April the 22nd, 2021 - The innovation made in the financial field over the last few years has been quite astounding, and with the power of banks no longer being quite as limiting as it once was, apps like Wise (formerly Transferwise) and of course Revolut are becoming more and more popular. That said, Croatian salaries still cannot be paid into a Revolut account.

As Novac/Karlo Muratagic writes, here in Croatia, it is absolutely not possible to arrange to have Croatian salaries paid into a Revolut account. This is a firm conclusion that can be read from a recent statement from the Croatian National Bank, which after numerous comments came about regarding this issue.

Revolut is present for the central bank in Croatia in two instances, Revolut Payments UAB or as an electronic money institution, and Revolut Bank UAB, as a bank that has a deposit account. In both cases, this isn't enough to be able to compete fully with existing banks in Croatia, but that doesn’t mean they won’t be able to in the future.

The story began almost a year and a half ago. Back in late December 2019, the Tax Administration issued an opinion banning the payment of Croatian salaries to Revolut Payments UAB.

"Given the fact that, according to the CNB, the legal entities that made the inquiry are considered digital electronic money institutions, ie a special type of payment service provider whose establishment and operation is regulated by the Electronic Money Act, we're of the opinion that the payment of Croatian salaries to a kuna account of the digital institution for electronic money isn't considered a payment made into a bank account in accordance with the provisions of the law and regulations,'' stated the Tax Administration.

The stated reason, then, was precisely that it was an electronic money institution. A credit institution from another EU member state may of course establish a branch here in Croatia and through it provide mutually recognised services which it is authorised to provide in its home country. A credit institution from another EU member state may also start providing mutually recognised services in Croatia directly from the day the CNB receives the notification of it doing so.

The Revolut app had apparently ticked that box, but its statement, the CNB stated that they received a notification from Revolut, ie from Lietuvos bankas, on the provision of the carrying out of financial services in Croatia for Revolut Bank UAB. However, this only applies to the receipt of deposits and other repayable funds, while other services listed in Annex I of Directive 2013/36 / EU, which means payment services such as the payment of salaries, aren't included and as such may not be provided in Croatia.

Payment services in this country are defined in Art. 4. of the Law on Payment Operations. The document "Revolut Bank UAB Deposit Terms" stipulates, however, that Revolut Bank UAB is not authorised to provide payment services or issue electronic money. Only the owner of both accounts, through their payment account, ie Revolut Payments UAB, can deposit money to Revolut Bank UAB or withdraw it from the deposit account.

To summarise the above, Revolut did come and is very much in operation here in Croatia, but not to its full extent. Individuals who use Revolut through this app as such have two accounts.

Initially, they are able receive an account for payment in an electronic money institution, ie Revolut Payments UAB. However, as it is an electronic money account, the Tax Administration doesn't allow the payment of Croatian salaries to be made into it. At the moment, Croatian salaries can only be paid only to a current or giro account, and in the Croatian national currency, the kuna.

The second account, which the Revolut user opens later, is a deposit account within the credit institution. It is a new service from Revolut Bank UAB, but this account is not registered as an account for payment services. That is why the CNB stated that Croatian salaries cannot be paid into it in accordance with the law. However, the advantage of this account compared to that of the electronic money institution is that, like all other bank accounts, it is insured.

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''We currently have 20,000 users in Croatia and all this is through word of mouth,'' stated Elena Lavezzi, the director for Southeastern Europe for Britain's Revolut UK. Revolut company wants to become the first global digital bank.

As Novac/Filip Pavic writes on the 27th of June, 2019, this manager was born in Italy, was educated in Paris and London, and in the position of Revolut, where, among doing other things, she leads the markets of Italy, Croatia and Slovenia, came from the position of Director General for Europe for the Boston Crypto Startup Circle.

Before that, she worked at Uber and was part of the Uber launch team in India. As she herself says, her interest in technology that has the potential to change people's daily lives on a global scale eventually led her to Revolut, a British company that created a mobile application (app) that can pay bills, send money and change currencies back in 2015. Revolut now has about four million users. Since it recently implemented the Croatian kuna in its offer, Novac talked with Elena Lavezzi about Revolut's plans on the Croatian market, traditional banking, and the future of digital banks.

Do you think the Croatian market, which is financially still traditional, is ready for disruptive applications such as Revolut?

''Revolut is still in its test phase in Croatia, but we've noticed that there are no big fintech players. Also, as far as I can see, Croats are quite orientated towards traditional banks. It's the same as in Italy, they use a lot of cash, and not so much bank cards. When I lived and worked in London last year, I didn't have to withdraw cash from an ATM even once, and here, I had to withdraw 200 kuna in just one day. That's why I think there's plenty of potential for Revolut. We're new, simple, innovative and transparent. But to understand the app's value, you have to be able to understand the millennials, as well as my mother.''

In what way do you expect the older, more skeptical generation to turn to the app?

''We need to be aware that we're working with people's money and that they have to trust in this innovation, and that's a matter for market education. This will be the responsibility of our local team in Croatia. They need to introduce the application to the people, educate them, and eliminate their suspicions. We want Revolut to be a real and local brand, and we'll manage to achieve this by going from top to bottom and establishing strong local customer support.''

How do you guarantee the same security for the customers that can be offered by traditional banks?

''Revolut is a financial institution approved by the British Financial Management Authority and is obliged to protect the funds of its customers according to their requirements. In addition, we're subject to the 2011 Electronic Money Laundering Regulation and the 2017 Money Laundering Regulation.;;

To open the Revolut application, apart from providing your personal information, your bank card information is also required, from which money is transferred to the appl Does Revolut still require a bank account?

''Yes, we still need traditional banks and we can't expect people to say overnight, "Here, I'm going to put everything I've got on the application." But soon, that will change.''

When, in your opinion, will digital banks completely replace traditional banks?

''Our plan is to have 100 million users worldwide in the next five years. But I don't think that digital banks will completely replace traditional ones, but I do think that digital banks will become the way that users can deal with their payments on a daily basis.''

Can you receive a salary via this app, for example? Similarly, give your Revolut account number to your employer?

''Not at the moment, but we hope to support it in the very near future. We're working hard to bring local IBANs and a more localised product to our customers in Croatia and every country we operate in.''

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