Radovan Jelašić: The development of payment cards in Serbia
Speech by Mr Radovan Jelašić, Governor of the National Bank of Serbia, in the Serbian Chamber of
Commerce on the occasion of the annual meeting dedicated to payment cards, Belgrade,
8 June 2007.
* * *
Ladies and Gentlemen,
It is a pleasure for me to greet you on behalf of the National Bank of Serbia on the occasion of annual
meeting of the Chamber of Commerce of Serbia dedicated to the development of payment cards
business.
Before discussing the topic of the meeting itself, allow me to point out three details related to the
general economic situation in the country which very much affect the progress of card business in
Serbia.
•
Very many people, I may even say, most people, including myself, do not and can not
remember the times when inflation in Serbia was lower than it is today. The reason is very
simple, they were not born yet! The rate of inflation which is lower than the currently
prevailing 4.4 per cent, and 3 per cent for core inflation, was last recorded, would you believe
it, 44 years ago, that is in 1963. I am convinced that the current low inflation rate will help the
development of card business and make it cheaper and more attractive because expansion
of the network actually represents the highest fixed cost element.
•
I am honoured to be the first governor in a number of decades who can spend his day in
office without even having to mention the word "exchange rate". Since Monday this week
when regular daily exchange rate fixing was abolished, the NBS dived with full force into the
waters of managed floating exchange rate with the emphasis on "floating" rather than on
"managed". Those not happy with the exchange rate for the dinar will have to submit their
complaints to the market and not to the NBS, and the other way around, those happy with
the exchange rate will have to give their thanks to the market.
• As negotiations related to stabilization and association with the EU continue, in addition to
the money from Brussels, numerous foreign investments, and hopefully a better credit rating,
Serbia will get one more thing, which I think is the most important one, and that is a
CHANCE to show and prove who and what it really is and what it has done so far in terms of
attempts at reform. If the politics represent a stumbling block, you are never given a chance
to present or prove for what you are worth!
The results achieved in the domain of development of card business in Serbia in the course of the last
four years are really imposing as is proved by the following:
•
Number of cards issued has reached 5.6 million and was increased by as much as 2.2
million in the course of the last four years alone;
•
Half of the above number of issued cards are DinaCards;
•
Almost 70 million transactions in Serbia were performed via payment cards in the course of
the last 12 months, of which 6.5 million in May alone;
•
There are over 50,000 POS terminals, and
•
almost 1800 ATMs in Serbia today.
The time has come for us to make another step - a step towards improving the quality of payment
cards business in Serbia. This step shall certainly take place in the course of this year by way of
improving quality of service and increasing the number of options on offer, like payment via mobile
telephone or on-line, which has recently been enabled through the DinaCard system.
One of the major issues thrust upon us by the standards achieved so far in respect of card business in
Serbia, are the costs of payment system and the so called trade fees. In view of the fact that the level
of guaranteed fee, interchange rate, to be retained by the card issuer in international card systems is
disproportional to the level of fees in the EU member countries and that the gap will only widen further
after a new set of rates is becomes applicable from 1 January 2008, the NBS has, following into the
footsteps of the European Central Bank, decided to actively engage in improving efficiency of card
payments and the resulting relationship between banks and trades people.
I wish to inform you of the steps we intend to take to remove this anomaly, such as:
•
Introduce a system of interchange rates from 2 September 2007 instead of applying fixed
trade fees, that is a system in which banks and trades people will be free to regulate their
mutual relations on their own.
•
Make a comprehensive analysis of costs of payment systems as well as relations between
banks and trades people in the course of next three months so as to be able to make an
informed conclusion on the optimum level of interchange rate to be applied on the use of
cards issued in Serbia.
On this occasion, however, the NBS invites banks to reach an agreement among themselves in the
near future as to the applicable level of interchange rate that would provide for a more efficient
payments system and to attempt to substitute NBS regulations by introducing self-regulating measures
in this area. The interchange rate to be applied in the DinaCard system will be 0.7 per cent of the
purchase value for majority of trades people (and 0.25% for petrol) which shall be a temporary
measure pending comprehensive agreement among banks to apply to all bank cards issued in Serbia.
I wish to conclude by reminding you that the NBS has recently, through the National Centre for
Payment Cards, also become a member of the Berlin Group, one of the initiatives for linking national
card systems in Europe in line with the SEPA initiative. This was a necessary step to prepare us for
joining European integrations in the area of card business for which purpose the NBS shall continue to
monitor closely the development of regulatory bodies worldwide and shall undertake all measures
needed.