E-Commerce

Regulations
WHITE BOOK BALANCE SCORE CARD
Introduced Significant Certain No
Recommendations:
in the WB: progress progress progress
Further harmonization of e-commerce regulations with the relevant EU
rules (e.g. the implementation of the principles of coordinated field and
the internal market, amendments to the definition of information serv-
2013 √
ice providers in line with the Directive on Electronic Commerce 2000/31/
EC, stipulating sanctions for the abuse of the institute of notification of
illegal content).
Harmonization of secondary legislation relevant for e-commerce (e.g.
the restrictive approach of the Foreign Exchange Act demanding proof 2013 √
of authenticity of the origin of money).
Organizing public workshops, campaigns and educational programs
in order to spread awareness about the importance and benefits of 2011 √
e-commerce.
Changes to the relevant postal regulations, so as to allow for the deliv-
ery of mail with a digital signature from the recipient on the screen of 2013 √
courier scanners.

CURRENT SITUATION of households in Serbia; the number of subscribers increased

E-commerce is regulated primarily by the Law on E-Com-
merce, the Law on Electronic Documents and the Law on Elec-
tronic Signatures. The National Bank of Serbia opened public
consultations on a set of financial regulations governing spe-
cific aspects of e-business in May 2014, specifically the Draft
Law on Payment Services and the amendments to the Law
on Foreign Exchange Operations, which significantly impact
the performance of payment transactions in e-business. In
late 2014 the National Assembly of the Republic of Serbia
adopted the Law on Payment Services, as well as the Law on
Amendments to the Law on Foreign Exchange scheduled to
enter into force on 1 October 2015. Additionally, in late 2014
the Amendments to the Financial Services Consumer Protec-
tion Law were adopted, also entering into force on 1 October
2015. The Consumer Protection Law, adopted in 2014, includes
important aspects of the legal framework and, inter alia, regu-
lates the protection of consumers in distance contracts.
by 7% compared to 2013. A significant difference in Internet
access rates is evident in the urban and rural parts of Serbia.
In fact, according to RATEL’s latest report on the telecommu-
nications market, in 2014, 68.9% of Serbia’s urban households
had internet connections, whereas in rural Serbia this percent-
age stands at 53.7%. According to data of the Statistical Office
of the Republic of Serbia, 55.1% of households used broad-
band internet in 2014, which is an increase of 11.7% compared
to 2013. Increased use of broadband Internet resulted in the
growth of the share of Information and Communication Tech-
nologies (ICT) in the gross domestic product.
In 2014, 1,160,000 Internet users made online purchases in
Serbia, which is an increase of 28% in comparison to the
previous year (2013), when there were 900,000. Such a
significant growth in e-commerce is equally the result of
the development of local e-commerce services and of the
increased availability of foreign payment services (PayPal).

The popularity of online shopping in Serbia has been record-

ing a stable growth trend during the previous period. Accord-
ing to statements made by public officials, Serbian citizens
spent approximately EUR 180 million making Internet pur-
chases in 2013. Data of the Statistical Office of the Republic
of Serbia show that approximately 1,160,000 people made
online purchases last year, which accounts for 41.2% of Inter-
net users. According to this indicator, Serbia is still well below
the EU average, where nearly 60% of Internet users purchase
goods online. In 2014, Internet access was available to 62.8%
POSITIVE DEVELOPMENTS
Amendments to the Law on E-Commerce in 2013 introduced a
few basic novelties. The introduction of measures for restricting
information services, (services provided at a distance through
electronic equipment, such as e-commerce, e- advertising,
electronic search services, etc.), is a positive development.
These measures were modelled on interim measures of the
law governing enforcement and sureties. Such measures may
be imposed on any information service provider transmitting,

