How Lithuania’s payment landscape is changing

How Lithuania’s payment landscape is changing

27 January 23

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The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

We continue our series of European payment landscapes with a profile of Lithuania. Lithuania’s payment service provider (PSP) community was among the first to adhere to the Single Euro Payments Area (SEPA) Instant Credit Transfer (SCT Inst). So, we interviewed Tomas Karpavičius, Head of Market Infrastructure Policy Division at the Bank of Lithuania, to learn more about Lithuania’s early experiences of processing SCT Inst transactions and find out more about other payment developments in his country. In addition, our infographic summarises what you need to know about the Lithuanian payment landscape.

First, what are the current main features of the payment landscape in Lithuania, and how has it evolved in the recent past?

The usage of non-cash means of payment in Lithuania has been rapidly increasing over the past few years. Lithuania is one of the countries where opportunities offered by the European Union (EU) single market in the payments area are being widely exploited.

In 2021, the number of non-cash payment transactions carried out by Lithuanian PSPs almost doubled compared to 2020. 

Mainly due to Brexit, a segment of the EU-resident customer base of the United Kingdom’s PSPs were transferred to PSPs registered in Lithuania, and the volume of Lithuanian cross-border payments increased tremendously. 

In addition, domestic non-cash payments continue to grow steadily, reaching the fastest growth in five years (15.7 percent) in 2021. Compared to 2017, domestic non-cash payments increased by 61.5 percent in 2021. 


The introduction of more technologically advanced payment services, such as contactless card payments, instant credit transfers and payment initiation services (PIS), as well as changing consumer habits largely determined the rapid increase in the usage of domestic non-cash payments in Lithuania. According to the Lithuanian residents’ survey, an estimated ninety-four percent of Lithuanian residents holding a payment account used internet banking in 2022, sixty-nine percent used mobile payment apps (sixty-six percent of them used apps to initiate payments and thirty-six percent to initiate contactless payments at point-of-sale or POS terminals). Eighty-one percent of residents with a payment card used contactless card payments at POS terminals. According to the 2022 survey results, fifty-two percent of respondents would prioritise payments by card or other non-cash payments if they had a choice (that proportion was thirty-three percent in 2021). 

Moreover, the development of revised Payment Services Directive (PSD2) open banking services has been very successful in Lithuania. The Bank of Lithuania largely contributed to it by balancing its market catalyst and supervisor roles. The PIS is well adapted to the Lithuanian market and is widely used to pay for e-commerce/m-commerce and, to some extent, for bill payments. To achieve this, the Bank of Lithuania coordinated efforts of third-party providers (TPPs) and account servicing payment service providers (ASPSPs) to develop and authorise application programming interfaces (APIs) compliant with PSD2. The PIS became the main alternative to remote card payments and encouraged competition in this payment market segment. In 2021 remote card payments started being used as frequently as Bank Link (redirected ‘on-us’ credit transfers) and PIS services for the first time. In 2021 the number of Bank Link and PIS transactions increased by eighteen percent.

Even though the usage of non-cash payments is growing, cash is still widely used for payments in Lithuania. According to the SPACE survey, fifty-nine percent of POS payments in Lithuania were made in cash in 2022. According to our estimations, ninety-six percent of Lithuanian citizens use cash in their daily activities. Nevertheless, in 2021, fifty-three percent of the value of all transactions with a payment card issued to residents and businesses in Lithuania consisted of direct card payments and forty-seven percent were cash withdrawals. 

As Lithuania is one of the pioneering SCT Inst countries, how would you describe its first few years of processing SCT Inst transactions?

The share of SCT Inst transactions executed by Lithuanian PSPs has been constantly growing and accounted for sixty-four percent of all euro credit transfers in September 2022. The main PSPs in Lithuania are processing SCT Inst transactions for their clients under the same conditions as the SCT transactions. 

One of the leading factors in Lithuania’s success in adopting SCT Inst was the active role of the Bank of Lithuania in both ensuring the necessary infrastructure and catalysing the market.

The Bank of Lithuania’s unique payments system CENTROlink allows its participants to send and receive SCT Inst payments. Furthermore, the expansion of SCT Inst is also supported by the Proxy Lookup Service provided by the Bank of Lithuania. It allows the initiation of payments by selecting the mobile phone number of the payee in the mobile device’s contact list. 

In 2018 the Bank of Lithuania initiated the discussion with market participants in the Lithuanian Payments Council on common market practices for the provision of SCT Inst. Its outcome contributed considerably to making SCT Inst the ‘new normal’ in Lithuania. 

However, there are areas where the advantages of SCT Inst are still to be exploited, such as SCT Inst adaptation to payments at POS as an alternative to payment cards. Besides, together with the spread of SCT Inst, we see the need to strengthen fraud prevention.

Why do internationally oriented payment fintech companies choose to register or get a license in Lithuania?

According to the Fintech Landscape in Lithuania 2021-2022 Report prepared by Invest Lithuania, the government’s investment promotion agency, fintech companies listed five main reasons why they chose Lithuania as the location for starting and scaling their businesses:  

  • eighty-one percent – fintech-friendly regulation and infrastructure
  • thirty-eight percent – ease of doing business
  • twenty-seven percent – target client market
  • twenty-six percent – talent pool availability;
  • twenty-six percent – personal relations.

During meetings with potential market participants, the Bank of Lithuania has noticed similar trends in the reasons given by fintech companies for choosing Lithuania. 

The Bank of Lithuania is one of those regulators that establishes a relationship with new companies and creates a real opportunity to ensure support at various stages of fintech activities, including providing information on applicable legislation and licensing requirements before the license is issued. There is a special Newcomer Programme that helps potential financial market participants evaluate their opportunities in Lithuania and provides an insight into legislative and licensing requirements for businesses aiming to commence their activities in the country.

Our close connection with the fintech community in Lithuania helps new businesses get the necessary support and contacts for establishing and developing their companies.

Finally, a broader question: how do you see Lithuania’s payment landscape developing over the coming five years?

Fintech companies will continue to develop new payment solutions and their business models will become more sophisticated and complex. The complexity emerges from the involvement of several partners in the provision of services to a single customer and is supplemented by using new technologies and innovative measures (e.g. artificial intelligence (AI), distributed ledger technology (DLT), etc.). New opportunities will emerge with the elaboration of the open finance concept

The usage of non-cash payments in both person-to-person and POS areas will continue to grow at a rapid pace. However, despite the numerous innovative payment solutions provided by fintechs, the habits of the majority of consumers change slowly. Therefore, the payment solutions that provide the best consumer experience and are intuitively usable will have the best chance of becoming more prevalent. 

While the payments market is growing in terms of both PSPs and new payment services, new risks will also emerge. That’s why the Bank of Lithuania and Lithuanian PSPs are putting their efforts into ensuring security and reliability in the payments market, especially in strengthening fraud prevention and infrastructure resilience (against cyber and physical risks).

Infographic: The Lithuanian payment landscape (January 2023)
(Click to enlarge and download)



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