A payment institution is a market participant licensed by the Bank of Lithuania that provides payment services. It can perform money remittances, payment transactions, direct debit or credit transfers, provide cash deposit, cash withdrawal or payment initiation services, etc. A payment institution cannot accept deposits from unprofessional market participants or issue electronic money. In addition to payment services, it has the right to provide additional services that are closely related to these services, e.g. currency exchange.

A payment institution may hold a licence for restricted activity. Where the payment institution holds this type of licence, its management is subject to less stringent requirements, the capital and shareholder eligibility requirements are not applied, however it is subject to restrictions on the turnover of payment transactions, provided for in the Republic of Lithuania Law on Payment Institutions. Such an institution may only operate in the Republic of Lithuania.

A payment institution can have a licence of a payment institution only providing the account information service. Such a licence is valid in other Member States, however the licence holder is not subject to capital and shareholder eligibility, fund safeguarding requirements, as well as requirements for intermediaries and outsourcing of operational functions.

A payment institution holding a licence for unrestricted activity can operate across the EU; it is subject to own funds requirements provided for in the Republic of Lithuania Law on Payment Institutions.