Payment system

A payment system is a part of the country’s financial infrastructure enabling the transfer of funds between participants in the system, financial institutions and other participants. The functioning of payment systems is regulated by operating rules which define the execution of transactions (processing, netting and settlement of transfer orders) and participants’ obligations and responsibilities.

The safety and efficiency of payment systems is particularly important for the central bank given its main competences – the preservation of confidence in the national currency and ensuring financial stability.

Payment systems enable the timely execution of monetary obligations arising from economic activity of various entities. They are systemically important for the economy – for money to fulfil its main function as a medium of exchange, payment systems must be reliable and efficient. In this way, they ensure public confidence in money.

Smooth functioning of payment systems is also exceptionally important for successful conduct of the central bank’s monetary policy because they represent the transmission mechanism for everyday monetary operations and thus determine the speed, costs and efficiency of monetary policy implementation.

Participants in the Republic of Serbia’s payment system can be:

• National Bank of Serbia;
• bank;
• electronic money institution;
• payment institution;
• public postal operator headquartered in the Republic of Serbia and established in line with the law regulating postal services;
• investment company headquartered in the Republic of Serbia and operating in line with the law regulating the capital market;
• Republic of Serbia, autonomous province or local self-government unit, public body, company and other legal person founded and guaranteed by the Republic of Serbia;
• operator of other payment system;
• Central Securities Depository and Clearing House, or other operator of the system for the settlement of financial instruments.

Payment systems are important because they enable payment service users who have payment accounts with different payment service providers to make their everyday payments or transfers to recipients’ accounts in a fast and simple way. Payment service users, natural and legal persons, make their payments by issuing to the payment service provider a payment order (instruction) for the execution of a payment transaction (pay-ins, transfers or pay-outs), based on which the provider executes the payment transaction in the system in which it participates.

Payment services in the Republic of Serbia can be provided exclusively by the following payment service providers, in line with the Law on Payment Services:

1. bank;
2. electronic money institution;
3. payment institution;
4. National Bank of Serbia;
5. Treasury Administration or other public bodies in the Republic of Serbia, in line with their statutory competences;
6. public postal operator headquartered in the Republic of Serbia and established in the line with the law regulating postal services.

There are eight payment systems in the Republic of Serbia. The National Bank of Serbia operates the following:

1. RTGS payment system;
2. Clearing payment system;
3. Interbank FX clearing system;
4. International FX clearing system;
5. DinaCard clearing system;
6. IPS.

The Association of Serbian Banks operates the following payment systems:

1. Cheque clearing;
2. Direct debits clearing.

The stability of a country’s financial system largely depends on proper functioning of the payment system. Transaction safety, continuity of payment system availability, speed of transfers and execution of transactions at affordable prices are important indicators of proper functioning of a payment system. Without them, it is impossible to ensure adequate functioning of the financial system of a country.