Payment services

FinTechs belonging to this category offer alternative payment services which are supposed to provide a faster and cheaper way for national, European, and international payments for private and business customers by using new technologies.

For example, payment service providers hereby offer solutions to easily integrate several payment services in online shops.

Some FinTechs furthermore provide real cash register systems and online-reservation solutions for restaurants and shops providing their own payment services or making use of the payment services of FinTechs described above.

Introduction

Attitude of the country towards modern payment services

In North Macedonia, provision of payment services is a regulated activity, currently provided by banks and financial companies which are holders of a relevant license. The applicable legislation provides for concrete activities which can be conducted by banks and financial companies, respectively. While banks have a much wider scope of activities (including, among others, acceptance of deposits and other repayable sources of funds, lending in the country and abroad, trading in securities etc.), financial companies can carry out activities such as loan approval, credit card issuance and administration, factoring and issuance of guarantees, and can also provide advice in relation to the abovementioned activities, as well as lend movable and immovable property to third parties. 

Banking activities can only be conducted by banks which hold a license issued by the Governor of the National Bank of the Republic of North Macedonia (NBRM). Financial companies need to hold a license issued by the Ministry of Finance of North Macedonia (MoF) in order to carry out their activities.

North Macedonia has recognised the need for modernisation of the financial sector and is working towards creating an environment which will allow for modern and alternative payment services to enter the market. Currently, a draft Law on Payment Services and Payment Systems (Draft Law) has been prepared and is expected to enter into parliamentary procedure by the end of Q1 of 2022. A significant number of directives and regulations of the European Union in the field of payment are transposed in the Draft Law, which will expand the list of payment service providers and payment services, and better regulate the relations between payment service providers and their users. Most importantly, the Draft Law will open the gates for new players, namely those in the FinTech sector, in order to provide easier, faster, and cheaper payment methods. The banks as current providers of financial services will be digitalised, and the market for payment services will be liberalised by allowing entrance to payment institutions and electronic money institutions (which are not banks) and which will offer new and innovative ways of payment. Additionally, payment service fees will become more transparent and comparable, and interbank payment card fees will be limited.

In December 2020, the NBRM conducted a FinTech survey, the results of which were published in a feasibility study, assessing the feasibility of implementing FinTech in North Macedonia. The aim of this survey was to understand the current landscape for the development of FinTech and alternative finance in North Macedonia while assessing the opportunities, barriers and challenges presented for innovation and new market participants. The survey found that 89% of the participants (from both the banking and non-banking sector) agree that there is a need for FinTech, which will bring greater levels of financial accessibility, more competition, bigger choice and benefits for individual consumers and small businesses.

Legal affairs

Obligations and requirements to provide payment services or ancillary

services described above Banks can be founded only by having a starting basic capital of MKD 310,000,000 (approx. EUR 5,040,000), solely in the form of money and paid-in outright. In order to obtain a license, the bank should submit certain documents and information to the NBRM, including, among others:

(i) draft Articles of Incorporation;
(ii) a strategic and operational plan of the bank, including projection of the financial statements for the following five (5) years;
(iii) an amount of the starting basic capital and statement that it is to be paid in;
(iv) sources of funds for payment of the starting capital;
(v) a certificate by the Public Revenue Office of North Macedonia or, for foreign entities, a certificate by an appropriate institution for regular payment of taxes and contributions;
(vi) a certificate by a competent institution for regular payment of the public duties;
(vii) an organisational structure of the bank;
(viii) internal control and risk management systems;
(ix) financial activities performed by the bank; and
(x) information system and technical equipment of the bank.

The Governor may require additional documents and information prior to issuing the license. The Governor is obliged to either issue a temporary license or reject the application within 90 days as of the day when the application was submitted. After receiving the application, the Governor assesses whether the bank will be organised and capable to operate in accordance with the prescribed regulations, supervisory standards and transparency and safety principles, whether the bank meets the corporate governance and risk management standards, as well as the feasibility of the strategic and operational plan and the financial statements projection.

After obtaining the temporary license, the bank must fulfil additional conditions within 180 days in order to obtain the founding and operating license, including:

(i) payment of the starting basic capital;
(ii) preparation of a statute;
(iii) list of nominees with special rights and responsibilities, other than for the members of the supervisory board and the board of directors, including information on their identity, education, experience, and professional background;
(iv) employment plan including qualification structure and training of the bank's staff;
(v) renting or purchasing business premises and equipment for operating and establishing an operation system;
(vi) preparation of operating policies and procedures of the bank, in writing; and
(vii) engagement of an audit company.

The bank needs to have an adequate level of own funds depending on the nature, type, and scope of financial activities and the level of risks arising from the conduct of such activities.

Registration costs include a fee for reviewing the application in the amount of MKD 200,000 (approx. EUR 3,250).

Additional comments regarding the legal situation for payment services or what FinTech’s must be aware of in this business area

N/A.

Economic conditions

Market size for payment services and biggest payment service providers

According to the latest data published by the NBRM, the total amount of payments conducted in North Macedonia in 2020 amounted to MKD 3,856,000,000 (approx. EUR 62,700,000), with 140,000,000 transactions and an annual rise of the transactions of 10.2%. There has been a growth in the transactions conducted via payment cards, where 56.2% of the total amount of payments were conducted via payment cards, whereas 22.4% of transactions were credit transfers initiated on paper and 21.4% of transactions were credit

transfers initiated electronically. During the COVID-19 pandemic, a change in the habits of the citizens has been registered where they have started using the benefits of the digitalisation of the payment services market as opposed to conducting payments directly at bank counters. The biggest payment service providers in North Macedonia are the banks.

Additional comments regarding the economic situation for payment services or what FinTech’s must be aware of in this business area

N/A.