Slovakia has undergone a remarkable transformation with payments as digital options increase in popularity alongside traditional methods. Cash has historically played a major role in Slovakia’s transactions, but digital payments are increasing. For example, Slovakia’s ecommerce revenue is projected to reach $2.21 billion in 2025.

As part of the EU, Slovakia uses the euro as its official currency and adheres to regulatory policies such as the revised Payment Services Directive (PSD2). The country’s blend of traditional and digital payment methods makes it a major player in the global payment market. Below, we’ll cover how businesses can succeed in the Slovakian payment market, including:

• Integrating local payment methods
  
• Adhering to regulations
  
• Prioritizing security
  

The state of the market

Many Slovakian customers use cash for everyday transactions, but electronic payments, including debit and credit cards, are gaining traction. Data from the European Central Bank (ECB) indicates that 91% of Slovaks have access to a bank account for a payment card. The increasing popularity of digital wallets and mobile banking apps might be shifting the nation toward a cashless future.

The National Bank of Slovakia (NBS), the country’s central bank, is key in shaping monetary policy and ensuring financial stability. The NBS aligns with the ECB and follows the EU’s regulatory structure. Slovakia also adheres to EU directives meant to create an effective, safe payment environment, including the Single Euro Payments Area (SEPA) and PSD2. Institutions such as the Financial Market Authority (FMA) and the Ministry of Finance oversee regulatory compliance.

Payment methods

Slovakia is a payment space where cash, card payments, and digital transactions coexist.

Usage

Technology has been key in reshaping cash payment use in Slovakia. Though cash remains a common payment method, other methods are increasing in popularity. A 2022 ECB report shows that 33% of point-of-sale (POS) payments in Slovakia were made with credit or debit cards. The growth of digital wallets and mobile payment applications has also affected payments, with mobile payments surpassing ATM withdrawals for the first time in 2021. The rise of contactless payments, QR code scanning, and online banking platforms has further accelerated the shift away from cash, making transactions quicker and more convenient.

Contactless payments have increased substantially in Slovakia, especially during the COVID-19 pandemic. ECB data shows that the share of contactless transactions in all POS card transactions increased from 77% in 2019 to 84% in 2022, reflecting a strong shift in customer behavior.

Mobile payment adoption, especially among younger generations, has increased quickly in Slovakia. Mobile payment use, facilitated through mobile wallets and dedicated apps, increased by more than 100% in 2021. This jump reflects increased customer acceptance and suggests rising confidence in the security of mobile payment options.

Localized options such as Twisto and 365.bank have gained prominence in Slovakia’s mobile payment space. Twisto, for instance, provides a user-friendly interface and easy integration with Slovakian banks; it supports peer-to-peer payments, bill splitting, and investment options within the app. These local solutions appeal to specific tastes and preferences, establishing themselves as major players in the mobile payment sector.

Popular B2C payment methods in Slovakia

• Credit cards
  
• Cash
  
• Local cards
  

Popular B2B payment methods in Slovakia

• Credit cards
  
• Bank transfers
  
• SEPA direct debits
  

Trends

Contactless payments have become a preferred, convenient payment method in Slovakia. Regulatory bodies in the country have endorsed the adoption of contactless payments. During the pandemic, the spending cap for contactless transactions without a PIN rose from €25 to €50, encouraging touch-free payments and minimizing physical contact with POS devices. This regulatory environment has facilitated customer adoption and encouraged businesses to accept contactless payments, solidifying it as a mainstream payment method.

Ease and friction of entry

As you plan your approach to the Slovakian payment market, you should consider how the country handles taxation as well as chargebacks and disputes.

Taxes

Customers and businesses encounter value-added tax (VAT). In Slovakia, the VAT rate is 20% for most goods and services. Customers pay VAT when making purchases, while businesses collect and remit the tax to the government. Compliance with VAT regulations is a requirement for businesses—noncompliance can result in hefty fines. Late or erroneous VAT remittances can also lead to audits and legal repercussions.

Chargebacks and disputes

Slovakia’s policies toward chargebacks and disputes reflect its commitment to consumer protection. Those policies are influenced by EU regulations and domestic laws. Businesses in Slovakia should be prepared to adhere to regulations that place a high burden of proof on businesses to validate the legitimacy of transactions.

Businesses in Slovakia should also be aware of specific timelines and documentation requirements for chargebacks and disputes. They often have shorter windows to respond to chargebacks, and the required documentation can be more extensive than what businesses in other markets might be accustomed to providing. This emphasizes the importance of detailed recordkeeping and transaction verification to minimize the financial impact of disputes.

International payments

Slovakia’s membership in the EU means its payment market shares many traits with those of other member states. Here are factors to consider about international payments in Slovakia:

• Currency conversion
  Currency conversion is a key part of financial operations, serving travelers and businesses engaged in cross-border transactions. For travelers arriving in Slovakia from countries outside the euro area, currency conversion is a common necessity. Currency exchange can occur at financial institutions, specialized currency exchange centers, or ATMs. Typical exchange rate markups are 1%–3%, and some banks might charge a flat fee for currency conversion. When using ATMs, foreign tourists might encounter a 2% service fee for currency conversion from their card-issuing bank.

• Ties to Central and Eastern European (CEE) countries
  Slovakia’s proximity to neighboring CEE countries has helped it build economic and financial ties within the region. Shared historical legacies and economic integration efforts have led to commonalities in payment preferences, such as card usage and mobile banking. Cross-border trade and remittances are notable factors in the interactions between Slovakia and its CEE neighbors, influencing payment methods and preferences.

