Overview of Lithuanian Payment Institution Licensing
Lithuania has established itself as one of Europe's leading FinTech hubs, with the Bank of Lithuania issuing payment institution licenses that enable service provision across the entire EU/EEA. The regulatory framework balances consumer protection with support for innovation, creating an attractive environment for payment service providers and FinTech startups.
The Bank of Lithuania's efficient licensing process and transparent regulatory approach have attracted significant international interest from payment services companies.
Regulatory Framework
Lithuanian payment institution regulation operates under Bank of Lithuania supervision:
Bank of Lithuania: The primary regulatory authority for payment institution licensing and ongoing supervision.
Republic of Lithuania Law on Payment Institutions: The legislative framework governing requirements and obligations for payment institutions.
EU Payment Services Directive (PSD2): European requirements implemented in Lithuanian law, enabling EU-wide passporting.
Lithuanian Anti-Money Laundering Legislation: AML/CFT requirements applicable to all licensed payment institutions.
License Types
Payment Institution License
- •Scope: Enables service provision across the EU/EEA
- •Activities: Payment initiation, account information services, money remittance
- •Passporting: Full EU/EEA passporting rights
Restricted Activity License
- •Scope: Limited to Lithuanian territory only
- •Limitations: Excludes payment initiation and account information services
- •Capital: Lower capital requirements
Electronic Money Institution License
- •Scope: Electronic money issuance and payment services
- •Activities: Customer fund protection, prepaid instrument offerings
- •Additional: Permits e-money issuance
Licensable Activities
Payment institutions must obtain licensing to:
1. Operate payment accounts with cash deposit/withdrawal services
2. Execute payment transactions between service providers and users
3. Perform transactions covered by credit arrangements
4. Issue payment instruments or acquire transactions
5. Provide money remittance services
6. Offer payment initiation services
7. Deliver account information services
Capital Requirements
Standard Payment Institution
- •Minimum initial capital: EUR 125,000
Money Transfer Only
- •Minimum capital: EUR 20,000
Payment Initiation Services Only
- •Minimum capital: EUR 50,000
Corporate Requirements
Entity Formation
- •Lithuanian-registered company required
- •Minimum one employee contact point
- •Registered office in Lithuania
Organizational Structure
- •1+ shareholder
- •1 head of administration
- •3 supervisory board members
- •3 board members
Insurance and Audit
- •Professional indemnity insurance contract required
- •Designated audit firm compliant with Lithuanian financial laws
Admission Criteria
The Bank of Lithuania evaluates:
Corporate Assessment
- •Applicant profile and entity type
- •Operational readiness
- •Regulated activity classification
- •Holding company presence
Financial Assessment
- •Funding sources
- •Financial capacity and track record
- •Capital adequacy
Personnel Assessment
- •Fitness and propriety of controllers, directors, and shareholders
- •Staff qualifications and anticipated staffing
- •Management experience
Operational Assessment
- •Outsourcing arrangements
- •Compliance capability
- •Technical infrastructure
Public Interest
- •Public interest considerations
- •Consumer protection measures
Timeline
Initial Review
- •5 business days for acceptance/rejection determination
Standard Process
- •3 months minimum (assuming no deficiencies in application)
Restricted Activity License
- •2 months typical processing
Total with Professional Assistance
- •Approximately 5 months for company registration, bank account opening, and license approval
Authorization Process
Phase 1: Company Setup
Timeline: 2 weeks
- •Establish Lithuanian company
- •Local address establishment
- •Nominee director appointment
- •Company secretary arrangement
Phase 2: Banking
Timeline: 4 weeks
- •Open corporate bank account
- •Secure internet banking credentials
- •Deposit minimum capital
Phase 3: Documentation Preparation
Concurrent with other phases
- •Comprehensive business plan
- •AML/CFT compliance policies aligned with Bank of Lithuania requirements
Phase 4: Internal Policies
Concurrent with other phases
- •Technology risk management documentation
- •Information systems procedures
- •Accounting procedures
Phase 5: Insurance
Conditional requirement
- •Source professional indemnity insurance
- •Required for payment initiation or account information services
Phase 6: Pre-Submission Meeting
Optional
- •Initial Bank of Lithuania consultation
- •Address questions before formal submission
Phase 7: License Submission
- •Submit complete application
- •Regulatory review and approval
Compliance Obligations
Ongoing Requirements
- •Regular regulatory reporting to Bank of Lithuania
- •Annual audited financial statements
- •Capital adequacy maintenance
- •AML/CFT compliance monitoring
Consumer Protection
- •Customer fund safeguarding
- •Transparent pricing
- •Complaint handling procedures
Prudential Requirements
- •Ongoing capital adequacy
- •Liquidity management
- •Risk management frameworks
EU Passporting
Lithuanian payment institution licenses provide passporting rights throughout the European Economic Area:
Freedom of Services
- •Cross-border service provision
- •No local establishment required in host states
Freedom of Establishment
- •Branch establishment in other EU/EEA states
- •Agent appointment throughout EU/EEA
Market Access
- •Access to 450+ million European consumers
- •SEPA participation
- •Single regulatory approval for EU-wide operations
Advantages of Lithuanian Licensing
Regulatory Efficiency
- •Bank of Lithuania's streamlined processes
- •Clear regulatory guidance
- •Transparent requirements
FinTech Hub Status
- •Growing ecosystem of licensed institutions
- •Experienced professional services sector
- •Supportive regulatory environment
Cost Competitiveness
- •Competitive operating costs
- •Lower capital requirements than some EU alternatives
- •Efficient licensing timeline
EU Market Access
- •Full passporting rights
- •Single authorization for EU-wide operations
- •SEPA membership
Practical Considerations
Professional Support
Most applicants engage:
- •Lithuanian legal counsel familiar with Bank of Lithuania requirements
- •Compliance specialists for AML/CFT framework development
- •Local accounting and audit support
- •Corporate secretarial services
Banking Relationships
Lithuanian banks experienced with payment institutions provide corporate banking facilities. Early engagement advisable.
Language
Lithuanian required for certain regulatory submissions, though English commonly used in business contexts.
Local Presence
Genuine Lithuanian presence required including registered office and employee contact point.
Conclusion
Lithuanian payment institution licensing provides EU-wide market access through one of Europe's most efficient regulatory frameworks under Bank of Lithuania supervision. The tiered capital requirements (EUR 20,000 - EUR 125,000) accommodate different business models and activity scopes.
The approximately 5-month total timeline and Bank of Lithuania's FinTech-friendly approach attract international payment service providers seeking European presence. Success requires qualified management, comprehensive AML/CFT frameworks, and appropriate professional indemnity insurance.
Companies considering Lithuanian payment institution licensing should engage appropriate professional support and ensure their business models align with Bank of Lithuania expectations for licensed payment service providers.