Bank of Lithuania
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Income from licensed activities of electronic money (EMI) and payment institutions (PI) increased by almost one third and the amount of payment transactions was up by one tenth in 2023. Less than a tenth of the institutions generated most of the revenue in the sector. 

“We have observed recurrent trends within the market – the sector’s financial capacity is growing, but the 10 largest institutions continue to generate key positive indicators. We actively hold consultations with market participants, strengthen regular dialogue on topical issues and expect stronger culture of compliance and maturity of the sector,” says Denas Jonas Gadeikis, Head of the Payment and Electronic Money Institution Supervision Division of the Bank of Lithuania.

Income from licensed activities of the Lithuanian EMI and PI sector went up by 30% and amounted to almost €495 million.  The amount of payment transactions rose by around 10%, up to €114 billion. The performance indicators of the whole sector continue to be driven by several institutions: there are 23 large institutions with payment transactions equal to or greater than €1 billion. Small and medium-sized institutions account for more than two thirds of market participants in terms of turnover. Nearly €79 billion (70% of the total turnover in terms of payment transactions) were generated by the 10 largest EMIs and PIs. They earned almost €325 million, accounting for around 66% of the market revenue. Almost 60 EMIs and PIs (46% of the institutions in the sector) had a turnover below €50 million, while income from licensed activities of 78 institutions (62% of the sector) was below €1 million. 

57 EMIs and PIs were profitable. The profitability of four institutions was high (above 50%), that of 13 institutions – from 20% to 50%, and of 40 institutions – from 0.01% to 20%. 42 institutions (40% of market participants) suffered losses. The Bank of Lithuania has observed the emergence of more and more institutions that are facing financial difficulties and therefore asks them to contact the Bank of Lithuania as early as possible to find ways to solve problems.

To increase the maturity of the sector, in 2023 the Bank of Lithuania held almost 50 meetings with representatives of EMIs and PIs, prepared recommendations on practices for improvement, actively cooperated with associations representing the sector and organised a series of consultation events. It looked at the sector’s current developments, discussed how to properly delegate management and control functions to third parties and how to control them, how to ensure activities through intermediaries, and addressed the issues of empty shell companies. One of the directions of the meetings is the dialogue with new market participants (check-in meetings). The aim is to discuss the challenges in the first 6 months after the granting of the licence and follow-up plans. 

The central bank assessed institutions’ management of money laundering, KYC and fraud risks, compliance with own funds requirements, safeguarding requirements as well as the implementation of internal control and internal audit functions. 19 targeted inspections, one in-depth analysis and two assessment visits were carried out, and 63 enforcement measures were applied. It was found that 36% of market participants submitted data to the Bank of Lithuania after the deadline, while 41% provided data with errors. At the end of 2023, two institutions failed to meet the mandatory own funds requirements, while the capital adequacy ratio of 14 institutions at the end of the review period fluctuated around the minimum required threshold. The Bank of Lithuania advises not to risk and form a safe reserve exceeding minimum requirements.  

At the end of 2023, 125 institutions (82 EMIs and 43 PIs) operated in the EMI and PI sector in Lithuania. Last year the Bank of Lithuania issued four new licences, changed one licence from limited to unlimited activities, extended 15 institutions’ licences, and 15 other licensed institutions were acquired (change of shareholders). At the request of the participants themselves or as a result of the imposition of sanctions (mainly for non-compliance with legislation on the prevention of money laundering and terrorist financing), 13 licences were revoked. 

The main activities of the institutions are related to payment transfers and open banking. The payment initiation services attributed to it were provided by 12 institutions, which jointly initiated 75.6 million payment transactions. In addition, 8 institutions in Lithuania provided account information services (when consumers are provided with consolidated information on all their payment accounts). They had access to nearly 3 million accounts.

Information on the annual and quarterly key performance indicators and indicators of compliance with prudential requirements of EMIs and PIs can be found here.

Reviews of the Activities of Electronic Money and Payment Institutions