• Relationships within the euro area
  As part of the euro area, Slovakia shares a common currency with 19 other countries. This currency uniformity simplifies trade and financial transactions among them, supporting economic cooperation. These countries have common regulatory requirements, including those related to payments, which maintain market standards.

Security and privacy

Slovakia is committed to transparency, consumer protection, and the adoption of advanced technologies as it addresses payment security and regulatory compliance. By adhering to EU directives and maintaining these standards, the nation has established itself as a trusted environment for financial transactions.

• Data protection laws
  Following EU regulations, Slovakia prioritizes data protection. The country rigorously enforces the General Data Protection Regulation (GDPR), which sets stringent standards for safeguarding customer data. The GDPR requires explicit consent for data collection and grants customers the right to manage or delete their data.

• Office for Personal Data Protection
  The Office for Personal Data Protection acts as the national data protection authority in Slovakia. It oversees GDPR compliance to ensure organizations adhere to data protection requirements. This office can investigate and penalize entities that fail to adequately protect customer data, underscoring Slovakia’s commitment to data security.

• Anti-Money Laundering (AML) laws
  Slovakia, like other EU member states, strictly abides by EU directives on AML and Counter-Terrorist Financing (CTF). Financial institutions are required to implement AML and CTF systems to monitor and report potentially suspicious activities. Noncompliance can result in severe penalties. These measures are important for maintaining the integrity of Slovakia’s financial system and preventing illicit financial activities.

• PSD2
  PSD2 requires payments service providers to follow Strong Customer Authentication (SCA) protocols. SCA mandates two-factor authentication for most transactions, improving security by requiring multiple layers of verification before authorizing payments. This helps mitigate the risk of fraud and unauthorized access.

Key success factors

For businesses that want to operate there, Slovakia presents challenges because of its payment preferences and the complexities involved in following EU and local rules. Here are factors to consider:

• Slower adoption of emerging payment technologies
  About 2.15 million Slovaks are projected to use mobile payment methods for POS transactions by 2030, out of a population of about 5.4 million. This slower pace of adoption forces businesses to continue supporting traditional payment methods, adding complexity to payment systems and user experience design.

• Nuances of international transactions
  Cross-border transactions, particularly those outside SEPA jurisdiction, can be complex because of factors such as fluctuating exchange rates and varying regulations. Slovakia’s export value totaled over $108 billion in 2022, highlighting how important it is to handle these complexities effectively. Businesses need comprehensive preparations and systems to do so.

• Strong data management requirements
  The EU’s implementation of the GDPR has placed substantial regulatory demands on businesses in Slovakia. Failure to comply with the GDPR can result in hefty fines of up to €20 million or 4% of a business’s global annual turnover. Businesses in Slovakia also need to invest in data governance systems, especially for payment systems, to guarantee compliance and protect sensitive customer data.

• Dispute management for card payments
  Though card payment disputes are relatively infrequent, they can still pose challenges. According to ECB data, fraudulent debit card payments accounted for about 0.02% of all card transaction value in 2019. But even a small percentage of disputes can translate into substantial volumes because of the high number of card transactions. Managing disputes effectively requires businesses to invest in reliable systems and rely on legal expertise to minimize their financial impact and maintain customer trust.

Key takeaways

The Slovakian payment market offers businesses several opportunities for growth. Here are top takeaways for how to enter this market:

Embrace local payment methods

• Provide popular banking products from local banks
  In Slovakia, local payment methods such as Slovenská sporiteľňa, Tatra banka, and VÚB play a major role in payments. Businesses should provide these options to cater to local preferences because many Slovak customers trust and use these homegrown solutions. Emphasizing support for these local methods can build trust and increase transaction completion rates.

• Use SEPA for easy transfers
  SEPA is central to Slovakia’s payments infrastructure. Businesses should use SEPA for euro-denominated direct debits, especially for recurring payments such as subscriptions. SEPA-compliant payment gateways facilitate transactions within the euro area, making the process more convenient for businesses and customers.

• Offer multicurrency options
  Though Slovakia uses the euro as its official currency, some customers might prefer to pay in other currencies. Implementing multicurrency options can cater to diverse consumer preferences, particularly in a country with international connections and tourism.

Ensure compliance

• Study the Consumer Code
  As an EU member, Slovakia abides by the Consumer Code, which makes businesses responsible for proving a transaction’s legitimacy. This is particularly relevant in cases of unauthorized payments. The burden of proof often falls on businesses to demonstrate that the transaction was valid and authorized.

• Understand the role of PSD2
  Slovakia complies with PSD2, which mandates SCA. SCA involves multiple layers of verification, which can be cited in dispute resolutions. The level of authentication can play a key role in determining the outcome of chargebacks and disputes.

• Follow SEPA regulations
  Slovakia adheres to SEPA regulations, which have specific rules for chargebacks related to direct debits. These regulations ensure customers receive a refund for direct debit transactions if they request it within eight weeks. This provides them with added protection in case of billing errors or unauthorized debits.

Prioritize security

• Use encryption technology
  Businesses should invest in strong security measures for the payment process, including two-factor authentication and encryption, to safeguard customer data and instill confidence in transactions.

• Comply with EU requirements for data protection
  Businesses must prioritize compliance with the GDPR and its strict data protection requirements. They must process customer data with care and transparency to avoid potential fines and create trust among customers.

• Consider advanced security tools
  Payments service providers operating in Slovakia are subject to EU and local regulations. These businesses often go above and beyond basic requirements to achieve the highest levels of security. They use advanced technologies, including machine learning algorithms, to detect and prevent fraudulent activities. They also prioritize the security of customer data, implementing encryption and other security measures to safeguard sensitive information.