CENTROlink has become a popular system that connects financial institutions across the three Baltic states of Estonia, Latvia, and Lithuania and the rest of the states that are part of the EU. Launched in December 2015, Cetrolink allows individuals and businesses to make real-time payments securely and efficiently across the EU region with banking institutions.
CENTROlink represents a major step forward for payment setup in Lithuania. The system significantly benefits speed, convenience, and innovation by providing instant settlement. It can accelerate economic activity and trade within and between the Baltic countries.
History of payment system
Since its inception, usage of CENTROlink has grown rapidly:
- In 2020, over 100 eea-licensed Fintech companies participated, processing 81.4 million operations valued at €115.8 billion.
- From 2016-2020, payment institution members grew from 5 to 117.
- Operations executed grew from 1 million to 81.4 million.
- Transaction values grew from €2.8 billion to €115.8 billion.
This exponential growth demonstrates CENTROlink’s value in enabling real-time payments across the Baltics.
Ownership and Governance
The CENTROlink payment system was developed and is operated solely by the Bank of Lithuania. This retail system enables customers of financial institutions to make fast and inexpensive euro payments across the EU through the Single Euro Payments Area (SEPA).
While CENTROlink is owned only by the Bank of Lithuania, the governing board overseeing the system is composed of members from the three Baltic countries – Estonia, Latvia, and Lithuania. This allows for collaboration between the countries, even though Lithuania alone owns and manages the payment infrastructure.
By bringing together representatives from multiple Baltic nations, the CENTROlink board aims to serve the payment needs of the region in a cohesive manner. However, it is important to note that Lithuania retains full ownership over the actual technology and operations of CENTROlink.
A CEO with over 15 years of experience in required system’s development and operation leads the management team. The team includes specialists across technology, product, finance, and compliance functions.
Participants and Fintech Companies
The pioneers of CENTROlink include major banks from Lithuania and other EU member states. The initial group of seven settlement and indirect members of Baltic states was a leading financial organization at that time representing over 80% of the total banking sector across the Baltics.
The launch settlement members were:
- AS Luminor Bank (Estonia)
- AB SEB Bank(Lithuania)
- AS SEB Bank(Latvia)
- AS Luminor Bank AS (Latvia)
- Swedbank AS (Estonia)
- AB Swedbank (Lithuania)
- AS Swedbank (Latvia)
They provide the underlying arrangement through which individuals and businesses can access CENTROlink for instant payments via their accounts using the IBAN. Their participation enables wide distribution and usage of real-time payments through CENTROlink.
In 2020, over 100 licensed Fintech companies used CENTROlink to execute instant payment deals. Major Baltic banks like TBI Bank and Ferratum Bank have also begun participating to expand access.For those aspiring to set up businesses in the thriving financial landscape of Lithuania, understanding the nuances of company registration in Lithuania becomes essential.
Scope of Service operated by the Bank of Lithuania
CENTROlink enables instant account-to-account euro payments between participating financial institutions. It supports real-time messaging, checks for sufficient funds, clears and settles payments, and instantly notifies payees upon business completion.
The system processes SEPA Credit Transfers and Debit Transfers. These payments adhere to the SEPA Instant Credit Transfer Scheme developed by the European Payments Council. This allows interoperability with other SEPA-based instant systems across Europe in the SEPA area.
For clients, this means they can use CENTROlink services to make instant SEPA payments across Lithuania and recipients at banks in 38 other payment area (EEA) in EU countries. This provides a seamless cross-border payment experience.
CENTROlink currently operates 24/7 for real-time processing of single SEPA services. The system can expand to offer their customers additional transaction types like batch payments and direct debits. Broadening functionality could enable more innovative services in the future.
Connectivity to TARGET2
CENTROlink links directly to TARGET2 – the Eurosystem’s real-time gross settlement system to enable smooth cross-border euro transfers. It processes large-value payments across Europe. In February 2020, CENTROlink was connected to it for high-value EUR settlements. This is a gateway to instant payments with over 52,000 banks worldwide.
Connecting to this provides CENTROlink members direct access to payments systems. This is a key enabler for real-time retail transfers between CENTROlink and SEPA systems across Europe.
Technically, the connection to this utilizes SWIFT’s Payments Interact solution i.e., it provides a standardized interface for exchanging instant payment dealings with it’s TIPS settlement mechanism.
By leveraging this interconnectivity, consumers and businesses on CENTROlink can easily make payments between European counterparties within and beyond Lithuania and European Economic Area countries.
Integration with the Bank of Lithuania’s RTP System
As the Bank of Lithuania’s system, CENTROlink is directly integrated with their settlement plan and oversight. This creates seamless connectivity domestically.
Before CENTROlink, the Bank of Lithuania’s payment system had already developed its real-time payments system called RINGIS. Launched in 2020, RINGIS processes domestic payments within Lithuania.
