Lithuanian Payment Institution License

REQUIREMENTS

The requirements for a Payment Institution in Lithuania are derived from the EU Payment Services Directive, and Lithuanian specifics are mostly around capital and local presence. Key requirements include:
 

Capital Requirements
Based on the services to be offered, the minimum initial capital must be:

• €20,000 – if providing only money remittance services (fund transfers without payment accounts).

• €50,000 – if providing only payment initiation services (PIS, typically in online banking payments).

• €125,000 – if providing any other payment services, such as operating payment accounts (accepting deposits and withdrawals), executing payment transactions, issuing payment cards, or any activity where you hold client funds beyond a single transfer. Most full-scope PIs need this amount.
   

These funds must be in the company’s account and dedicated to capital (not spent on setup costs). For restricted PIs, no minimum capital is required, but the trade-off is they can’t exceed €900,000 in transaction volume per month and can’t passport abroad.
 

Local Company and Office
You must have a UAB (Ltd) in Lithuania. The company needs a registered office in Lithuania (and typically a real operating office). The Bank of Lithuania expects PIs to have a meaningful presence: at least one director or senior manager residing in Lithuania or frequently present to run the business. This ensures effective supervision. A purely foreign-run entity with no Lithuanian physical presence will face scrutiny. Essentially, management must not be a “letter-box” abroad.
 

Fit and Proper Management
As with EMI, managers and the board must be of good repute and collectively have the experience to run a payment services business. For instance, having at least one person with prior experience in payments or banking operations/compliance strengthens the application. The Bank of Lithuania may conduct an interview or further questions to key persons if needed. Honesty is vital: any past bankruptcies or legal issues should be disclosed with explanations.
 

Shareholder Suitability
Any shareholder with 10% or more ownership (direct or indirect) should be transparent, financially sound, and reputable. If the shareholder is a large corporation or fund, financial statements will be needed. If it’s an individual, proof of funds for their investment might be requested to ensure capital is coming from legitimate sources.

Safeguarding Arrangements
Except for cases where safeguarding isn’t required (e.g., purely account information service providers), the PI must protect client funds. This means instituting one of two methods:
 

• Segregation: keeping client money in a separate account at a bank or investing in secure low-risk assets

• Insurance/Guarantee: obtaining a guarantee or insurance from an insurer or bank to cover clients if the PI fails

The method chosen must be documented. Lithuania’s rules require that by the end of the next business day after receiving funds, those funds are safeguarded. Evidence of a drafted agreement with a safeguarding bank in Lithuania or the EU can greatly satisfy this requirement.
 

Operational Structure and Internal Controls
The application should show a clear organisational structure. Key roles (even in a small team) should be defined – who handles compliance, who manages IT, who deals with customer support, etc. If one person wears multiple hats (common in start-ups), it should be plausible and not a conflict (for instance, the same person shouldn’t be in charge of making payments and reconciling accounts without oversight – segregation of duties should be in place as much as feasible).
 

You also need a risk management framework proportionate to the size of your business. Even a small PI should conduct a risk assessment of its activities (fraud risk, operational risk, liquidity risk if holding funds overnight, etc.) and have mitigating controls (fraud monitoring tools, insurance, backup systems, etc.).
 

Business Continuity Plan
Regulators want to see that a PI can handle disruptions. A basic BCP addressing scenarios like IT system failure, cyber-attack, or service provider failure is often required (especially since the Bank of Lithuania emphasises ICT and security risk management). Plans to regularly test backups or have a secondary internet provider for your systems, for example, are good to include.

Compliance with AML
Lithuania follows EU AMLD5/6. A PI must have internal procedures to prevent money laundering and terrorist financing. You’ll need to appoint an MLRO (Money Laundering Reporting Officer) – for small firms this might be a director double-hatting, but they must be knowledgeable. Training plans for staff, customer due diligence measures, and transaction monitoring systems (even manual if volume is low) should be outlined. Since PIs can be high risk (handling payments), the Bank of Lithuania will carefully assess AML readiness.

Fee and Financial Capacity
Prior to licensing, the state fee (approximately €693 for a PI licence) must be paid. Additionally, the PI must demonstrate it can cover initial operational costs. While not an official capital requirement, the projections should show that aside from the required capital, you have enough funds or revenue to cover expenses for at least the first year or until breakeven. This assures regulators the business is viable and won’t misuse client funds to cover its costs.

In summary, a Lithuanian PI licence requires solid preparation but with lower financial thresholds compared to an EMI. The focus is on showing that even with less capital, the company will operate safely: client funds segregated, management competent, and systems secure. The relative ease of requirements (especially capital) is balanced by the high expectation on compliance and organisation – which is appropriate as the Bank of Lithuania aims to maintain the integrity of its burgeoning fintech sector.