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06/10/2023

The Law Amending the Payment System Law, which will enter into force on 8 October, regulates payment services provision in Montenegro as in the EU member states. It will enable the use of payment services in Montenegro following the highest European standards and security conditions.

Namely, the Law Amending the Payment System Law on Payment Transactions is harmonised with the EU Payment Services Directive PSD2, whose primary goal is to encourage innovation and support increased payment services provision’s competition and transparency. After thorough and extensive preparations in the CBCG, the Council of the CBCG adopted the draft Bill of the Law Amending the Payment System Law in March 2020. The Parliament adopted the Law in September 2022, with entry into force on 8 October 2023.

The new Law, inter alia, introduces and regulates two new payment services - providing payment account information services and payment initiation services. Payment account information service allows a payment service user to have a complete overview of the financial balance of all the payment accounts owned at any time. On the other hand, the payment initiation service provides reliable information that the payment has been initiated, i.e. merchants will receive notification that the payment process has started and that they can deliver the goods or services even though the money is not yet in their account. Such services offer merchants and consumers more financially favourable solutions, enabling the further development of innovative mobile and online payment transactions and online shopping even when the consumer does not own a payment card.

Adopting the Law enables the introduction of new payment service providers and encourages competition in the payment services market, thus creating preconditions for lowering the payment services prices.

Moreover, the new Law provides greater security for electronic payments and payment service providers. It improves the rules on protecting consumers as payment services beneficiaries while maintaining the high standards achieved so far and promising solutions from the applicable regulatory framework.

The proposed Law enables consumers to be better protected when the payment amount is not known in advance, such as a hotel or rent-a-car reservation, because funds on the customer’s payment account may be reserved only if the consumer consented to the exact amount reserved. In addition, the proposed Law reduces consumer liabilityfor unauthorised payment transactions for a lost or stolen payment instrument - payment card, phone with payment application, etc. - from 150 to 50 euros. It also introduces the deadline to respond to a consumer complaint and shortens the term for cancelling a contract with a payment service provider from 12 to 6 months free of charge.

To efficiently implement new legal solutions within its jurisdiction, the CBCG adopted a set of significant secondary legislation harmonised with the relevant European Commission and the European Central Bank acquis.

We notably refer to the implementing legislation setting the security requirements that payment service providers must comply with to ensure reliable client authentication and joint and secure open communication standards. It will achieve the objectives of providing an appropriate security level for payment service users and providers, adopting effective and risk-based requirements, ensuring the protection of funds and payment service users’ personal data, ensuring and maintaining fair market competition between payment service providers, ensuring technological neutrality and the business model neutrality and enabling user-friendly, affordable and innovative payment methods.

A significant novelty is that the CBCG will, inter alia, implement a system enabling daily monitoring of information on account freezing of the transaction accounts of executive debtors, i.e. legal entities and entrepreneurs, to increase transparency and information access for the public. Such an initiative aligns with the contemporary business environment needs and contributes to transparency, especially in supporting business entities that settle their obligations conscientiously and responsibly. We remind you that, until now, data on enforceable debtors were published monthly on the first working day after the month-end, with a balance on the last day of the month. Moreover, with the Law’s application, the transaction account number and other data from the Central Register of Transaction Accounts concerning legal entities and entrepreneurs will be publicly available on the CBCG website. Link for Overview of Frozen Accounts of Legal Persons and Entrepreneurs: link. Link for Overview of Transaction Accounts of Legal Persons and Entrepreneurs: link.

Applying the new Law improved the payment system regulatory framework, positively affecting Montenegro’s accession negotiations to the EU for Chapter 4, “Free Movement of Capital”. We also remind you that the last Report of the European Commission for Montenegro 2022 recognised and positively assessed the activities the CBCG initiated and implemented towards preserving financial stability and harmonising the domestic regulatory framework with EU directives.