Introduction

A strong digital payment ecosystem in the Baltics, Latvia has become an early player in modernization of its financial sector. With its operations wrapped around SEPA transfers, instant payments, BankLink and mobile friendly user first solutions, Latvia stands at the junction where fintech modernization meets the developmental needs. Latvia has, over the past decade, transformed into a majorly cashless economy and digitization has become the norm of individuals and businesses. The transformation has been driven by commercial banks, government initiative, financial institutions and the strong underlying financial and technical infrastructure, which is what we’re here to find out more about! 

The foundation of payment ecosystem in Latvia

Latvia has been increasingly building and developing towards a cashless economy with instant transfers and rapid technologies as its core. These key pillars include;

1. SEPA payments regulating Euro transfers across Europe.

2. Instant payments for real time bank transfers. 

3. BankLink, which provides internet banking solutions.

4. Mobile and digital payment systems with fintech penetration. 

Together these components make Latvia’s financial ecosystem sound, establishing a strong foundation to build on.  

Understanding SEPA payments, BankLink and instant transfers

The layered ecosystem of payments in Latvia comprises networks like SEPA, Instant payments and real times transfers, as discussed above. Understanding their working gives one an insight into the smart backend network of these systems; 

1. SEPA credit transfers: SEPA is the Euro dominated transfer network across Europe which allows businesses and individuals to send and receive money across the SEPA zone with standardised iBAN systems. This enables next day transfers ensuring good security and speed across the regions in the network.

2. Instant payments via EKS:

Latvia’s central bank (Latvijas Banka) has enabled 24/7 instant transfers facilitated by EKS infrastructure which ensures transfers under 10 secs and is supported by major Latvian banks like Citadele, SEB, Swedbank, Signet and many others.

3. Online payment gateway with BankLink

BankLink, being an intermediary of the internet banking system, is not a bank itself, instead it enables individuals and organisations to make transfers directly via their bank’s internet banking services. It’s widely used by merchants and supported by major banks like Swedbank, SEB, Luminor, and Citadele.

Usage and growth of the systems

• In the last 2 years, the non cash payments have surged over 1.1 trillion euros which accounts for around 2.4 million daily non cash payments giving a significant share in cashless transfers.
• These transactions have been validated by state usage in payments like taxes, fees etc showing the alignment of these payments with the central system. Government integration of digitised structures has accommodated the implementation of digital services on business and individual levels as well. 

Digital payment adoption in Latvia

Here are some of the trends of digital payment adoption in Latvia;

• Latvia has rapidly adopted contactless cards whose growth is only projected to grow further from 2.1 million contactless cards in 2024.

• More than one fourth of the population makes daily payments via smartphones, a bigger share of population uses instant transfers and there’s even the usage of smart watches for payments which has been only recently ignited.

• Great levels of internet penetration among almost all regions and widespread acceptance along with efficient digital skills among users, all come together to supper this digital growth. More than 90% of Latvian’s are equipped with the internet and use it for day to day transactions and more activities. 

Cross border payments and fintech revolution in Latvia 

Latvia’s opportune digital infrastructure combined with its digitally advanced payment rails provides a great impetus to fintech innovations. Examples include growing usage of stablecoin payments across borders and digital payment solutions using platforms like TransFi or new digital banks like Indexo providing credit cards and mobile services. The baseline of these payments is built by SEPA and Instant transfers like SEPA used for cross border EURO payments as an efficient tool for the Latvian market and BankLink simplifying ecommerce setups for merchants and individuals.  

These combinations make Latvia a very strong hub for business, ecommerce and cross border markets. TransFi and other fintechs are coming in and making a breakthrough with stablecoins and digital asset payments. With strong local rails in Latvia, the system can blend with the existing networks enabling efficient cross border transactions using digital assets for better transparency, speed and costs lower than any other payment means. Know more about how TransFi can become your payment partner and make your payment journey seamless in this technology driven payment schema here.

Future prospects and final thoughts

Latvia's payment rails spanning from SEPA, Instant transfers, BankLink, fintechs and real time payments offer a huge opportunity for the growth of Latvia’s economy which has never always surged towards betterment. Latvia stands as a junction where technology merges rightly with its financial system and the path ahead is one of a well equipped cashless economy. If you’re looking for solutions to build easier payment integrations and ways to streamline cross border payment rails across Europe and the rest of the world, hop on to our platform - TransFi which offers quick and accessible integrations with local payments rails, easy digital assets settlements and a worldview into currencies and payments methods used all across. TransFi is helping the many countries in the global realm embrace a better future with the ease of the best services and interface at power by connecting users with over 100+ currencies, 250+ local payment methods, and 80+ digital assets, giving both senders and receivers control, speed, and cost savings.  

Frequently asked questions (FAQs)

1. What is BankLink in Latvia? 

BankLink, being an intermediary of the internet banking system, is not a bank itself, instead it enables individuals and organisations to make transfers directly via their bank’s internet banking services.

2. How to make Instant transfers in Latvia? 

Through EKS instant payments system, transfers can be made 24/7 and are settled under 10 secs.

3. What is the adoption rate of cashless payments in Latvia?

Latvia has rapidly adopted contactless cards whose growth is only projected to grow further from 2.1 million contactless cards in 2024. This signifies a high adoption rate and growth in the digital payment domain in Latvia.

4. What is the function of SEPA transfers in Latvia? 

SEPA is the Euro dominated transfer network across Europe which allows businesses and individuals to send and receive money across the SEPA zone with standardised iBAN systems. This enables next day transfers ensuring good security and speed across the regions in the network.

5. How is TranFi helping businesses in Latvia with digital payments?

TransFi is helping the many countries including Latvia in the global realm embrace a better future with the ease of the best services and interface at power by connecting users with over 100+ currencies, 250+ local payment methods, and 80+ digital assets, giving both senders and receivers control, speed, and cost savings.