2025 was a triumphant year for payments in the Balkan region, helping countries such as Montenegro and Albania further integrate into the EU’s payments infrastructure. In this blog, Paylume delves into what the benefits and challenges of this endeavour encompass for financial institutions.
Montenegro, Bosnia and Herzegovina, Albania, Kosovo, North Macedonia and Serbia all achieved considerable payments milestones in 2025, with progress on SEPA membership allowing them to press forward on their journey towards full EU membership.
Paylume has been part of this story, supporting banks and market infrastructures in the region to adopt the Target Instant Payment Settlement (TIPS) Clone solution that has been developed by Banca d’Italia. This allows for compatibility with the EU’s instant payment systems and accelerating financial integration with the trading bloc.
What will this mean?
SEPA integration offers major advantages, especially for those in the Balkan banking industry.
Primarily, it should be possible to lower operational costs, and it will add incentives to institutions in the region to modernise their digital infrastructure.
Standardised SEPA rails reduce reliance on high-cost correspondent banking networks while also building efficiency across payment flows.
Banks will also become more competitive, with the newfound offering of faster and cheaper euro transfers that meet international EU standards.
Stronger integration with EU financial markets will make it easier for Balkan banks to connect to EU payment providers and participate in payment schemes that the door was previously not open to.
The challenges ahead
The benefits will be demonstrable, and integration into SEPA was inevitable considering the region’s assession into the broader EU sphere, but there are also plenty of challenging considerations for firms to consider in the coming years.
Banks that are operating in the Balkans will face cannibalisation of significant revenue streams. These include the fees from international transfers, a current source of income.
Margin compression will intensify as SEPA enforces cheaper, faster, and more transparent payments.
At the same time, there is an opportunity now for EU member state banks and fintechs to become more competitive in the region, increasing customer churn risks and pressuring weaker domestic institutions.
This new pressure will mean that financial institutions in the region will need to embrace their digital transformation and ensure that their products and services are up to standard.
This is part of why the short-term implementation costs are likely to be high.
While at the other end of this is a much larger market opportunity and the promise of more frictionless trade, there are inevitable major investments required for ISO 20022, cybersecurity, instant payments, and AML systems and liquidity pressures may also rise under 24/7 instant-payment settlement requirements, especially for smaller banks.
A much better place
Regardless, economically, SEPA stands to radically improve trade conditions, turning cross-border euro payments into domestic ones, lowering costs and accelerating settlement for exporters and importers alike.
It will boost supply-chain efficiency and strengthen the Balkans’ position within the Europe, while remittances, critical for those with family members working within the EU, will become faster and cheaper, too.
This lays the foundations for a stronger digital economy, all the while reducing payment-processing costs for governments and improving financial inclusion at the same.
Long term, SEPA’s benefits undoubtedly outweigh its costs, but this will only happen if banks and regulators manage the transition effectively.
Having played an integral role in helping this integration become a reality for the region, Paylume’s experts are here to help enable banks coming up to standard with SEPA, especially as they adapt to the new necessities of SEPA.
This will ensure that institutions are able to embrace the opportunities that will come with this latest move.
