We have recently published a newsletter on the draft Payment Services Act, which aims at harmonizing the Serbian regulation in this area with the Payment Services Directive, the Settlement Finality Directive and the Electronic Money Directive. The draft has now become the law, its application being postponed until 1 October 2015. 

The text of the law substantially corresponds to the draft that we have analyzed in the earlier newsletter. Most importantly, the notion of authorized payment services provider is expanded to cover, apart from Serbian-licensed banks and public post operator, payment institutions and e-money institutions. New entrants can apply to the National Bank of Serbia (NBS) for a license starting from 1 August 2015. 

Compared to the draft, the law brings certain novelties in the provisions that will become applicable once Serbia joins EU. Given the accession is not likely to happen any time soon, we do not presently analyze those provisions. 

Serbian-licensed banks will be obliged to provide their existing clients with a master payment services agreement until 1 September 2015, such agreement to take effect from 1 October 2015. Detailed content of the master agreement is prescribed by the Payment Services Act. A failure of the client to decline the master agreement until 1 October 2015 will be deemed a tacit acceptance thereof. In that case, both bank and the client are entitled to unilaterally terminate the agreement until 1 January 2016 without notice. Alternatively, banks can comply with the new law by notifying their clients of the adjustment to their existing agreements and the general terms and conditions supplementing these agreements. The client in that case has the right to unilaterally terminate its agreement with the bank until 1 January 2015. The National Bank of Serbia may prescribe additional harmonization obligations. 

 As a result of the adoption of the Payment Services Act, the Foreign Exchange Act and the Prevention of Money Laundering and Financing of Terrorism Act have also been amended, with the effect from 1 October 2015. 

The Foreign Exchange Act now provides that resident individuals can perform cross-border payment transactions not only via Serbian licensed banks, but also via licensed payment institutions. It also stipulates that payments transactions of residents (individuals and legal entities) arising from cross-border e-commerce can be performed by foreign and Serbian e-money institutions. The Payment Services Act requires foreign e-money institutions participating in such transactions to notify the NBS of their respective corporate details before 1 October 2015 or before they commence servicing Serbian residents, whichever is later. Resident legal entities can perform cross-border payments, other than those arising in the context of e-commerce, only via Serbian licensed commercial banks. 

The Prevention of Money Laundering and Financing of Terrorism Act subjects payment institutions and e-money institutions to the 'Know You Client' procedures and monitoring obligations. Certain exemptions apply with regard to e-money institutions.