EU Twining Project titled “Strengthening the institutional capacity of the National Bank of the Republic of North Macedonia (NBRNM) in the process of its accession to the ESCB”

18 December 2020

Visibility event “Presentation on the contribution of Payment Accounts Directive in Croatia with comparison web site and mobile app solution overview”

EU Twining Project titled “Strengthening the institutional capacity of the National Bank of the Republic of North Macedonia (NBRNM) in the process of its accession to the ESCB”

Emilija Nacevska, Vice Governor

Dear Mr. Zanotta, representative of the EU Delegation in our country,

Dear experts of the Croatian National Bank, Mr. Tomislav Mišićand Mr. Bruno Vukoja,

Dear friends,

I am privileged to have the opportunity to greet you today in this visibility event, under the auspices of the ongoing EU funded Тwining project, which supports us in strengthening our institutional capacity towards faster accession to the European System of Central Banks.

This event is dedicated to an important pillar of our overall society - the payment system. It is a bloodstream of the economy, and having an efficient, competitive, and innovative system of payments is inevitable for supporting the changing needs and habits of the citizens. The Twinning project provides important guidelines in devising and implementing the new draft Law on Payment Services and Payment Systems, which will provide open doors for stronger competition in the payment area, and more efficient and innovative services at lesser cost.

Let me use this occasion to reflect on a topical issue –FinTech and its confluence with payments services. As shown in most available studies, in the Western Balkan region, new technologies are penetrating in the financial system initially through the payment system. According to the CCAF’s research (2020), a total of 67 fintech providers were found to have operations in the Western Balkans in June 2019, with the majority operating in the payments space.There were 35 in Serbia, 11 in Albania, 7 in North Macedonia, 7 in Bosnia and Herzegovina, 4 in Kosovo and 3 in Montenegro. “In the Western Balkans, despite high growth in the use of card and digital payments, there remains an unexplored potential for other fintech services due to high mobile and internet penetration and a skilled IT workforce.”[1] Though the potential to grow is visible, yet the usage of opportunities is lacking, reflecting several obstacles - limited access to capital and finance, high cash use, low accessibility to payment and information systems, and regulatory barriers.

The Macedonian case reveals some positive shifts in the payment area. In the period from 2016 to September 2020, the number of payments through credit transfers initiated electronically has increased by 79%. Increase of 68% is observed in the number of payments through credit transfers initiated electronically by using personal computers. More importantly, in the same period, the number of payments through credit transfers initiated electronically by using mobile phones has increased by 14 times, or a 24% monthly increase for the whole period. Similarly, the number of transactions with payment cards on the domestic internet terminals, or e-commerce, for the period from 2016 to September 2020, has increased fourfold.

Despite the positive shifts, the data analysis indicates that innovations in payments are in its infancy and new opportunities should be created. The introduction of the new Law is an important step forward for a friendlier environment and technological innovation. The transposition of the PSD2 into national regulation, which amongst other things, will aid innovation in the Macedonian financial service market. This directive is data and technology-driven, and aims to increase competition, innovation and transparency across the payments market, while enhancing security of Internet payments and account access. And the urgency is even more stressed now in times when COVID-19 is bringing rapid technological change in the overall society as well as the financial industry.

Hence, let me briefly touch upon the main goals that the new Law and bylaws should promote by fostering the transformation of the payment ecosystem.

First, enhance competition among payment service providers by opening the market for new players, which is expected to bring benefits to payment service users in terms of faster, less expensive and more convenient payments. The Twinning project will support us in prescribing rules and procedures for licensing and supervision of the new payment service providers and payment systems operators.

Second, encourage innovations by opening banks’ systems for payment initiation and account information services offered by FinTech companies (so called Open Banking concept). This project is assisting us in drafting the standards for strong customer authentication and common and secure open standards of communication between payment services providers i.e. between the existing PSPs as well as between the newcomers and incumbent PSPs.

Third, enhance transparency by devising tools that can facilitate access to relevant information by payment service users. This project is helping us define the most representative payment services that are going to be published on a website of the National Bank to help users find all relevant information for the payment services and fees charged by the providers. In the context of our current cooperation with the Croatian National Bank within the Twining project, I will reflect on the need for increased transparency in providing the most representative payment services.

Consumers will benefit the most from information that is concise, standardized and easy to compare between different payment service providers. Thus, it is vital for consumers to be able to understand fees so that they can compare offers from different payment service providers and make informed decisions as to which payment account is the most suitable for their needs. At the same time, by increasing transparency and comparability of fees for services related to the consumer payment account, the law and the bylaws, among other things, will increase the level of consumer protection when contracting and using payment accounts. Additionally, increased transparency is expected to enhance competition among payment service providers.

In order to avoid the risk of excessive information, to facilitate swift implementation and to ensure sufficient homogeneity of the national list, the National Bank will select the payment services that are the most commonly used and generate the highest cost for consumers at national level based on a questionnaire. We have already initiated this process by collecting data from the banks. Nowadays, we are analyzing the data, which will be a basis for selecting the most representative payment services in our country. This week, we have been assisted by the Croatian National Bank experts in this process. Today we are honored to have them to present the Croatian approach for comparison website and mobile app solution for the most representative payment services.

At the end, let me warmly thank you for the overall support provided to us within the Twinning projects that is of immense importance for proper and efficient transposition of the European legislation and practices in the payment area.

Without further ado, I would like to invite Mr Tomislav Mišić to share the Croatian experience with the Macedonian audience coming from various institutions. Tomislav, the virtual floor is yours.