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The new Law on Payment Services - challenges and opportunities for the Albanian banking sector

Gentian CAPOHead of OperationsRAIFFEISEN BANK – ALBANIAWhat kind of changes you expect to occur in your bank, regarding the implementation of the requirements stipulated by the new law?What could be the biggest "threat", the new law could create for banks?Do you think that new payment instruments will be developed and introduced in Albania?1. It is a well-known fact that the Albanian economy is characterized by problems of a high use of physical money (cash) and a low use of financial instruments, by the general public. In these framework, the adoption of the new law on payments, taking into account the PSD2 Directive, is welcomed, as its main objectives are to encourage the intensive use of modern payment instruments, aiming to achieve about 10 "non-cash” payments per capita per year, by end-2022, as well as to increase the opportunities for access to payment accounts, reaching an account ownership ratio at the level of 70% of adult population, by 2022.For our bank, as an entity licensed by the Bank of Albania before the entry into force of the law, additional investments will be needed, in terms of adapting the systems to the new law requirements, as well as rearranging the organizational structures, according to the new legal requirements. The law prescribes stronger requirements for ensuring transparency to customers, and in this regard, requires entities to establish structures and design procedures for alternative dispute resolution with their customers. We are working in this direction, with the aim of ensuring maximum transparency to customers, setting up special structures that will enable the review and resolution of disputes between customers and the bank, as a provider of payment services. 2. Our bank does not consider it as a "threat", but instead an opportunity offered by the presence of this law, to increase the customer base and increase payment volumes. From this point of view, the law will naturally increase competition among entities that will provide payment services, but on the other hand, will increase the variety of payment services, as well as their costs and revenues. As a result of reducing commissions for services that will be provided by various entities, on the one hand, and the increase of customer base/number of transactions, on the other hand, we estimate that the effect of economies of scale will be positive. Raiffeisen Bank has been identified from the beginning as a bank of innovations in the Albanian banking system, by bringing modern banking services and standards, so we consider the presence of the law an opportunity to create a modern and comprehensive payment market, supported by secure and efficient infrastructures, as well as a wide range of payment instruments and services. 3.Raiffeisen Bank, by recognizing the extremely high costs of using correspondent banks for payments in foreign currency within the country, encourages the need for possible interventions in this context, which would bring direct benefits to Albanian citizens, giving them more options for perform their daily transactions, easily and in a cost-effective way.Another development could be the direct debit scheme for the Albanian market, which would bring increased benefits, both from the perspective of consumers and businesses, thus supporting the objective of wider financial inclusion.However, we think that we are late, regarding the need to operationalize the national payroll of Public Administration, which would increase market efficiency and further stimulate competition.