Payments are the basis of economic relations. They involve a transaction in which ownership of the payment funds is transferred to the recipient. The development of money and payments is mutually conditioned (more information could be found in the "Money and currency" section).

With the exception of cash payments, all other payments are made through payment service providers in compliance with the Payment Services and Payment Systems Act. These include banks, electronic money companies, and payment institutions. One of the main differences between them is that funds in bank accounts are guaranteed up to EUR 100,000, while other payment service providers do not have such protection. The participation of an intermediary in payments brings additional security for the payers, protecting them from errors and fraud.

The National Card and Payment Scheme is constantly implementing innovations, one of which is instant Blink payments. In these, transactions between participants in the system are carried out in seconds. In addition, Blink P2P can be used to transfer money between individuals and by mobile number, and various promotional campaigns are offered where these transfers are free of fees.

The different types of payments, by main groups and payment products, are presented below.

 

Cash payments

Accumulating significant amounts of cash is not recommended due to a number of risks that arise. It is possible for money to be stolen, lost in natural disasters such as floods or to be lost in a fire. It is even possible for a person to forget where they keep it, as well as to accidentally destroy or damage it.

In addition, the Limitation of Cash Payments Act sets a ceiling for cash payments of EUR 5,000. If the value of a transaction is over EUR 5,000, even if the payment is made in parts, it must be made by bank transfer. This law counteracts the shadow economy and money laundering, as well as protects people from fraud.

Cash payments are suitable for smaller amounts in a person's everyday life. Even in these cases, an alternative is often preferred - for example, a card payment. Even for small amounts, cash payments have disadvantages: money can still be lost or stolen; it takes more time to count the exact amount and change; there is a risk of intentional or unintentional error when returning change; banknotes and coins take up more space and are bulkier when carried in a wallet, etc. There is no automatic traceability for cash payments, i.e. it is not generated. This makes it difficult for people to control their expenses and check paid bills.

 

Cash transfers

A specific form of payment is the so-called cash transfer. In this payment service, the payers provide funds in cash without a payment account being opened in their name, with the aim of the funds being deposited into the account of another person. In this case, the restrictions of the Money Laundering Act do not apply, but above certain amounts, the requirements of the Anti-Money Laundering Act (AMLA) must be complied with, by declaring the origin of the funds and the purpose of the transaction.

 

Current accounts

The current account is offered by various payment service providers - banks, payment institutions and electronic money companies. It is suitable for consumers (individuals) who want to receive funds from a salary, fee, pension or other payments received on their account. Payments can also be made through this account, for example, to pay utility bills or to transfer funds to accounts of individuals and legal entities. Current accounts are used daily in business – for paying debts to suppliers, for receipts from customers, etc.

Usually, a one-time fee is applied to opening such an account, and then a monthly fee for its maintenance. Most often, there are fees for cash withdrawals and deposits at a counter, ATM withdrawals and deposits, and for transfers. It is important to emphasize that the fees for transfers initiated through internet banking are usually much lower than those at a counter. In addition, most payment institutions offer different packages. They include a certain number of services at a fixed price, which is significantly lower than the total fees for these services individually.

 

Basic payment accounts

The basic payment account is offered only in euros, and through it, a set of legally defined services is provided throughout the country, free of charge or for reasonable fees. Among the services of the payment account for basic operations are cash deposits and withdrawals, receipt and initiation of payments, operations carried out via a payment card.

 

Payment cards

A payment card is an instrument issued by a bank or other licensed payment service provider, which allows its holder to carry out various financial operations - payment for goods and services, cash withdrawals, as well as online payments. In Bulgaria, payment cards are regulated by the Payment Services and Payment Systems Act, and the most common types are debit and credit cards.

A debit card is directly linked to your bank account and with each transaction the amount is withdrawn from the available funds on it. A credit card, on the other hand, gives you access to a pre-approved credit limit, which must be repaid under the terms of the contract.

Payment cards work through card operators (e.g. VISA, Mastercard), and the processing of transactions in Bulgaria often goes through systems managed by BORICA. They are an extremely convenient, easy, and secure payment tool. On the face of the card you will find your name, the card number and its expiration date, the name of the issuing bank, the logo of the international card organization and the wi-fi symbol if the card is contactless. There is also the card chip and a hologram to protect against counterfeiting. On the back there is a magnetic strip on which the card number and its CVV/CVC code (from the English Card Verification Value/Code) are printed - the last three digits.

 

Tokenization of payment cards

For even greater security, payment cards can be tokenized. In this process, they are added to a digital wallet on your smartphone and/or smartwatch. You can then pay contactless if your device has an NFC chip. You identify yourself using biometric data (fingerprint or facial recognition), without entering either your card data or your PIN code anywhere.

 

Useful links:

National Card and Payment Scheme

Payment Services and Payment Systems Act

Limitation of Cash Payments Act

Anti-Money Laundering Act