Montenegro’s SEPA system processes more than 93% of citizens’ cross-border transactions worth up to 200 euros and almost 89% of those valued between 200 and 20,000 euros, Central Bank of Montenegro data show. The figures come one year after the country began applying the common euro payments system, which uses shared rules for domestic and cross-border transfers.
Petar Urdešić, vice president of the Payment Transactions Committee of the Association of Banks of Montenegro, described how the system has affected everyday payments and the work required to introduce it. The Association represents the banking sector, and its Payment Transactions Committee was one of the participants in developing the payment system.
Cross-border payments have become part of daily life as students from Montenegro study across Europe, people work for companies in other countries and families live at different addresses. Small businesses also increasingly have customers and suppliers beyond the domestic market. “The way people live and do business changed faster than the way they had been sending money for years,” Urdešić said.
Examples include paying tuition in Slovenia, receiving a fee from Germany and settling an obligation to a supplier in Italy. The system’s capped fees apply to these euro transfers: an individual’s first SEPA transfer of the day, up to 200 euros, can cost no more than two cents. Electronic SEPA transfers of up to 20,000 euros are capped at 1.99 euros.
For a standard electronic SEPA transfer, the funds are sent to the recipient’s bank no later than the next banking business day after the order is received. Each bank defines the processing deadlines. The known cost and predictable timing can help families plan tuition payments abroad and companies manage obligations and cash flows to suppliers in other European countries.
Banking operations adapted for SEPA
Urdešić described predictability as a central benefit for both households and companies, and as something that can be as important as speed in financial services. For a family arranging an overseas tuition payment, knowing the cost and expected timing helps with planning. For a company, those details make it easier to schedule payments to suppliers and manage cash flows.
Introducing SEPA required banks to adapt information systems and procedures for processing and executing payment orders, train employees and apply new technical standards. One important element was ISO 20022, the international standard that defines how financial institutions structure and exchange payment data.
Preparations covered the full transaction flow, from receiving and executing an order to booking, rejecting a payment or returning funds. Banks also had to define in advance how they would handle each of those outcomes. “Good software without a well-defined process is not enough,” Urdešić said.
The work required coordination among technology and operations teams, banks, software providers, the Central Bank of Montenegro and other participants in the payment system. Planning and communication were complicated by the number of interdependencies and demanding deadlines. The central bank had a regulatory, expert and coordinating role in the project.
Banks also worked together during implementation despite being competitors in their day-to-day business. They exchanged experience, resolved common issues and aligned deadlines. Urdešić said the market and payment system were ready, while users did not need to know how much complexity had been involved for the service to feel simple.
The experience showed that a small market could adopt demanding standards, adapt technology and operating processes, and offer a service aligned with modern European banking expectations in a relatively short time. Urdešić described SEPA as a practical example of Montenegro’s European integration, bringing its payment system functionally closer to the rules and standards of the shared European financial area.
Instant payments and fraud checks ahead
SEPA enables citizens to send and receive money more easily and at lower cost, helps small entrepreneurs pay suppliers more efficiently and makes it easier for companies to work with partners in other European countries. Users’ expectations will continue to rise, with payments becoming faster, mobile banking simpler and more services available for handling financial obligations without going to a branch.
Instant payments and related services are a natural next step in the development of payment transactions. But speed alone is not enough, Urdešić warned: a payment system also needs to send money to the right recipient at a known cost and provide security that gives users confidence.
As payments become faster, systems for identifying errors and fraud, checking details and informing users promptly will become more important. Customers should check the IBAN, recipient’s name and amount before confirming an order. Particular caution is needed if someone unexpectedly changes payment instructions or insists that a transfer must be made immediately, because faster transactions leave less time to correct an error.
Before their next euro payment abroad, customers should check whether their bank offers a SEPA transfer and under what conditions. Urdešić said the system had shown that shared standards, coordination and technological modernisation could bring practical benefits to users in a relatively short time.
