Limited network

Published: 29/3/2019 Modified: 29/9/2022
The Croatian National Bank is the competent authority to which the providers of limited network services are obliged to provide a notification if the total value of payment transactions executed over the preceding 12 months exceeds the amount of HRK 7,500,000.00.

Obligation to notify the Croatian National Bank on activities (services) referred to in Article 5, item (11), sub-items (a) and (b) of the Payment System Act (OG 66/2018 – hereinafter referred to as 'Act'), not deemed to be payment services (hereinafter referred to as 'limited network services'), is prescribed in Article 6, paragraph (1) of the Act.

Criteria, factors and information taken into account by the Croatian National Bank in the assessment of limited network services are also set out in the Guidelines of the European Banking Authority (EBA) on the limited network exclusion under the Payment Services Directive (PSD2) – (EBA/GL/2022/02).

Entities subject to notification on limited network services

Entities subject to notification are providers of limited network services – companies and crafts carrying out one of or both activities referred to in Article 5, item (11), sub-items (a) and (b) of the Act (hereinafter referred to as 'service providers') in the Republic of Croatia if the total value of payment transactions executed by carrying out these activities over the preceding 12 months exceeds the amount of HRK 7,500,000.00.

The calculation of the total value of payment transactions of HRK 7,500,000.00 is carried out at the level of each service provider. Where a single service provider provides services based on more than one payment instrument that can be used only in a limited way, the calculation of the mentioned threshold is carried out by adding up all payment transactions executed in the Republic of Croatia with all payment instruments that can be used in a limited way (such as cards, payment applications, etc.), offered by the same service provider.

Entities subject to notification to the Croatian National Bank are companies and crafts established in the Republic of Croatia, as well as service providers from other EU Member States issuing payment instruments that can be used for the payment of goods or services within the limited network service in the Republic of Croatia and if the value of payment transactions executed using such instruments over the preceding 12 months exceeds the amount of HRK 7,500,000.00.

At the same time, service providers issuing a payment instrument that can also be used for the payment of goods or services within limited network services in other EU Member States are reminded that, if the value of payment transactions executed with such instruments exceeds EUR 1,000,000.00 million, they are obliged to send the notification to the competent authority of the other Member State pursuant to the provision of the national regulation of that Member State transposing the provision of Article 37, paragraph (2) of Directive (EU) 2015/2366 on payment services in the internal market (PSD2).

Activities subject to notification – limited network services

Activities referred to in Article 5, item (11) of the Act for which the notification obligation is prescribed are activities based on payment instruments that can be used only in a limited way, that meet one of the following conditions:

  • allowing the holder to acquire goods or services only in the premises of the issuer or within a limited network of service providers under direct commercial agreement with a professional issuer; and
  • which can be used only to acquire a very limited range of goods or services.

The term “payment instruments that can be used only in a limited way” includes payment instruments with a limited use, i.e. those used for a specific purpose (e.g. store cards, cards and similar means used in public transport, parking tickets, membership cards, cards and similar means of payment of tolls, ENC devices, etc.), unlike payment instruments issued by payment service providers that are broadly used for the payment of goods and services of a large number of different merchants on the market (e.g. Maestro, Mastercard, Visa, Diners, American Express cards, etc.).

The term “activities based on payment instruments that can be used only in a limited way” includes payments using payment instruments with a limited use, irrespective of whether the user (holder) pays the funds to the issuer of the payment instrument subsequently (postpaid payment instruments) or in advance (prepaid payment instruments).

Activities not subject to notification

Payment transactions based on instruments such as coupons, vouchers or cards issued by an issuer to its employees or to another company purchasing such instruments for its employees from the issuer based on agreement (e.g. for the purpose of Christmas or Easter gifts, etc.), all for the purpose of purchases at the issuer's stores for personal needs of employees, are not the value that is calculated in the total value of payment transactions under Article 6, paragraph (1) of the Act.

Issuers that issue only such instruments do not have the obligation to notify the Croatian National Bank of the described activity. Also, the obligation to notify the Croatian National Bank does not apply to the merchants that have enabled the purchase, based on agreement with other companies, at their stores for employees of those companies based on subscription or personal identification of such employees for the purpose of spending up to a certain amount.

Examples of use of payment instruments in limited network services

  • for payment instruments allowing the holder to acquire goods or services only in the premises of the issuer: e.g. gift cards of a particular store that can only be used for payments in that store or in the chain of stores of the same issuer (in the physical premises of the issuer)
  • for payment instruments such as payment cards or applications etc., allowing the holder to acquire goods or services only within a limited network of service providers under direct commercial agreement with the issuer of the payment instrument (physical points of sale and/or online sale): e.g. cards that can be used for payments in a particular shopping centre
  • for payment instruments such as payment cards or applications etc. that can only be used to acquire a very limited range of goods or services: e.g. fuel cards that can be used for the purchase of fuel and a limited range of goods or services functionally connected with fuel

When the notification should be submitted to the Croatian National Bank

An entity subject to notification is required to send to the Croatian National Bank the first notification on the limited network service within 30 days of the date when conditions for notification are met.

The conditions for the notification are met if the total value of payment transactions executed by carrying out the activities within the limited network service in the previous 12 months or in a period of less than 12 months exceeds the amount of HRK 7,500,000.00.

The entity subject to notification is required to provide to the Croatian National Bank each subsequent notification on the limited network service on an annual basis, for the period from 1 January to 31 December, no later than by the end of February of the current year for the period of the previous year, each year, as long as the conditions for notification are met.

Manner of submission of the notification to the Croatian National Bank

The PDF document should be downloaded to the computer and completed in the Adobe Acrobat Reader DC programme.

The notification obligation referred to in Article 6, paragraph (1) of the Act is fulfilled by sending the following documentation to the Croatian National Bank to the e-mail address dnpp@hnb.hr:

  • Notification of limited network services form (OMI Form)
  • Annex to the OMI Form – Description of the limited network service and
  • Statement (made for the purpose of determining if the conditions for the exclusion referred to in Article 5, item (11), sub-items (a) and/or (b) of the Act are met) signed by the craftsman or the legal representative or legal representatives of the company in accordance with their authorisation for representation.

At the request of the Croatian National Bank, the service provider notifying the Croatian National Bank in the described manner is also required, in accordance with Article 6, paragraph (2) of the Act, to submit other information.

In the case of need for additional clarifications with regard to the obligation to notify or completing the documentation submitted to the Croatian National Bank, the service provider can send a query to the above e-mail address.

Decision of the Croatian National Bank

The Croatian National Bank, based on the notification and the information submitted, determines if the conditions for the provision or the continuation of the provision of limited network services are met.

Where the Croatian National Bank estimates that it is not justified for the service provider to continue providing limited network services, the service provider will be ordered by a decision to submit to the Croatian National Bank the appropriate request for the purpose of obtaining the status of a payment service provider or to comply with the limitations referred to in Article 5, item (11) of the Act in the manner indicated in the decision within the deadline determined by the Croatian National Bank (which cannot be less than 90 days).

Publishing of data on service providers

Service providers that have sent the notification to the Croatian National Bank in accordance with Article 6, paragraph (1) of the Act (notification of limited network services) that also meet the conditions for the continuation of the provision of limited network services, as well as the description of activities carried out by the service providers, are entered in the register kept by the Croatian National Bank and in the central register kept by the European Banking Authority.