Why Montenegro does not meet PayPal's requirements, and its citizens have been able to use the service exclusively for payments and not for receiving money for more than ten years, is not the real question - the real question is who has an interest in maintaining such a situation. The restriction on receiving money benefits domestic banks under foreign ownership, as well as foreign financial institutions, which control foreign exchange flows in the country.
This, among other things, is what Dejan Abazović, a master's degree holder in electronics and telecommunications, IT consultant and former state secretary at the Ministry of Public Administration (MPA), said in an interview with "Vijesti".
For "Vijesti", he lists the advantages of PayPal and alternative services, and says that if Montenegro wants to progress in the digital economy and become competitive in the global market, it is necessary to review the current situation and provide citizens and businesses with better access to international financial services.
Over ten years of promise
After being announced for several years, PayPal became available to users in Montenegro in 2014. At that time, it was possible for users from Montenegro to pay for services online from their PayPal accounts. To date, it has not been possible to receive money to PayPal accounts, although there were announcements that this would happen.
After ten years, the Regional Cooperation Council took over negotiations with PayPal from the state, specifically the Ministry of Public Administration. They officially approached PayPal on behalf of the Western Balkans at least three months ago, but, as they recently told "Vijesti", they have not yet received a response from the company.
For years, the main question regarding PayPal has been who will decide whether users in Montenegro will receive the full PayPal service. And this has been communicated differently: PayPal previously claimed that the two-way service is hindered by regulations in Montenegro, while Montenegrin institutions denied this, stating that the service depends only on PayPal.
Abazović believes that this is not the right question.
"The real question is not why Montenegro does not meet PayPal's requirements, but who has an interest in maintaining this situation," he says.
According to Abazović, the explanations that have been heard over the years in response to the question of why there is only a "send" function in Montenegro, for sending money, and not a "receive" function, for receiving money to PayPal accounts, are technical or regulatory in nature.
"The fundamental problem lies in the way the Montenegrin financial market is structured. The restriction on receiving money benefits domestic foreign-owned banks and foreign financial institutions that control foreign exchange flows in and out of the country, while at the same time leaving citizens and businesses at a disadvantage," he said.
Foreign currency accounts, foreign banks...
Every natural and legal person who wants to receive money from abroad must use foreign currency accounts in commercial banks, explains Abazović, adding that banks "charge significant commissions for receiving and withdrawing funds" for this service.
If citizens and businesses in Montenegro were allowed to receive money to PayPal accounts, it would also mean a "cheaper and more efficient way of doing business."
"Which would reduce the profits of domestic banks and their control over capital inflows," says the "Vijesti" source.
Abazović adds that, in addition to foreign-owned domestic banks, a significant factor is also large foreign financial institutions operating in Montenegro, as well as correspondent banks, through which international transfers pass.
"These institutions have a direct financial interest in transactions going through their channels, because that's how they generate additional revenue. Allowing PayPal to operate without their mediation would mean reducing their control over financial flows in the country," he said.
Abazović recalls that over the last fifteen years, various Montenegrin governments have tried to establish cooperation with PayPal and enable the full functionality of that platform.
"However, each attempt has been left without a clear answer and result. PayPal, as a company, makes decisions based on its own assessments of risk, profitability and regulatory compliance, but there is a reasonable suspicion that this decision is also influenced by a network of financial interests that this platform does not want to disrupt. Montenegro, as a small market with little influence in global finance, is probably not in a position to impose changes in its favor," he believes.
According to him, the influence of international financial institutions may also play a role.
"For the last three decades, Montenegrin economic policy has been strongly influenced by international financial institutions, with key decisions often being made in accordance with the interests of major global players, and not necessarily the domestic economy and citizens. The lack of strategic economic sovereignty has resulted in Montenegro not having enough power to shape the rules of its financial system for the benefit of its citizens, but rather leaving them to a system that is more in line with the interests of foreign banks and institutions," says the interlocutor of "Vijesti".
Such a financial model, according to him, has long-term negative effects: it limits the development of the digital economy and entrepreneurship, encourages the "grey economy" and increases the emigration of skilled labor.
"Montenegrin businesspeople and freelancers are forced to use expensive and complicated methods to receive payments, which reduces their competitiveness in the global market. Due to the inability to legally receive money via PayPal, many citizens turn to informal channels, which further complicates the monitoring of financial flows and reduces the state's tax revenues. Young professionals working for foreign companies often open accounts in other countries or make decisions to move permanently in order to have unhindered access to global finances," says Abazović.
Although PayPal does not allow receiving money in Montenegro, adds the "Vijesti" interlocutor, this does not mean that citizens and businesses are without options.
"There are a number of alternative methods that enable the inflow of funds from abroad, but each of them comes with its own advantages and limitations," he says, listing possible alternatives: Wise, MoneyGram, Stripe, cryptocurrencies...
