Andrea Bačanek • August 30, 2024
What Changes Were Introduced by the Amendments to the Law on Payment Services?
On 31st July 2024, the National Assembly of the Republic of Serbia adopted the Amendments to the Law on Payment Services (“Official Gazette of the Republic of Serbia”, no. 64/2024). These amendments introduce important innovations, which will improve the day-to-day lives of citizens and enhance business activities within the economy.
One of the key legislative changes is the introduction of the open banking concept. This concept enables the exchange of data between different payment service providers, allowing users to access and manage the information regarding their accounts, regardless of which bank they are with. Additionally, initiating payments through various service providers will be enabled, which increases competition and may lead to lower prices and better-quality service for end-users.
Furthermore, these amendments introduce two new types of payment service providers. The first are account information service providers, enabling users to receive consolidated information about one or more payment accounts they hold with different banks. Thus, they will be able to review all their account data and financial activity in one place, regardless of the number of banks they use.
The second type is payment initiation service providers, enabling users to make payments through various applications, without the need to directly access their bank accounts. Users will have the option to choose the service provider through which they wish to make a payment. It is important to note that payment initiation service providers don’t have direct access to the users’ funds, they only initiate the transfer of money from an account at another bank per the users’ consent.
The hereto mentioned service providers may deal with the listed services after the approval form the National Bank of Serbia. However, existing market participants, i.e., banks, payment institutions, electronic money institutions, and public postal operators may provide these services as well.
In addition, the new legal framework sets the conditions for Serbia’s integration into the Single Euro Payments Area (SEPA), enabling more efficient and cost-effective transactions between Serbia and EU Member States.
Another important aspect of the amended Law is the obligation of all payment service providers to implement reliable user authentication. This means that, for conducting cashless payments, at least two out of three security elements will be required: something you know (e.g., a password), something you possess (e.g., a mobile phone), and something you are (e.g., a fingerprint). These measures will provide users with additional protection against fraud and enhance payment security.
The implementation of the amended Law is expected to contribute to the further development of the payment services market and the FinTech sector in Serbia, increasing its efficiency and competitiveness.