2025-03-24
Lithuania’s electronic money institution (EMI) and payment institution (PI) sector recorded significant financial growth in 2024, with income from licensed activities jumping by 25% to €622 million and the amount of payment transactions increasing by 33% to €152 billion. However, the competitive environment remains unchanged, with a tenth of institutions continuing to dominate the market in both cases.
“Although the sector witnessed a slight decline in the number of participants last year, this is offset by the qualitative growth of the sector. It is important to note that at the end of the year, all institutions met their own funds requirements, which is a sign of increasing maturity. However, as a rule, we have warned that it is not sustainable to hover around the capital adequacy threshold,” says Denas Jonas Gadeikis, Head of the Payment and Electronic Money Institution Supervision Division of Lietuvos bankas.
The top ten institutions in terms of income from licensed activities earned almost €386 million, which accounts for more than 60% of the market’s income from licensed activities. 66% of the sector’s total turnover – nearly €101 billion – was generated by ten largest EMIs and PIs in terms of the amount of payment transactions. There are 30 large institutions in the market with the amount of payment transactions equal to or exceeding €1 billion. They account for a quarter of the market, whereas small and medium-sized institutions represent almost a half of the EMI/PI market participants.
At the end of 2024, institutions with the amount of payment transactions exceeding €1 billion accounted for a quarter of the total market and 92% of the total turnover of the EMI/PI market. Institutions with the amount of payment transactions between €100 million and €1 billion represented 23% of the market. The same market share was held by institutions with less than €100 million in payment transactions.
However, in terms of turnover, they accounted for only 0.5% of the total turnover of the EMI/PI market. In terms of the amount of payment transactions, collectors of utilities and other payments accounted for almost 18% of the sector, whereas non-operating institutions and institutions providing only payment initiation services or account information services each represented 6% of the sector.
The profitability ratio exceeded 50% in three institutions, ranged from 20% to 50% in 16 institutions, varied between 0.01% and 20% in 49 institutions, and was negative in 51 institutions.
Of the 13 institutions providing payment initiation services, four institutions initiated over 10 million payment transactions. The account information services segment was dominated by one institution with access to 67% of the consumer accounts covered by this service.
In 2024, the share of customer funds held with central banks decreased by 26% year on year from €912 million to €671 million. The share of customer funds held with credit institutions increased as much as 2.5 times from €488.3 million to €1.2 billion. Meanwhile, €742 million was invested in safe and liquid assets, representing an increase of 36% compared to 2023.
At the end of 2024, all institutions met their own funds requirements, although eight institutions were close to the permissible threshold at the end of the period under review. Lietuvos bankas stresses that institutions should set their target own funds ratio as high as possible, as a ratio which is too low may be insufficient to cover unexpected losses.
At the end of 2024, there were 119 licensed EMIs and PIs (76 EMIs and 43 PIs) in Lithuania. Last year, Lietuvos bankas issued three new licences and extended licences for two institutions, authorised acquisition of 12 institutions (or holdings of their shares) and revoked nine licences.
To assess the compliance of EMIs and PIs with the requirements of money laundering, KYC and fraud risk management, own funds requirements and requirements for safeguarding of customer funds, as well as the implementation of internal audit and control procedures, Lietuvos bankas carried out 15 targeted inspections, two in-depth analyses, imposed 19 sanctions, organised 71 meetings with financial market participants, and sent 91 practice improvement notices. When informing the market about the most common operational deficiencies, Lietuvos bankas supplemented the publicly available information.
Lietuvos bankas publishes information on upcoming routine inspections of EMIs and PIs, as well as annual and quarterly indicators of compliance with the key operational and prudential requirements for each of them.
Review of the Activities of Electronic Money and Payment Institutions