Cashless Serbia: How Partnership with Public and Private Partners Holds the Key to a Prosperous Economy
In Serbia, Visa is supporting a ground-breaking new initiative, working with partners across government and business, to increase the awareness and acceptance of cashless payments in the country. Here, Visa and its fellow stakeholders explore how they set out to achieve their shared goal of stimulating digital inclusion in Serbia – and its potential for the wider region.
From dentists to taxi drivers, bakeries to boutiques, businesses across Serbia are benefitting from the roll-out of up to 25,000 new, free POS (Point-of-Sale) acceptance devices, including Tap to Phone and eCommerce locations1 that will help to bring them into the digital economy. That is just one of the pillars of a nationwide card acceptance growth initiative already underway, that demonstrates the importance of partnerships between public and private partners in payments, and how, crucially, they can benefit all participants in a market.
Initiated in June 2021 and set to conclude in December 2025, the innovative project has seen Visa unite with partners across the public and private sectors, including the Serbian Ministry of Finance, local organisation National Alliance for Local Economic Development (NALED), German development agency Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), and another US payment networks active in Serbia. Their common aim is to develop the infrastructure and an enabling policy environment for Serbia’s cashless economy, and, in the process, to spread knowledge and best practices.
“Serbia has a significant shadow economy and cashless payments are one of the key instruments for improving the transparency of financial transactions and boosting fair competition. It was clear that there is a strong need for a joint, industry-wide initiative to turn things around. This is why, with the support of Visa, Mastercard and GIZ we have established the National Cashless Payment Initiative – Better Way” says Milica Stefanovic, Communications and Development Director at NALED.
Specifically, the goal is to level the playing field for business, fostering economic development, while increasing public revenue and improving services as a result. As Sinisa Mali, Serbia’s Minister of Finance, explains: “Cashless payment, along with eFiscalization and eInvoices, represents one of the three pillars of a transparent economy and fair competition, and that is what we want to support through this initiative and the National Program for Combating Shadow Economy.” He adds, “NALED's research showed that in the previous five years, the grey economy decreased by three percentage points” and that Serbia is further incentivising "small and medium-sized enterprises which will further encourage the reduction of the grey area”.
Growing Serbia’s Cashless Economy
Serbia offers the initiative’s partners a significant opportunity to help cashless payments proliferate across the country. The government recognises the importance of addressing Serbia’s existing ‘cash habit’, which is coupled with an underdeveloped acceptance network (the number of POS terminals in the country is less than half the European average3). Just taking Serbia’s cashless economy closer to the CEE (Central and Eastern Europe4) average could shrink the country’s shadow economy – which accounts for 33.5% of Serbia’s GDP5 – by around 3.4% of GDP, representing a potential annual tax boost of around 700m euros6. Milica Stefanovic, Communications and Development Director at NALED notes, “when we started to discuss with Visa the prospect of starting a nation-wide initiative for fostering cashless payments in Serbia, there was a huge acceptance gap for cashless payments in our country, especially in the SME sector. The number of POS terminals in Serbia was around 100.000 – which was two times less than the European average”.
To achieve its objectives, the initiative has four key pillars, or work packages, which are designed to drive the development of all types of cashless payments, from cards to mobile wallets and next-generation payment methods, offering Serbians as much choice as possible7. Their main goals are:
1) Support the government to develop policy and regulation around cashless payments, from knowledge exchange to analyzing obstacles.
2) Distribute and enable 25,000 POS acceptance devices, free of charge in the first year increasing their number in the market by about 20% - to encourage businesses, entrepreneurs, and public institutions8 to enter the digital economy. They can also choose the type of acceptance solution that best suits their needs and benefit from a reduced merchant discount rate (MDR), by acquiring banks.
3) The partners behind the programme are working to raise awareness around the benefits of access to the cashless economy, from developing educational materials and a specialized website to acting as a one-stop-shop for information and launching PR and digital campaigns as well as hosting a new annual national conference on cashless payments and the shadow economy.
4) Finally, work package focus on sharing knowledge in this area on a regional level, working with political decision-makers and government representatives from other West Balkan markets.
Partnership with Government
To bring the initiative to life, Visa is working closely with the Serbian government, building on its existing relationships and remains in contact since its launch. By boosting cashless payments, the initiative supplements the government’s efforts to introduce eFiscalization (where turnover is recorded through electronic fiscal cash registers) and target the shadow economy – by boosting cashless payments and supporting its focus on inclusion.
With an overwhelming majority (97%) of registered companies being micro or small businesses9, the Cashless Serbia initiative means many more of the country’s SMEs are being brought into the digital economy and are becoming more competitive in the process. As Visa’s General Manager for South-East Europe, Vladimir Djordjevic says: “Our research10 showed that an increase in digital payments of just 5% over 5 years could reduce the size of the shadow economy by up to 13%. That is why the development of a cashless society is one of the priorities that we share with the government.”
Cashless Serbia: Forging Partnerships
When the Cashless Serbia initiative was launched, it was not clear how many acquirers would be willing to participate. In practice the interest expanded rapidly and currently the initiative secured the support and participation of nine out of a total of ten acquirers operating in Serbia.
Hopes for the Future
The project has clear, measurable goals and is based on sustainable principles embedded in a framework of political strategies which target long-term impact. In its beginning stages over 100 applications were received in a week alone. The initiative supports and reinforces a development process grounded in broad political and societal will. Government strategies such as the national program for countering the shadow economy, also provide an institutional platform for involving a broader donor community and obtaining support for joint projects with businesses.
Beyond that, there is potential for this public-private model to be rolled out more widely. With the Serbian initiative being one of several such projects backed by Visa – a similar scheme, Cashless Poland, also saw a partnership between public and private actors boost acceptance through deploying new POS terminals – there is potential for other countries to be interested. The future of payments, it seems, will be collaborative.
“The Serbian cashless initiative confirms the importance of fostering industry-wide partnerships with public and private partners which help to build digital payment infrastructure. Tackling the shadow economy remains an important roadblock that requires multiple stakeholder engagement and Cashless Serbia is a prime example of how effective this can be”, Salvador Perez-Galindo, Senior Vice President and Head of Government Relations, Visa CEMEA.
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1Cashless Initiative Serbia ‘Better Way’ Visa insights, 2022
2The National Cashless Payment Initiative is a joint project between Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and Visa and Mastercard companies, implemented within the PPP program of the German Federal Ministry for Economic Cooperation and Development (BMZ) in partnership with NALED and the Ministry of Finance of the Republic of Serbia.
3Number of POS terminals per 1m inhabitants as of 2017; Source: Submission of project concept, ECB
4Bulgaria, Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Romania, Slovenia, Slovakia. https://www.cbs.nl/en-gb/news/2018/31/international-road-haulage-over-4-percent-up-in-2017/cee-countries--ceecs--
5As of 2019; The Impact of an Increase in Cashless Payments on the Shadow Economy and Public Finance in Serbia (2022), FREN (there are different estimations of the level, depending on the method used).
6The Impact of an Increase in Cashless Payments on the Shadow Economy and Public Finance in Serbia (2022), FREN
7Cashless Initiative Serbia ‘Better Way’, Visa Insights, 2022
8That have not accepted cashless payments in the past year
9Cashless Initiative Serbia ‘Better Way’ Visa Insights, 2022
10Cashless Initiative Serbia ‘Better Way’, Visa Insights, 2022
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