The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

Croatia became the 20th EU Member State to join the euro on 1 January this year. Since the end of June, the SEPA Instant Credit Transfer (SCT Inst) scheme has been in use in Croatia, where a majority of payment accounts and six payment service providers (PSPs) have joined the scheme to date. We interviewed Sandra Ruso, an Advisor at the CBA, to learn more about payment developments in her country. In addition, our infographic summarises all you need to know about the Croatian payments landscape.

First, Croatia adopted the euro on 1 January 2023 and became the 20th member of the euro zone. Can you tell us about your first six months with the euro?

The prices of goods and services are expressed in euro and kuna with a clearly visible exchange rate, which provides a very good consumer protection measure. We can say that even before adopting the euro, Croatia was highly euro-oriented country, primarily due to tourism but also in other economic areas. That's why our experience has been really very good – and even simpler for business itself because the exchange rate difference has been eradicated.

Croatia started processing SCT Inst transactions in June 2023. How would you describe its experience with instant payments? What are the main lessons already learned and the next steps being contemplated?

We have been processing SCT Inst transactions at the national level for three years, which certainly facilitated the implementation of cross-border SCT Inst transactions, although that was still a big step to take.

The lessons learned are, among other things, that the implementation needs complex and detailed preparation, and that the support and intensive cooperation of all stakeholders are necessary: especially the bank as a "Participant", the central bank, entities in the role of "Instructing party”,  SWIFT i.e. authorised network service providers (NSP). It would be beneficial to establish a centralised framework for cross-border banks and contacts that are mutually agreed upon, enabling efficient testing and knowledge-sharing. A central place should be organised for the exchange of reported problems and received feedback from all banks. Functional specification and final documentation should be finalised well before the go-live date to avoid last minute changes.

In the end, everything was done successfully, and we can proudly say that Croatia has become part of the Instant Community and that SCT Inst transactions are exchanged in both directions.

The next steps include the expansion of services in terms of issuing cross-border instant orders, but they largely depend on what the announced changes to the EU regulations (No 260/2012 and (EU) 2021/1230) will bring us in terms of (new) regulatory requirements for the implementation of instant transfers.

What are the current main features of the payment landscape in Croatia and how has it evolved in the recent past?

Introducing the euro as the official currency involved several key changes and advancements in the payment ecosystem. One of them is the integration of pre-existing instant payments scheme that has gone cross-border, and mobile payment apps. Card payments, both debit and credit, are widely accepted. Mobile payment solutions have witnessed growth. Various mobile banking solutions typically utilise Near Field Communications (NFC) technology which is allowing users to tap their devices on contactless payment terminals. Direct debit is often used for recurring payments such as utility bills, loan repayments and subscription services.

Finally, a broader question: how do you see Croatia’s payment landscape developing over the coming five years?

We are probably facing the same challenges as all other EU countries. In the very near future, we have the ISO change-over (already in progress) and Confirmation of Payee projects. Both projects are quite demanding.

After that I am confident that we will also join SEPA Request-to-Pay (SRTP) and One-Leg Out Instant Credit transfer (OCT Inst) schemes.

Infographic: The Croatian payment landscape (July 2023)
(Click to enlarge and download)