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 storing or providing access to illegal content, at the request of
a person (any natural or legal entity), whose rights the infor-
mation service provider violated, e.g. in the case of infringe-
ment of intellectual property rights. The court can order the
removal of illegal content, or the cessation of the infringing
act. Since this is a temporary injunction, the petitioner must
file a lawsuit in due time to resolve the disputed issue, other-
wise the temporary injunction will be suspended. The impor-
tance of this measure is reflected in the efficient protection of
third party rights and in the opportunity to remove content
that violates the rights of third parties from the Internet.
Another change relates to a clearer and more accurate notifi-
cation about illegal content (content infringing the rights of
third parties). The new provisions provide for a formal notice
on illegal content on the Internet, enabling a more effective
response in the removal of potentially illegal content. A per-
son who believes that his/her rights have been harmed by
the publication of illegal content must send a notification of
illegal content to the information service provider in order
for them to remove such content. It is important to note that
the amendment further strengthens the security of e-com-
merce, as it allows for a quick reaction of a person whose
rights have been harmed by illegal content and of the infor-
mation service provider, so that the latter can now effectively
evaluate and eventually remove illegal content, based on the
detailed information in the notification.
Concerning the adopted financial regulations relevant for
regulating e-commerce, the Law on Payment Services intro-
duces the definition of electronic money, electronic money
institutions and services provided by such institutions. These
clarifications are an important step forward from the perspec-
tive of financial regulations. The Law on Payment Services pro-
vides a useful solution in allowing foreign electronic money
institutions to provide services on the Serbian market after a
mere notification to the National Bank of Serbia. The adopted
amendments to the Law on Foreign Exchange Operations do
not significantly alter the requirements concerning the use of
services for online billing and payments, meaning that such
services can continue to function in Serbia without obstacles.
At the same time, the number of local banks offering elec-
tronic payment services has increased in the previous period.
The adoption of Amendments to the Financial Services Con-
sumer Protection Law further complements the legal frame-
work that has made the use of credit cards for online purchas-
ing safer. This law clearly defines the mandatory content of a
credit card payment agreement, which the user signs with the
bank, and the rules on the credit card payments.
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The overall situation in e-commerce in Serbia can be seen
as a notable improvement. It is a fact that the number of
households using the Internet (including broadband), and
the number of people shopping on the Internet is on the
increase in comparison to the previous years, and so is the
turnover from e-commerce.
REMAINING ISSUES
In relation to the new procedure for notification of illegal
content mentioned herein, the Law does not provide for a
solution concerning potential abuse of such notifications,
and this is a serious flaw. Furthermore, the law does not
include provisions enabling the party receiving a notifica-
tion to respond, or address the consequences if the con-
tent reported as illegal was not, in fact, illegal. Therefore,
additional amendments to the Law on Electronic Commu-
nications are necessary to further clarify and regulate the
procedure for notification of illegal content, and thus effec-
tively prevent abuse of such notifications.
While the significant improvement in the field of e-commerce
regulation is undisputed, the legal framework’s efficiency and
the implementation of related regulations, particularly of rele-
vant financial legislation, still remain at issue. The complicated
procedure for authenticating receipt of money from abroad,
and the provisions on the Law on Foreign Exchange operations,
stipulating that Serbian residents cannot open foreign bank
accounts, discourages the development of e-commerce.
Additional efforts in harmonizing national legislation with
the EU acquis are necessary. A change that has been made
in the Law on E-Commerce, limiting the definition of Inter-
net service providers (the previous definition was in com-
pliance with the EU Directive on E-commerce 2000/31/EC)
to persons registered with the Serbian Business Registers
Agency, potentially allows for a situation where a person
operating a website, merely generating links, may be pun-
ished for doing so because he/she is not registered with the
Serbian Business Registers Agency. Such an approach both
restricts and potentially forces a considerable number of
e-businesses to relocate to foreign-based domains.
In order to harmonize with Directive 2000/31/EC prior to
Serbia’s EU accession, the legislator must address the issues
of coordinated field and principles of the internal market.
The coordinated field is the sum of regulations governing
the behaviour of information service providers in countries
where they are registered for the provision of information
services (with respect to liability, quality of content and serv-
ices, registration and commencement of activities etc.). The
principle of the internal market allows for information serv-
ice providers who are in compliance with the provisions of
the regulation, including the coordinated field in their coun-
try of registration, to perform business in other EU countries
without the competent authorities of that U Member State
requiring the information service provider to align with the
coordinated field of that country. The transposition of the
aforementioned provisions into Serbian legislation is man-
datory prior to EU accession; regardless, these provisions are
very important, since one of the most important characteris-
tics of e-commerce is its cross-border nature.
One of the most important issues regarding the financial
regulations enabling e-commerce is whether the money
charged through a foreign online payment service, (e.g.
PayPal) in accordance with the Law on Foreign Currency
Transactions, should be withdrawn to the country before
it can be used for further purchases. These concerns could
be avoided if the National Bank of Serbia were to issue clear
instructions to regulate the use of foreign online payment
services in accordance with relevant regulations.
Both citizens and the business community should be edu-
cated further with respect to the advantages of e-commerce,
in order to further develop this economic sector. Security in
using e-commerce services is satisfactory; however, further
efforts to raise awareness and disseminate information on reli-
ability are required. Progress will be made when local users of
PayPal services are able to receive funds from abroad, which is
currently impossible since this service does not offer users the
possibility of payment in the national currency (the Serbian
dinar), which is a requirement of the current legal framework.
The fact that the Regulation on the General Conditions for
Providing Postal Services, which plays an important role in
the shipment of items sold through e-commerce, does not
allow shipment deliveries to be performed with a consign-
ee’s digital signature on the delivery scanner’s screen, is
an aggravating factor in the development of e-commerce.
Consequently, printed copies of delivery sheets must still
be produced, filled in and archived.
Lack of capacity and limited market scope is reflected in the
continuous hesitation of large economic players to further
engage in the e-market. Education and development of prac-
tices are the only solutions to issues of trust in the online envi-
ronment, which is the key constraining factor in Serbia, as
worldwide. The security and safety of personal information,
which is currently a very important global issue, are still not at
an adequate level in the practice of local online services. Fur-
thermore, effective implementation of the legal framework is,
in that respect, still at the development stage in Serbia.

FIC RECOMMENDATIONS
• Further harmonization of e-commerce regulations with the relevant EU rules (e.g. the implementation of the
principles of coordinated field and the internal market, amendments to the definition of information service
providers in line with the Directive on Electronic Commerce 2000/31/EC, stipulating sanctions for the abuse of
the institute of notification of illegal content).

• Harmonization of secondary legislation relevant for e-commerce (e.g. the restrictive approach of the Foreign
Exchange Act demanding proof of authenticity of the origin of money).

• Adoption of appropriate guidance by the National Bank of Serbia which would specify the use of foreign services
for electronic money in accordance with existing regulations.

• Organizing public workshops, campaigns and educational programs in order to spread awareness about the
importance and benefits of e-commerce.

• Changes to the relevant postal regulations, so as to allow for the delivery of mail with a digital signature from the
recipient on the screen of courier scanners.

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