Introduction

The EU Payment Services Directive (PSD II 2015/2366/EC) (PSD2) entered into force on January 13 2016. By January 13 2018 all EU member states were expected to have harmonised their respective national laws with its provisions (except the security measures outlined in the regulatory technical standards, which will apply in September 2019). The directive is expected to promote innovation in payment services.

The directive's main aim is to enhance competition in otherwise traditional and closed industries. It orders banks to give licensed third-party providers (eg, fintech and telecoms companies) access to their clients' databases as payment initiation or account information service providers. Banks will do so by opening their application programming interface to third-party providers.

Implementation

In November 2017 a draft of the new Payment System Act, transposing PSD2, was released for public consultation.

The draft defines the information that banks must forward to third parties for each category of payment services and sets limits on forwarding more information than is expressly requested from a bank. The draft also sets requirements for licensing third-party providers by the Croatian National Bank.

Under PSD2 and therefore the Payment System Act, banks and other service providers need not enter into a contract to enable the latter to access information held by banks. Regardless, Croatian National Bank representatives have indicated that they will encourage both parties to contractually define mutual rights and obligations for exchanging information on clients.

The Payment System Act is in the regular parliamentary procedure and the draft was accepted in the first reading on February 16 2018. The second reading and publication will follow. This may be the reason why Croatia (as well as other EU member states) has yet to communicate its PSD2 transposition measures to the EU Commission.

Some local market players are beginning to recognise the directive's scope before it has become applicable. For example, a fintech company is in cooperation with a local bank to provide credit rating services for the bank's clients.

On March 19 2018 a conference organised by the Chamber of Commerce and the Croatian Banking Association was held in Zagreb under the title "PSD2 – Is open banking coming (also) to Croatia?". The general conclusion of the conference was that the directive will create opportunities for both banks and IT companies to grow.

Emerging companies under PSD2 and the Payment System Act may be competitors with or partners to existing market players; however, changes on the market will be gradual and parallel with greater consumer confidence in new services.

Comment

PSD2 represents a new framework for the payment services industry. It lifts limitations in the sector and establishes a regulatory framework for existing market practices. The directive will stimulate cooperation between service providers and replace old service providers with new ones. It will also improve digitisation and other technical aspects of the industry.

For further information on this topic please contact Jelena Zjacic at Macešic & Partners by telephone (+385 51 215 010) or email (zjacic@macesic.hr). The Macešic & Partners website can be accessed at www.macesic.hr.

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