2021-09-15
Electronic money and payment institutions improve discipline in the first half of 2021, handle over €120 billion in payment transactions
Total value of payment transactions executed by electronic money institutions (EMIs) and payment institutions (PIs) in the first half of 2021 soared 5.7 times from the same period a year earlier, while their income from licensed activities surged 5.1 times.
“According to the end-of-June data, all EMIs and PIs complied with own funds requirements. We hope their executives have taken into consideration the expectations as to the institutional governance, internal control and the culture of compliance, which we set out in late spring. A broader picture will emerge following the completion of a more in-depth analysis currently underway,” said Dovilė Arlauskaitė, Head of the Payments Market Supervision Division of the Bank of Lithuania.
The total value of payment transactions handled by EMIs and PIs in the first half of 2021 amounted to €121.8 billion, which marked a rise of 44.5% from the previous quarter and an increase of 5.7 times from the first half of 2020. In addition, EMIs and PIs generated €208.2 million in income from licensed activities, up by €167.7 million, or 5.1 times, year-on-year. EMIs accounted for 94% of the total income, and PIs – for the remaining 6%.
The level of financial performance achieved in the first half of 2021 showed that, with institutions being in compliance with own funds requirements, the market situation continued to improve and all EMIs and PIs met the said requirements. In the first quarter of 2021, one out of 136 institutions failed to comply with own funds requirements (it had already taken measures to ensure sufficient own funds) whereas in the first half of 2020, three out of 118 institutions were found to be non-compliant.
The Bank of Lithuania requires that electronic money and payment institutions comply with the requirements set for them and inspects financial market participants in a planned and regular manner. The Financial Market Supervision Service is currently conducting 14 individual and thematic investigations or analyses into compliance by these FinTech institutions with the requirements pertaining to own funds and the protection of customer funds, into their internal audit and internal controls. In addition, the central bank is conducting four investigations related to the money laundering prevention risk management and two thematic analyses into the Know-Your-Customer (KYC) practices and fraud risk management. In addition to five fines and three public announcements about infringements of effective legislation, one institution had its licence revoked and another one faced a temporary ban on the provision of services to legal entities in the first half of 2021 due to violations related to money laundering prevention and the lack of compliance with the requirements pertaining to own funds and the protection of customer funds.
The Bank of Lithuania continues to closely monitor the compliance of credit institutions with its position on the right of EMIs and PIs to access bank accounts opened with credit institutions. Two reject reports (account closure or restriction notifications) were received in the second quarter of 2021, as opposed to four such reports received in the previous quarter.
The public list of EMIs and PIs included 140 entities (86 EMIs and 54 PIs) at the end of the first half of 2021, up from 118 entities (73 and 45, respectively) a year earlier. The Bank of Lithuania is currently examining more than 30 applications for an EMI or a PI licence.
The Bank of Lithuania publishes information about scheduled inspections of electronic money and payment institutions, the key annual and quarterly performance figures of each EMI and PI as well as the indicators of their compliance with prudential requirements.
