The payment system in Albania has experienced a profound transformation in recent years, not only in terms of the legal and regulatory framework but also from the point of view of practical implementation, moving towards modernization to provide a faster, more secure, and comprehensive infrastructure. This process has been a response to the need to meet the requirements of the global market and European standards, including the implementation of SEPA (Single Euro Payments Area), Open Banking, and, most recently, the initiative to launch the project for the use of advanced technology TIPS-Clone (Target Instant Payment Settlement). In this context, the Bank of Albania has played a crucial role, leading this transformation with a balanced approach between technological innovation and prudent regulation.

This comprehensive transformation not only brings Albania closer to EU standards and practices but also significantly improves liquidity and the management of financial flows, benefiting both consumers and businesses and creating a stable basis for economic development and financial inclusion of the entire population.

WHAT IS SEPA AND HOW IS IT BEING IMPLEMENTED IN ALBANIA?

SEPA (Single Euro Payments Area) is a European initiative that aims to unify and standardize payments in euro within participating countries, eliminating cross-border barriers and creating a single financial market for payments. This initiative aims to simplify financial processes, reduce costs, and increase the efficiency of international payments, ensuring a uniform experience for individuals and businesses.

The implementation of SEPA in Albania brings tangible changes for individuals and businesses, including:

-Cheaper cross-border transfers: Through SEPA, the costs of making international payments are significantly reduced, making it more affordable to send and receive funds in euros. This has a positive impact especially on businesses operating in international markets and individuals making personal transfers.

-High transfer speed: The time needed to process payments is significantly reduced. Instead of the several business days previously required for cross-border transfers, SEPA ensures that payments are processed within 1–2 days, significantly improving the efficiency of financial flows.

-Standardization and transparency: The use of a common standard for euro payments, such as the IBAN format for bank accounts and the BIC for identifying financial institutions, simplifies and standardizes procedures, making the process clearer and more predictable for all users.

Banks in Albania have updated their technological systems and integrated the ISO 20022 formats, which are necessary for SEPA compliance. The information campaign by the Bank of Albania and financial institutions will help individuals and businesses understand the benefits and ways to use SEPA.

Albania’s participation in SEPA is an important step towards harmonizing its financial system with that of the EU. This integration helps strengthen economic ties with EU countries, making Albania more attractive to investors and international partners. SEPA also offers Albanian citizens the opportunity to use a European-level payment system, improving their financial experience and helping to build a more open and competitive regional and European economy.

Through this standard, Albania has taken an important step towards creating a modern, secure, and suitable financial system for the demands of the global market.

“OPEN BANKING,” OPENING UP NEW OPPORTUNITIES

“Open Banking” brings a profound transformation in the way individuals and businesses manage their finances, paving the way for more advanced and personalized services. This concept, built on the European payment services directives (PSD2), aims to create a more open financial ecosystem, allowing the secure sharing of financial data between banks and authorized third parties.

In Albania, “Open Banking” has been made possible thanks to the coordinated efforts of the Bank of Albania and financial institutions to update the technological infrastructure and the legal framework. The benefits of “Open Banking” consist of more advanced and personalized services through new applications and platforms. Customers can more easily manage their finances, compare financial products, and make more informed decisions about investments and savings.

The opening of the banking system has encouraged the entry of new players into the market, such as “fintech” companies, which offer innovative services that compete with traditional ones, bringing direct benefits to consumers in the form of lower costs and better options.

“Open Banking” also affects the development of the digital economy and creates an environment where small and medium-sized businesses can develop new applications and personalized services, promoting the development of the digital economy and the creation of new jobs. Technologies such as APIs (Application Programming Interfaces) are the main pillar of “Open Banking,” enabling the sharing of data in a secure and fast manner.

To guarantee security, the Bank of Albania has set high standards for data authentication and encryption, ensuring that only authorized parties have access and protecting users from abuse or cyberattacks. The adoption of “Open Banking” in Albania brings the country closer to European Union (EU) practices by harmonizing the financial system with international standards.

“Open Banking” is not just a technological reform, but a step towards building a user-centric financial ecosystem, capable of facing the challenges of the future and promoting the economic development of the country.

TIPS-CLONE – A CONDITION FOR REGIONAL AND EUROPEAN INTEGRATION AND MODERNIZATION OF PAYMENTS

The modernization of the payment system is an essential step towards meeting the criteria for integration into the European Union (EU). In this context, the creation of a TIPS-Clone (Target Instant Payment Settlement) system represents a strategic initiative to improve the country’s financial infrastructure and adapt it to EU standards.

This system will allow people and companies in Europe to transfer euros within seconds. The TIPS “clone” system is a technical adaptation of TIPS, which provides instant payment services for the Albanian market and potentially for all countries in the region. This purpose was served by the signing of a preliminary agreement for the start of work on this project by the Bank of Albania with the Central Bank of Italy, which is the technical operator of TIPS and which has been joined by the central banks of the Western Balkan countries, including Montenegro, North Macedonia, Kosovo, and Bosnia and Herzegovina.

THE IMPORTANCE OF TIPS-CLONE FOR ALBANIA

The TIPS-Clone system provides a platform for instant payments, which meets the requirements of SEPA. This system not only increases the efficiency and security of financial transactions but also plays an important role in harmonizing Albania’s rules and technology with those of the EU.

Based on the TIPS infrastructure operated by the European Central Bank (ECB), Albania can offer a suitable model for regional integration. The main features of TIPS-Clone are instant payments, 24/7, where the system enables transfers in less than 10 seconds, operating uninterruptedly throughout the year. TIPS-Clone is designed to be compatible with current financial systems, facilitating the transition to a modern infrastructure.

MAIN BENEFITS OF MODERNIZING THE PAYMENT SYSTEM IN ALBANIA

The modernization of the payment system has created new opportunities for the development of technological platforms that provide faster and more personalized financial services to consumers. With the increased use of these platforms, citizens and businesses can benefit from the convenience and ease of conducting financial transactions, reducing the need for intermediaries and reducing the time and cost of making payments.

One of the greatest benefits of modernizing payments is the increase in security and transparency in financial transactions. Technologies such as “Open Banking” ensure a secure sharing of financial data only with the consent of users, enabling individuals and businesses to have full control over their data. High data security and protection from cyberattacks are key issues, contributing to building a reliable financial environment.

The modernization of the payment system has opened up new opportunities for new market players, including fintech innovators, who offer new financial solutions. This has contributed to the creation of a more dynamic and competitive market, where traditional banks and financial institutions have increased the quality and diversification of the services they offer. Consumers benefit from this competition, having the opportunity to choose better and cheaper services.

Individuals also benefit from the opportunity to make instant payments for their daily needs, such as payments for services, “online” products, and for emergency needs. This eliminates delays and offers opportunities to carry out transactions that are safer and faster than traditional payment methods.

The implementation of these technologies has created a more convenient and advanced ecosystem for individuals and businesses in Albania, providing more opportunities, more efficiency, and more security. Increasing competition, modernization of services, and integration of new technologies are essential steps for the country’s economic development and for approximation to European standards. These changes are necessary to support a sustainable and innovative financial system in Albania.

*Academician Prof Dr Anastas Angjeli is economy expert, former Finance Minister and MP, founder and president of the Mediterranean University of Albania

Through this standard, Albania has taken an important step towards creating a modern, secure, and suitable financial system for the demands of the global market.