To maximize efficiency, CENTROlink was directly integrated with RINGIS upon launch. This allowed RINGIS to continue serving as the national RTP setup for investment in Lithuania while also connecting to CENTROlink for regional and access to SEPA.
For Lithuanian financial institutions, this integration minimizes the technology changes required. Their existing SEPA connections into RINGIS can be leveraged to access broader instant payment capabilities through CENTROlink linkage.
On the backend, the two payment methods exchange requests and confirmations via ISO 20022 messaging. This creates seamless interconnectivity between the two platforms.
Volumes and Value 2022 and beyond
Among the first month accomplishments after launch, CENTROlink processed 140,000 deals totaling €100 million. Usage continues to ramp up monthly as more systems and customers adopt SEPA instant payments.
CENTROlink continues exponential growth – in 2019, volumes grew over 70% to 43 million payments worth €88 billion. As adoption accelerates, volumes could reach tens of millions of deals daily.
Advantages to use CENTROlink instant payments
CENTROlink significantly benefits payments in Lithuania and Europe regarding speed, efficiency, convenience, and reduced costs.
Speed
The core advantage of CENTROlink is enabling real-time funds availability. They can accommodate in seconds regardless of time, day, or night. This significantly improved from traditional transfers or card payments, which could take days to complete.
Faster settlement provides quick access to funds for both personal and business needs. It creates much greater agility in cash flow management. The immediacy also reduces uncertainty in e-commerce, lending, and other economic activities taking place in the European economic area (EEA).
Security
As an EU-compliant system, CENTROlink mandates end-to-end encrypted dealings that protect sensitive payment information. Data is encrypted using the latest standards throughout the process – while entered, in transit, and at rest.
CENTROlink employs private blockchain technology to prevent fraudulent operations like money laundering or non-banks activities and ensure the integrity of payment data as well as anti-money laundering. Multi-factor authentication mechanisms add another layer of security for system access.
By safeguarding data and ensuring the validity of financial operations, CENTROlink provides the level of security needed for real-time money movement.
Additionally, fintech companies (EMI, PI, etc.) by having the access to the CENTROlink are able to open the banking account at the Bank of Lithuania (for operational and clients’ funds safeguarding purposes). The CENTROlink account opened at the Bank of Lithuania allows fintechs to ensure clients’ funds safeguarding requirements by applying low overnight fees for the funds held at the account.
Reliability
Built on resilient infrastructure, CENTROlink offers 24/7/365 contact us service availability for real-time processing. It also provides technical assistance. You can connect using the www.lb.lt. The system is designed for six 9s reliability (99.9999% uptime) through extensive redundancy mechanisms.
Key arrangement spans three geographically separated data centers – one primary and two backups. Automated failover ensures continuity in the event of any localized disruptions. Comprehensive disaster recovery provisions also minimize the risk of prolonged downtime.
Service level agreements guarantee performance metrics like system availability, business operation processing times, and recovery timeframes. This provides service assurances to end-users.
Efficiency
By consolidating three distinct domestic RTP systems into a single platform, CENTROlink achieves significant efficiency gains. It helps in promoting the single euro payments area (SEPA). Users save on technology costs by avoiding three separate systems. Maintenance, support, and operations are also streamlined processes added into one system.
The unified system translates into a better end-user experience. Customers can conduct real-time exchanges seamlessly across borders without fragmentation between the countries.
Automated processing and standardized formats also increase backend operational efficiency for participating financial institutions. This results in cost savings that may be passed down through lower consumer fees.
Innovation
CENTROlink establishes a cutting-edge real-time payment set-up for the Lithuanian region. The system provides an ideal foundation for commercial banks and fintechs to build innovative services on top of the core frame.
Use cases like requests to pay, cross-border P2P transfers, instant micropayments, and speedy bill pay all become possible through capabilities opened up by CENTROlink as the underlying payments rail.
As an EU-aligned system, CENTROlink creates seamlessness with broader regional payment innovation. This interoperability positions Lithuania at the forefront of the growing real-time economy in Europe.
Conclusion
CENTROlink is a significant step in modern payment and commerce in the Baltic region. Installing instant account-to-account transfers around the clock makes dealings faster, more convenient, and more secure.
For individuals, this means quicker access to funds and the ability to send and receive e-money in seconds. For businesses, it provides agile cash flow and certainty during transactions. And for the broader economy, it lays the foundations for next-generation payment service providers and faster economic activity. Hence, it will double the ease and comfort when it comes to electronic money matters.
As real-time payments expand across the Baltics in the coming years, CENTROlink has the potential to accelerate regional trade, e-commerce, e-money institutions and financial processes. Its unique combination of speed, resilience, and seamless cross-border connectivity positions the Baltic states at the forefront of European payments innovation.