Name
Global FinTech Guide
Country Name
Croatia
SectionTitle
Payment services
Body
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

The exponential growth of financial industries in Croatia has continued throughout 2021 and due to the challenges of the global Covid-19 pandemic, modern payment services have become more present in day-to-day business. 

A majority of commercial banks in Croatia have developed modern payment services systems for their clients which are based on FinTech, and they are continuing to introduce new models for conducting business.

Even though the evolution of legislature relevant for FinTech has not been following the described growth, on a social scale people have accepted the need to change and transition from standard and ‘classic’ payment services system to new modern ways of FinTech.

Legal affairs

Obligations and requirements to provide payment services or ancillary services described above

In Croatia, provision of payment services is a regulated activity and may be performed only after obtaining a licence from the Croatian National Bank (CNB), which is alongside the Croatian Financial Services Supervisory Agency (HANFA) regulating the financial sector. The Payment Services Act (PSA)  prescribes that all payment services listed in the PSA require a licence, with explicit exceptions (e.g. payment transactions in cash, transport of cash, exchange services provided in cash etc.)

In general, payment services may be provided by payment service providers that include inter alia (i) credit institutions; (ii) (small) electronic money institutions; (iii) payment institutions; (iv) registered account information service providers, established in Croatia or in another EU Member State or from a third country through its branch in Croatia; and (v) CNB (when not acting as a monetary or public authority). Entities established in another Member State are required to provide payment services within the limits of the approval issued by the competent authority of the respective Member State.

The requirements and documents necessary for obtaining a licence from the CNB are prescribed in the PSA and include, inter alia, Articles of Association of the applicant, business plan, list of payment services to be performed, descriptions of risk management systems, organisational structure, initial capital requirements etc. A fee to the CNB is payable by the applicant in connection with processing of the application.

Minimum capital requirements for payment institutions in Croatia range from approx. EUR 20,000 to EUR 125,000 depending on the payment services in question. 

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

Even though financial technologies enter more and more segments of Croatian society, legislation that should provide a framework for FinTech companies and their business conduct remain mostly unregulated. There are still no laws governing FinTech, blockchain, or artificial intelligence, even on an EU level. Majority of existing EU legislation regarding FinTech has been transposed into Croatian laws, either as amendments or implementation acts. 

Economic conditions

Market size for payment services and biggest payment service providers

Croatia is a growing market for payment services and could become one of the leading FinTech destinations of Southeast Europe. Several Croatian-based companies have made the Financial Times’ list of Europe’s fastest-growing companies (e.g. Oradian, Microblink) in this sector. There is no available data envisaging the payment services market by a specific service provider, however, the CNB provides a list of all registered payment institutions in Croatia with the list of payment services at the following link

Generally, the payment services market in Croatia is dominated by banks, and the largest banks in Croatia are Zagrebacka banka and Privredna banka Zagreb, which together held 47.2% of the total assets of the banking sector in 2021. 

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

N/A.

Authors

Disclaimer

© 2022, Ilej & Partners, in cooperation with Karanovic & Partners. All rights reserved by Ilej & Partners, in cooperation with Karanovic & Partners as author and the owner of the copyright in this chapter. Ilej & Partners, in cooperation with Karanovic & Partners has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this guide.

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

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