Montenegro and Albania are the first countries in the Western Balkans to join the Single Euro Payments Area (SEPA), a European Union initiative aimed at simplifying and standardizing payment transactions. SEPA allows for faster, cheaper and more secure transfers in euros between member countries.
In addition to Montenegro and Albania, SEPA includes all 27 European Union countries, as well as Norway, Liechtenstein, Switzerland, Monaco, Iceland, San Marino, Andorra, Vatican City and the United Kingdom.
What does SEPA mean for citizens and businesses?
SEPA transactions come with lower fees compared to traditional international payments, and the transaction processing time is typically within two days.
For businesses, SEPA simplifies cross-border transactions and reduces costs, improving efficiency. It also opens doors to more opportunities, fostering greater competitiveness on the international market.
How does SEPA work?
Before SEPA, cross-border transactions were slower and more expensive than domestic ones. With SEPA, a common set of rules, technical standards, and infrastructure eliminates these barriers.
In SEPA, there will be no intermediary banks. Payments are processed through a streamlined system, allowing money to be sent and received as if it were a domestic transaction.
SEPA also includes direct debits, enabling recipients (such as utility companies or subscription services) to collect payments directly from the payer’s account with their consent.
Example of a SEPA transaction
When a citizen or business in Montenegro wants to send money to someone in Croatia, they will need to provide their bank with the IBAN (International Bank Account Number), BIC (Bank Identifier Code), and the amount in euros. The bank will then process the payment, and the recipient’s bank will handle the transfer and release the funds.
Benefits for the Montenegrin economy
SEPA integration will boost international investor confidence in Montenegro’s financial sector, potentially attracting more foreign investments. It will also enable the development of new financial products and services, such as digital wallets and mobile payment apps.
When will SEPA start being implemented?
Montenegrin financial institutions will start joining SEPA payment schemes in April 2025, with operations likely beginning later that year. The European Payments Council will announce the exact date when Montenegrin institutions can start offering SEPA payment services.
Procedure for sending money under SEPA
For example, Boris from Montenegro wants to send 100 euros to his friend Petar in Croatia. Petar provides Boris with his IBAN and BIC details. Boris then uses his bank’s mobile app to make the SEPA transfer. After confirming the transaction, the money will be transferred to Petar’s account in Croatia, typically within one business day.
If Boris does not have mobile banking, he can go to a bank that supports SEPA payments to make the transaction.
