Any payment or electronic money institution licenced in the EU must safeguard customer funds.

The most common safeguarding method is to keep customer funds in a segregated safeguarding account held at a credit institution.

When onboarding with CENTROlink, PIs and EMIs open two types of accounts at the Bank of Lithuania:

Until their August announcement, the Bank of Lithuania considered that PIs / EMIs could use FC accounts to safeguard their customer funds in compliance with EU regulations.

Article III.13

From the moment of its opening, the account(s) of customer funds is dedicated only for holding and managing the funds received by [PI or EMI]. [...] The [PI o EMI]’s customer funds are held in the payment system in full compliance with the requirements of Article 10 of Directive (EU) 2015/2366 of the European Parliament [...]

Article 10 of Directive (EU) 2015/2366 is PSD2’s article on safeguarding requirements.

In August 2024, the Bank of Lithuania announced that this would no longer be the case and would no longer provide PIs and EMIs with dedicated safeguarding accounts starting from April 2025.

This change will significantly impact CENTROLink’s PI and EMI customers by forcing them to safeguard their funds in third-party credit institutions.

Most PIs / EMIs access payment schemes and safeguard customer funds with the same banks. Properly managing the safeguarding of customer funds with settlement and safeguarding accounts in the same bank can already be tricky. Doing so across different banks is even more complex.

CENTROlink’s customers will need to safeguard their customer funds with a third-party commercial bank. While many banks now partner with PIs and EMIs and offer them access to payment schemes, settlement accounts and safeguarding accounts, partnering for safeguarding accounts only is not a common model.

Therefore, entering into commercial discussions, undergoing the banks’ compliance process and finalising contractual discussions on time for April 2025 shouldn’t be overlooked.

Once an agreement is reached with a partner bank, the PI or EMI has to build an integration between its core systems and the bank’s cash management systems to automate safeguarding workflows.

Even for companies that have already built one or several bank integrations, building a new one is always a challenging project. The usual steps involve:

Funds attribution

Any credit or debit on the Bank of Lithuania settlement account must be attributed to specific customers so that the PI or EMI can update individual customer balances accordingly and know at all times how much funds each customer holds with the PI or EMI.

This step is not new, as CENTROlink’s customers must already do so in their current safeguarding setup on the Bank of Lithuania’s FC accounts.

Safeguarding transfers

The European regulation mandates that if a customer receives a payment, and the funds corresponding to that payment are not withdrawn by the customer or used to send another payment, the PI or EMI must safeguard these funds “by the end of the next business day.”

This means that CENTROlink’s customers will need to transfer the right amount of funds from their Bank of Lithuania’s FC accounts to their partner bank safeguarding account every day and properly track and reconcile these payments to ensure the proper tracking of individual customers’ funds at any given time.

Liquidity management

As safeguarded funds are held on a different account than the settlement account, or FC accounts in CENTROlink’s case, all customer deposits are not instantly available on the FC account to settle outgoing SCT or SCT Inst or incoming SDD.

These accounts being held at two different partner banks can make the problem even more complex as the transfer between the safeguarding and settlement accounts can take some time.

Automating the liquidity management of the settlement accounts is, therefore, critical. There are several levels of automation possible, from triggering automated cash sweeps from the safeguarding account to the settlement accounts whenever the settlement accounts balances reach a given minimum value to calculating automated cash sweep amounts based on customers' booked payment orders and current settlement accounts balances, to adding learnings from historical data to the computation.

Mambu Payments supports European PIs and EMIs with their safeguarding workflows.

Mambu Payments provides fully-managed bank connectivity to a growing network of more than 30 partner banks across Europe through a single, modern API, enabling fast, future-proof integration with the partner bank of your choice.

Our network includes CENTROlink and leading commercial banks with offers tailored to APIs and EMIs, such as BNP Paribas, Natixis GTB, LHV, Banking Circle, and ClearBank.

On top of this managed connectivity, Mambu Payments provides a payments hub enabling customers to automate safeguarding workflows through API, webhooks, and a modern dashboard, including: