Why should your financial institution consider SEPA integration via CENTROlink?2023 10 12 · 3 min read
If you are a fintech or financial institution in Europe, you have likely heard of SEPA or CENTROlink. The Bank of Lithuania offers a streamlined process for fintech companies operating in Europe, providing regulatory support and access to payment systems, such as CENTROlink
According to the Investuok Lithuania Report, in 2022, the usage of CENTROlink for payments grew by 1.5 times, reaching a total of 213 million transactions. This growth highlights the strong involvement of financial institutions in adopting SEPA through the CENTROlink payment system.
Therefore, in this blog, we explain what CENTROlink and SEPA are and why they are essential for financial institutions. Plus, we will walk you through the steps to connect to CENTROlink and share its benefits.
So, have a cup of coffee and keep reading to discover how CENTROlink can benefit your financial institution.
What is CENTROlink?
CENTROlink is a reliable retail payment system designed for payment service providers (PSPs) in the European Economic Area (EEA). CENTROlink is operated by the Bank of Lithuania, and it supports new payment innovations, such as instant payments and mobile payments.
Plus, the CENTROlink payment system provides technical access to SEPA and TARGET2 for all EEA-licensed PSPs. This way, it creates an ability for businesses seeking hassle-free payment solutions in the EEA.
What are SEPA payments?
SEPA, short for Single Euro Payments Area, makes euro payments simpler across Europe. It is not just for the 27 EU countries but also includes Iceland, Liechtenstein, Norway, Switzerland, and the UK. SEPA has made European payments more efficient and competitive by ensuring payments – within one country or across borders – follow the same rules and standards in all participating countries.
Now, the CENTROlink system plays a crucial role in making SEPA work smoothly. It lets PSPs handle SEPA credit transfers and direct debits in a speedy and secure way. Plus, it is on board with SEPA instant payments, which means money can move between accounts in real time.
How can you access CENTROlink?
Financial institutions interested in connecting to the CENTROlink payment system can do the integration by themselves or get professional consulting and guidance from an IT partner. Below, we outline the key steps for connecting to this payment system, as provided by the Bank of Lithuania.
- Meeting. The PSP meets with CENTROlink representatives to discuss their business model and needs;
- Questionnaire. The PSP fills out and submits a KYC questionnaire and documents to the Bank of Lithuania;
- Risk assessment. The Bank of Lithuania assesses the PSP’s KYC information and decides whether to offer a non-disclosure agreement (NDA);
- NDA. If approved, the PSP signs an NDA with the Bank of Lithuania, accessing CENTROlink technical documents and requesting system connection;
- Certificates. The PSP signs a certification agreement and receives access certificates;
- Testing. The PSP registers in the CENTROlink system, tests payment systems, and reports results to the Bank of Lithuania;
- Agreement. Further KYC updates may be required, followed by signing the CENTROlink participation agreement;
- Start of payments. The PSP registers in payment systems for the agreed go-live date, and payment processing begins.
Considering CENTROlink integration possibilities for your financial institution? Contact our team, who is here to help with IT ecosystem analysis, prepare integration documents, provide implementation guidance, conduct integration testing, and support with needed communication processes.
What benefits does the CENTROlink payment system offer?
Without a doubt, connecting to the CENTROlink system can bring a lot of value to your financial institution. Let us explore the various benefits and advantages below.
- Speed. CENTROlink ensures instant payments. Money fastly moves between accounts, benefiting both businesses and consumers. Businesses can swiftly pay suppliers, while individuals can send instant payments to friends and family;
- Security. CENTROlink, operated by the central bank, prioritises top-notch security. It employs convenient measures like digital signatures and encryption to safeguard all payment data;
- Reliability. CENTROlink is a reliable payment system, available 24/7/365, ensuring prompt and accurate payment processing;
- Efficiency. CENTROlink offers a cost-effective solution for payment service providers (PSPs). Competitive fees and economies of scale benefit PSPs as they process more payments through the system;
- Innovation. CENTROlink supports modern payment methods like instant and mobile payments. This enables PSPs to offer their customers convenient options, such as instant mobile payments.
In addition to the benefits listed above, the CENTROlink payment system also offers several other advantages to PSPs and their customers.
- Convenience. CENTROlink serves as a one-stop platform for handling various payment types, including credit transfers, direct debits, and instant payments. This simplifies payment management for PSPs, making it more convenient;
- Flexibility. CENTROlink offers a wide range of adaptable features and services, catering to the unique requirements of different PSPs. For instance, PSPs can opt for CENTROlink’s standard offerings or create tailored solutions;
- Scalability. CENTROlink is a scalable payment system with the capacity to manage a large number of transactions. This scalability suits PSPs of all sizes, accommodating small businesses and large financial institutions.
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