EMI and PI license in Lithuania

If you want to start your fintech business and operate in the EEA zone and open an E-money or Payment Institution, you need to obtain a license, which permits you to provide your services. One of the regulators, who offers beneficial conditions for fintech companies is the Lithuanian regulator - the Bank of Lithuania.

Reasons to build your fintech business in Lithuania:

  • License obtaining process takes from 3 months to 6 months
  • Low costs for company maintenance
  • An attractive jurisdiction for operations in the European region in case of the hard Brexit
  • Opening a segregated account in the Bank of Lithuania for SEPA payment IBANs

Important information: Lithuania offers 2 main payment institution types - EMI and PI, nonetheless, in most cases, after reviewing the application and all documents, the regulator suggests the EMI license.

List of e-money and payment services:

  • Issuance of electronic money, which is stored electronically (incl. magnetically), is issued to make transactions and is received by persons other than electronic money issuers. These services can be provided only by e-money institutions.
  • services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account;
  • services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account;
  • execution of payment transactions, including transfers of funds on a payment account with the payment service provider of the payment service user or with another payment service provider: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders;
  • execution of payment transactions where the funds are covered by a credit line for a payment service user: execution of direct debits, including one-off direct debits, execution of payment transactions through a payment card or a similar device and/or execution of credit transfers, including standing orders;
  • issuing and/or acquiring of payment instruments;
  • money transfers;
  • execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunications terminal equipment, digital or IT device and the payment is made to the telecommunications network or IT system operator, acting only as an intermediary between the supplier of the goods or services and the payment service user.

The full process of authorisation:

  • Pre-application meeting. The representatives of firms are required to participate in pre-application meetings with representatives of the Bank of Lithuania. The initial meeting aim is to answer questions that might have arisen in the pre-application stage and find out what financial services the applicant is planning to provide.
  • Submission of an application for an EMI license to the Supervision Service of the Bank of Lithuania. During 5 business days the Supervision Service reviews whether all necessary documents have been submitted and, where no formal deficiencies are identified, accepts the application for consideration.
  • Assessment of an application for a license of an EMI and documents. The Board of the Bank of Lithuania analyses information and documents submitted and decides on the issuance of a license or refusal to issue it.
  • Issuance of a license or refusal to issue a license

Terms:

Formally, the license issuing term for Authorised EMI and PI is 3 months, for Small EMI and PI - 2 months. Where not all documents have been submitted or have been submitted with deficiencies, the term is extended for 3 months for EMI and PI, and 2 months for Small EMI and Small PI - 5-6 months could be expected.

EMI and PI license fee:

  • EMI license fee - EUR 1,463
  • Small EMI license fee EUR 1,235
  • PI license fee - EUR 898 (for payment institutions providing only account information services, the licence fee is EUR 693)
  • Small PI license fee EUR 682

Requirements:

Founders

The founder(s) of an e-money or payment institution must undergo investor screening procedure with the CCSSO; it is a separate procedure from licensing.

Personnel Management structure

The company must have at least the Board, consisting of a minimum of 3 members and the CEO.

Other key personnel for licensing

When applying for license, the company must provide information on key personnel: anti-money laundering officer and information security officer and prove that the relevant persons have the necessary qualifications and experience.

Initial capital requirement

The initial capital requirement for EMI of EUR 350 000 applies. Nonetheless, the Bank of Lithuania requires a capital buffer, which size depends on the business plan calculations.

Small EMI is not subject to the minimum initial capital requirement.

Initial capital requirement for PI is:

  • no less than EUR 20,000 where the payment institution intends to provide only money transfer services;
  • no less than EUR 50,000 where the payment institution intends to execute only payment initiation services;
  • no less than EUR 125,000 where the payment institution intends to provide all other services.

Partnership agreements

Prior to submitting all documents for a license, you need to have a clear vision of your technical solution and to have all draft outsourcing agreements, as well as agreements with parties involved in the process of provision of payment services.

Submitting documents for EMI or PI

  • Documents confirming the legal status of the applicant
  • Document confirming the right of representation of a representative
  • Document confirming the payment of stamp duty for license issue
  • Programme of operations
  • Business plan
  • Documentary evidence that the minimum size of the equity capital does not fall below the amount specified in Article 22(2) of the Republic of Lithuania Law on Electronic Money and Electronic Money Institutions for EMI or Article 14(2) of the Republic of Lithuania Law on Payment Institutions for PI
  • Description of measures taken (to be taken) to safeguard consumer funds
  • Description of governance arrangements and internal control mechanisms, including administrative, risk management and accounting systems
  • Description of structural organisation
  • Notification of the proposed acquisition
  • Questionnaires of members of the management body and key function holders
  • Professional indemnity insurance contract and other documents confirming other comparable liability guarantees and details and substantiation of calculation of the sum insured or of other comparable liability guarantees
  • Questionnaire on the operational risk of the applicant’s activities

Submitting documents for Small EMI and Small PI

  • Documents confirming legal the status of the applicant
  • Document confirming the right of representation of a representative
  • Document confirming the payment of stamp duty for license issue
  • Business plan
  • Documents proving that the average outstanding electronic money of the electronic money institution will not exceed EUR 900k and the average of the preceding 12 months’ total amount of payment transactions executed by the payment institution will not exceed EUR 3m per month
  • Description of measures taken to be taken to safeguard consumer funds
  • Description of structural organisation
  • Questionnaires of members of the management body and key function holders
  • Questionnaire on the operational risk of the applicant’s activities

About: Advapay provides Core Banking platform, consulting and licensing for fintechs and digital banks.