In Conversation with Igor Velickovski, Manager, Payment Systems Department, National Bank of the Republic of North Macedonia

In recent months, Central Bank Payments News (CBPN) has sat down for in-depth conversations with the payments directors at the Bank of Albania and the Central Bank of Kosovo, respectively, while previous issues of CBPN featured articles authored by the National Bank of Serbia and the Central Bank of Montenegro.

Our tour of the Western Balkans continues this month as we catch up with the National Bank of the Republic of North Macedonia’s Igor Velickovski, who discusses the transformative role of a recently enacted law on payments, North Macedonia’s SEPA ambitions, financial inclusion, the importance of cross-border collaborations, CBDCs, and much more.

CBPN: The Payment Systems and Payment Services Law, which transposes PSD2 into domestic legislation, took effect on 1 January 2023. What are your expectations for how the law will transform payment services in North Macedonia?

Igor Velickovski: Aligning national legislation with the EU acquis in the payment area was one of the most important goals of the Strategy for Development of the Payment Systems in the Republic of Macedonia during 2013-2017, which was prepared by the National Payment System Council and adopted by the National Bank of the Republic of North Macedonia (NBRNM), the Ministry of Finance, and the Macedonian Banking Association. Since then, we worked together very intensively on the new legal framework, which was adopted in 2022 and is being applied since the beginning of 2023.

The new Law transposes several EU directives and regulations such as PSD2 (Revised Payment Services Directive), EMD2 (Revised E-Money Directive), PAD (Payment Accounts Directive), SFD (Settlement Finality Directive), IFR (Interchange Fee Regulation), and some provisions from SEPA regulations. Aiming to facilitate the implementation of the law, the NBRNM has adopted а set of 26 bylaws, most of which rely on the European Banking Authority’s guidelines and standards.

It is expected that the new legal framework will transform the payment services market by:

1. Encouraging competition. This is why we transposed PSD2, allowing non-bank payment service providers to enter the payment services market. Before, only banks were allowed to provide payment services and only specific payment institutions could provide cross-border money remittance services.
2. Stimulating innovation. Currently, payment card transactions and credit transfers dominate the payment services market in our country. We have noticed а strong increase in card payments over the years, during the pandemic in particular. Regarding credit transfers, the use of mobile applications has been expanding. Nevertheless, paper-based credit transfers still prevail and reflect the consumer’s habit of initiating payments at bank counters. In this environment, the forthcoming implementation of open banking in our country is expected to encourage online and mobile payments solutions as well as the provision of easily understandable and timely information on our consumers’ behavior.
3. Enhancing consumer protection. By transposing Title III and IV from PSD2 in our national legislation, we ensure higher protection by providing more comprehensive information for our consumers before they sign the standardized framework agreements with a payment service provider and, later on, at every stage of the execution of a payment transaction by clarifying payment service providers’ liabilities vis-à-vis consumers.

Moreover, by transposing PAD we elevate consumer protection by enabling consumers to open accounts with basic features, which brings benefits in terms of the application of reasonable fees. In addition, by the end of September of this year, the NBRNM is expected to establish a comparative website for the most representative services linked to payment accounts, which will enable consumers to compare in one place all the relevant information on the fees charged by payment service providers and select the most convenient payment service provider.

In general, we have created a legal framework for the new generation of technology to be applied in creating innovative solutions that are expected to make payments initiation easier, more secure, and cheaper.

CBPN: The promotion of fintech has been a priority of the NBRNM for the past several years — an Innovation Gateway/Hub was launched in 2019 and a National Fintech Strategy has been adopted recently. In this context, what are the important steps the NBRNM is taking to facilitate innovation in the payments/financial sector?

Igor Velickovski: The activities started several years ago by strengthening the capacity and awareness of the NBRNM’s employees about the importance of innovations in financial services. Following the example of other central banks, the NBRNM in 2019 established a Working Group for Financial Technologies with experts from different organizational units within the Bank. By the end of 2019, the working group created the Innovation Gateway as a platform for communication with the fintech sector and to provide guidance on regulatory matters.

In the meantime, all financial regulators in the country confirmed the need for the development of fintech. It was emphasized that before starting the preparation of the National Fintech Strategy, the ecosystem should be mapped, the initiatives undertaken by all stakeholders and the benefits of the fintech development in the country should be identified, and potential obstacles to the development of the financial services market should be perceived.

For this purpose, comprehensive research of the ecosystem was made by conducting a survey. The survey involved ...

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