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Latvia has become the first country in the eurozone to allow a non-bank payment service provider (NBPSP) to participate directly in a central bank-operated payment system.
The breakthrough follows a regulatory change introduced on October 17, 2024, enabling NBPSPs, including licensed payment and electronic money institutions, as well as credit unions, to become participants in the Electronic Clearing System (EKS).
The development is derived from changes to law in the EU’s Instant Payments Regulation (IPR), opening up direct access.
It was intended by co-legislators to improve competition, and promote innovation, so that there is a more level playing field between incumbents and challengers in the payments space.
"The Bank of Latvia provides an innovation-supporting infrastructure so that companies can develop modern, convenient and user-friendly financial services,” said Mārtiņš Kazāks, the governor of the Bank of Latvia.
“The opportunity for non-bank payment service providers to become EKS participants is one of the Bank of Latvia's initiatives to promote the development of the FinTech sector in Latvia. Such an opportunity is currently available only in Latvia”.
First-mover advantage
By joining the EKS, xpate now has direct access to clearing services within the Single Euro Payments Area (SEPA), which spans the EU and European Economic Area (EEA), as well as neighbouring countries such as the UK, Switzerland and many of the Balkan states.
According to the Bank of Latvia, xpate is the first to complete the rigorous onboarding process, which includes signing an agreement with the central bank, adhering to technical readiness requirements and undergoing comprehensive testing.
The central bank has committed to providing expert guidance and support to other potential participants throughout the process.
The initiative aligns with a European Central Bank (ECB) policy encouraging wider access to central bank payment systems through harmonised guidelines.
The reason the Baltic state has been able to move ahead of its neighbours is because lawmakers in the country’s parliament passed legislative changes much earlier than their counterparts in other eurozone countries.
