Uncharted Waters: Moldova’s Foray into Digital Finance

The Republic of Moldova is making great strides in the adoption of digital financial products and services. This article briefly explores Moldova’s digital finance evolution from 2020 to 2023, highlighting the challenges faced by regulators, financial institutions, and payment service providers.

There has been a surge in digital financial tools designed to be more user-friendly and secure than traditional banking options; from lightning-fast mobile payments to virtual banks at your fingertips, these innovations are empowering new key players in the local market.

As of 2023, Moldova has two main guiding strategies for its digital finance future:

The National Bank of Moldova (NBM) and the National Commission for Financial Market (NCFM) are the financial and non-financial sector regulators. In 2023, NBM's regulatory reach was extended to include credit and insurance companies, with the aim of further consolidating the financial market and providing equal opportunities to all players, including those in the micro-finance and insurance sectors. NBM leads the charge in Open Banking reforms.

Moldova has transposed PSD2 into its legal framework through the Law on Payment Services and Electronic Money No 114/2012 (“Law 114/2012”). Law 114/2012 aligns Moldova's payment services with PSD2 regulations, covering aspects like payment instrument issuance, remittances, payment account information services, account management services and payment initiation services. Key PSD2 provisions, transposed through Law 114/2012, came into force in 2023, and primarily concern payment service providers (PSPs).

2024 is a pivotal year for Moldovan open banking. Provisions on the recognition of third-party providers will come into force in August 2024. In preparation, the NBM is:

Payment services in Moldova can be rendered by banks, PSPs, electronic money institutions, and postal service providers, subject to prior mandatory compliance with capital requirements, prudential supervision and authorisation by the NBM.

Since July 2023, PSPs licensed in the EU can operate in Moldova without obtaining a licence from the NBM, thereby facilitating cross-border payments and stimulating competition and innovation in the payment services market. For example, Revolut launched a Lite version in Moldova in 2023 without requiring an NBM license.

Under Law 114/2012, as of 2024 new key payment players may enter the market to provide new type of services, such as account information services or payment initiation services, after registering with the NBM while fulfilling certain regulatory conditions.

The NBM oversees the automated interbank payment system, which facilitates automatic and final settlements of payments in Moldovan Leu. The system utilises real-time gross settlement for high-value, urgent payments and designated-time net settlement for low-value transactions.

In 2022, the NBM initiated a project to implement instant payments in Moldova. As of August 2023, new credit transfer regulations have come into effect, aligning with Article 5 and the annex of the SEPA Regulation (EU Regulation No 260/2012). This legislative alignment is a prerequisite for Moldovan payment service providers to join the SEPA. The instant payment system is slated to be operational in Moldova by February 2024.

The Moldovan fintech sector is on an upward trajectory, set to expand in the foreseeable future. A host of business accelerators and growth platforms are actively contributing to this burgeoning industry. These include initiatives from major players in the payment sectors, which offer a wealth of resources to propel start-up growth. These resources encompass expertise, mentorship, and market access, providing a comprehensive support network for emerging fintech ventures. 

In March 2024, the Law on crowdfunding No 181/2023 comes into force. The NCFM will assume a pivotal role in shaping the crowdfunding market, including facilitating the entry of new market players. The timing is particularly noteworthy as 2023 is anticipated to be a transformative year for the European crowdfunding industry. With over 800 crowdfunding companies headquartered in Europe, there is a strong likelihood that some may consider expanding into Moldova’s emerging market.

As Moldova navigates its digital financial journey, there are obstacles and breakthroughs in equal measure. With each regulatory innovation and technological leap, the country moves one step closer to establishing a robust digital financial ecosystem, underpinned by security, accessibility, and innovation.

Moldova’s successful foray into digital finance serves as a testament to the limitless possibilities of technology, while underscoring the importance of prudent regulation and strategic operational expertise. Crucially, forging successful collaborations among all stakeholders is essential to strike an optimal balance between fostering innovation and protecting consumer interests.