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Latvian central bank unveils instant payments system

31/08/2017

Latvia’s central bank has started operating what it describes as the eurozone’s first instant payments system compliant with the Single Euro Payments Area (SEPA) project.

Under the instant payments system, non-cash transfers will be provided 24 hours a day, every day of the year, including holidays and weekends, the Bank of Latvia announcedon August 28. “Customer payments are executed within a few seconds, and the money received can be reused immediately,” the bank said.

The central bank said it expected the service to be used by banks in Latvia and other European countries from November 2017. The scheme was based on an instant payments system called RT1, which the Bank of Latvia said was “operated by EBA Clearing, a capital company established by European banks”.

Harijs Ozols, the bank’s board member managing the project, described the system as “infrastructure meeting the demands of the era of [the] latest technologies”. Ozols said “major banks have begun timely preparations” to use the scheme, which should make instant payments “widely available to Latvia’s households and businesses as soon as possible”.

Individuals and businesses wishing to use the new service will need to wait until several Latvian banks have connected either to the new system itself or any other European instant payment system linked to it, the central bank said. So far, one bank – Citadele Banka – has connected to the system, the Bank of Latvia said. Citadele Banka is headquartered in Latvia, with registered assets of €2.6 billion ($3.1 billion) in 2016.

Two other banks with a large share of total payments in Latvia intend to start offering the instant payment service “as soon as possible”, the central bank said. The local subsidiary of Swedish-owned Swedbank and Latvian-headquartered SEB Banka aimed to use the service “following the completion of infrastructure and functionality tests”, the Bank of Latvia said.

The Sepa project is the work of the European Payments Council (EPC), which currently comprises 75 banks and banking associations as members or associate members. The EPC aims to extend Sepa to cover all European Union countries, as well as Iceland, Norway, Switzerland, Liechtenstein, Monaco and San Marino.

Read more on Central Banking.

Author: Art Division