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A new circular from the Bank of Lithuania shows that the country’s payments and e-money sector experienced significant financial expansion in 2024.
Income from licensed activities surged by 25 percent to €622m and payment transaction volumes rose by 33 percent to €152bn, according to the central bank.
The sector experienced stronger financial growth in 2024 than in 2023, with income from licensed activities rising by 25 percent to €622m and payment transaction volumes surging 33 percent to €152bn.
Despite this expansion, however, market concentration remained high, with the top ten institutions continuing to control a significant share of both revenue and transaction volumes.
By the end of 2024, institutions with transaction volumes exceeding €1bn represented just 25 percent of the market but contributed 92 percent of total turnover.
Those processing between €100m and €1bn accounted for another 23 percent, while smaller institutions handling less than €100m made up a similar proportion of the sector but contributed just 0.5 percent of the overall transaction volume.
Profitability across the sector varied widely: three institutions posted profitability ratios above 50 percent; 16 recorded figures between 20 percent and 50 percent; and 49 operated within a 0.01 percent to 20 percent range.
However, 51 institutions ended the year in negative territory.
Enforcement down
Regulatory enforcement in the sector remained intense, but did show some shifts — in particular, a drop in enforcement measures. The Bank of Lithuania imposed 63 enforcement measures in 2023, but that number dropped to 19 in 2024.
However, the regulator conducted more targeted inspections, at 15 overall compared with 13 the year before, and continued engaging with firms through 71 industry meetings and 91 compliance notices.
The number of licensed payments and e-money firms, meanwhile, declined from 125 in 2023 to 119 in 2024.
In 2024, the central bank issued just three new licences, compared with four in 2023, while revoking nine licences, down from 13 the previous year.
Competition and safeguarding
According to the central bank, the Lithuanian payments landscape remained competitive, particularly in payment initiation and account information services.
For example, of the 13 institutions providing payment initiation services, four processed more than 10m transactions each.
Meanwhile, the account information segment was dominated by a single institution, which controlled access to 67 percent of consumer accounts covered by this service.
A notable shift also occurred in the way customer funds were safeguarded, and the share of client funds held with central banks fell by 26 percent to €671m, whereas deposits with credit institutions surged 2.5 times to €1.2bn.
Investments in safe and liquid assets also grew, reaching €742m, a 36 percent increase from the previous year.
Despite the sector’s overall resilience, the central bank warned that eight institutions were operating close to their minimum own funds threshold, and urged firms to maintain higher capital buffers to withstand potential financial shocks.
This echoes the work of regulators in other jurisdictions in Europe, such as the UK, Ireland and Malta, which have all raised concerns about safeguarding.
Commenting on the findings, Denas Jonas Gadeikis, head of the payment and electronic money institution supervision at the Bank of Lithuania, said that “although the sector witnessed a slight decline in the number of participants last year, this is offset by the qualitative growth of the sector”.
Gadeikis added that 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.”