SEPA i PayPal
As one of the solutions, Abazović cites SEPA (Single Euro Payments Area), a unique area in which transactions in euros are carried out according to the same standards, regardless of borders. When asked whether SEPA is a solution for Montenegro, compared to PayPal, he says that it depends on the needs.
“SEPA transactions are often cheaper, especially for larger amounts. SEPA allows for standardized transactions within the European Union, which makes payments between different countries easier. Payments are usually fast, especially SEPA Instant payments which are processed within seconds,” he lists some of the advantages.
He adds that SEPA payments are regulated by EU legislation, and that this ensures a high level of security and consumer protection.
As a disadvantage, he cites that the SEPA system is primarily available within the EU and a few other countries, and says that this limits its use outside that area.
In addition, SEPA does not have all the functionalities that PayPal offers, such as easy refunds or integration with online stores, SEPA transfers are not available 24/7, as they depend on bank opening hours, SEPA requires opening a foreign currency account at a bank and basic banking infrastructure.
"Which means that users must be familiar with the work of banks and the use of IBAN numbers," he says, adding that commercial banks may require additional formalities and confirmations for international transfers.
Speaking about the advantages of PayPal, Abazović states that the service is available in almost all countries around the world, making it ideal for international transactions.
"PayPal offers various services such as refunds, buyer protection and easy integration with online stores, it has a simple and intuitive user interface that is easy to use, transactions are usually fast, especially for smaller amounts and international payments, it is ideal for use on e-commerce portals," he explains.
As disadvantages, he states that PayPal is more expensive than SEPA, as it has higher transaction fees, especially for international payments and currency conversion.
"Although PayPal allows for almost instant transactions, withdrawing funds to a bank account can take several days, depending on the bank and region. Although PayPal is secure, there are also cases of fraud and abuse, which can be a risk for users," says Abazović, adding that PayPal requires an internet connection to perform transactions, "which can be a limitation in situations where the internet is not available."
How to proceed
If Montenegro wants to progress in the digital economy and become competitive in the global market, says the interlocutor of "Vijesti"; it is necessary to review the current situation.
"And to provide citizens and businesses with better access to international financial services. The PayPal issue is not just technical or regulatory, but economic and strategic - as long as financial resources can leave the country but not enter, Montenegro will remain a market of limited opportunities, where the interests of powerful financial players override the needs of its citizens," he says.
He added that due to low fees and standardization, SEPA is ideal for intra-European transactions, while PayPal is a better choice for international payments and flexibility.
"Both systems have their advantages and disadvantages, so the choice should ultimately depend on the specific needs of the user," says Abazović.
What are the alternatives?
WISE (formerly TransferWise), known for its transparent exchange rates and low fees for international transfers, allows you to receive money directly to a foreign exchange account in Montenegro.
Advantages: low fees, competitive exchange rate, easy to use.
Disadvantages: it is necessary to have a foreign currency account at a bank.
PAYONEER offers virtual bank accounts in foreign currencies (USD, EUR, GBP), making it ideal for freelancers and online businesses.
Advantages: suitable for international transactions, supports withdrawals to local bank accounts or ATMs.
Disadvantages: high fees for withdrawals and currency conversion.
SKRILL, a digital wallet, which allows receiving and sending money, as well as online payments.
Advantages: fast transfers, support for multiple currencies.
Disadvantages: transaction and currency conversion fees.
REVOLUT service that offers international transfers, foreign exchange accounts and cards for online payments.
Advantages: low fees, good exchange rate, ability to manage money via the app.
Disadvantages: may require opening an account abroad.
WESTERN UNION is a service that enables fast international transfers, and money can be withdrawn in cash at locations throughout Montenegro.
Advantage: fast transfers, wide network of locations for withdrawing money.
Disadvantages: Fees are high compared to other options.
MONEYGRAM, similar to Western Union, allows for fast international transfers with the option of cash withdrawal.
Advantages: Similar to WU, MoneyGram offers fast transfers and is widely available.
Disadvantages: fees higher compared to other options.
CRYPTOCURRENCY (Bitcoin, Ethereum...): platforms such as Binance and Coinbase allow you to receive and convert cryptocurrencies into fiat money.
Advantages: low fees, decentralized system, fast transfers.
Disadvantages: exchange rate volatility, you need to know cryptocurrencies to use these services.
LOCAL PAYMENT SYSTEMS, their advantage is easier integration with domestic banks and the Post of Montenegro, but they have “limited international support”.
SWIFT bank transfers, the classic way to receive money through a foreign exchange account. The advantage of this system is that it is safe and reliable, but the fees are high and the processing time is longer than other services.
STRIPE is ideal for online businesses and digital products, but registration is required in supported countries.
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