consumers make an informed decision when selecting a payment service provider. Upon the collection of data from the payment services providers, the NBS will publish on its website comparable data on the fees charged by the providers of payment services (at least) for representative services.
- Overview of the payments services and fees – Payment service providers will be bound to prepare an overview of the services and respective fees in line with the list of representative services to be published by the NBS. The overview has to be provided to the payment service user (free of charge) prior to the conclusion of an agreement with a payment service provider. Further, the payment service providers are obliged to deliver annually (and at no cost) to the payment service users the report on all fees charged to them, as well as all interest rates, in relation to the payment account. Exceptionally, this duty applies to users which are not consumers only upon their request.
- The amount for which payment service users assume the risk of unauthorized payment transactions decreases to RSD 3,000 (approx. EUR 17) – The earlier threshold of RSD 15,000 (approx. EUR 125) is now reduced, and the risk of stolen or abused payment cards is now assumed by the payment service providers for all unauthorized payment transactions above RSD 3,000. The NBS also got the authorisation to prescribe an even lower threshold depending on the circumstances.
- Entrepreneurs entitled to withdraw cash in the amount of up to RSD 600,000 – The amendments enable entrepreneurs (as opposed to individuals only) to instantly withdraw cash in the amount of up to RSD 600,000, free of charge.
- Initial capital threshold for the payment system operator license increases – Prior to the changes, a general minimum initial capital for payment system operators was EUR 100,000. This threshold has now been increased to EUR 1,000,000.
- Prevention of money laundering and terrorism financing – Licencing procedures for payment institutions shall now include an evaluation of the business reputation of the associates of the applicants, management bodies/persons of payment institutions and its ultimate beneficial owners. These licencing requirements have also been introduced in other laws which regulate financial service providers.
- Deadlines for the NBS to decide upon the orderliness of the licencing applications – Upon the expiry of 15/30 days as of the receipt of the licencing application (depending on the respective licencing procedure), the NBS shall inform the applicant if their application is unduly submitted and how to edit it.
- Compliance responsibilities of the banks – Banks are bound to adjust their business operations and internal acts with the amended PS Law by 17 March 2019, and to harmonize the concluded agreements that regulate services related to payment accounts by 17 February 2019. The harmonization of agreements may also be conducted by way of alignment of the applicable general terms of business.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.