RegRally Insights: EMI/PI Regulation – June 2026

EU payments regulation is entering a structurally transformative phase, with PSD3 and the Payment Services Regulation moving toward final adoption and setting the direction for a more harmonised, enforcement-driven framework across fraud liability, authentication, and cross-border payment services. At the same time, Baltic regulators are actively reshaping the regional payments and fintech landscape through accelerated licensing activity, infrastructure modernisation, and increasingly granular supervisory expectations for EMIs, PIs, and crypto-asset service providers operating at the intersection of MiCA and payment services regulation.

This RegRally Insights: EMI/PI Regulation edition highlights key EU-level legislative developments and regional market and supervisory trends that define the next stage of the payments ecosystem.

PSD3 and PSR advance EU payment services reform – final texts adopted (May 2026)

The European Parliament’s ECON Committee has approved the final legislative texts of PSD3 and the Payment Services Regulation (PSR), moving the reform into its final adoption phase. Once in force, the package will replace PSD2 and the Electronic Money Directive and significantly reshape EU payment services regulation, particularly in fraud liability, authentication standards, and alignment with MiCA.

Key points

• Legislative status: ECON vote on 5 May 2026; COREPER endorsement on 22 April 2026; plenary vote expected late May 2026.
• Timeline: PSR expected to apply ~21 months after publication (likely H2 2027–early 2028).
• Regulatory overhaul: PSD3/PSR will repeal PSD2 and the Electronic Money Directive.
• Expanded fraud liability: PSPs will bear broader liability, including for impersonation fraud and authorised push payment (APP) fraud.
• Verification of payee: mandatory EU-wide harmonised checks for all credit transfers.
• Strong customer authentication: reinforced and standardised SCA requirements across payment flows.
• MiCA interface: simplified authorisation route for MiCA-authorised CASPs providing payment services.
• Transition period: existing PI/EMI licences remain valid for 30 months post-entry into force but require alignment with new requirements.

Recommendations

• Perform a full PSD3/PSR gap analysis against existing PSD2 compliance frameworks, with focus on fraud liability allocation and operational readiness.
• Upgrade fraud prevention systems to address APP/impersonation fraud risk exposure.
• Prepare for mandatory verification-of-payee implementation across payment infrastructure.
• Strengthen SCA and authentication architecture in anticipation of stricter harmonised EU standards.
• Develop a transition roadmap for PI/EMI authorisation alignment during the 30-month grandfathering period.
• For MiCA CASPs: reassess licensing strategy to determine whether PSD3 reduces the need for separate PI authorisation for EMT-related services.

Latvijas Banka fintech licensing momentum accelerates

Latvijas Banka reports continued strong activity in fintech authorisations, alongside structural upgrades to Latvia’s payments infrastructure. The developments reinforce Latvia’s positioning as an EU fintech entry jurisdiction with accessible licensing pathways and direct access to core payment systems.

• Licensing activity: 7 licences issued in 2026 to date (8 in 2025); 15 firms in active licensing; 29 in pre-licensing consultation.
• New neobank regime: specialised credit institution licence available from January 2026 with reduced capital requirements and streamlined entry conditions.
• Market positioning: licence designed for digital banks, cooperative models, and innovative financial service providers.
• Direct SEPA access: 13 non-bank participants now connected via EKS, reducing reliance on correspondent banking structures.
• Instant Verification Service: EU-wide payee name verification tool enhancing payment fraud prevention and compliance with emerging EU standards.

Recommendations

• Assess Latvian specialised credit institution licence as a strategic EU passporting base, particularly for neobank and digital-first banking models.
• Compare Latvia vs. Lithuania licensing pathways, focusing on capital requirements, supervisory approach, and time-to-authorisation.
• Evaluate EKS direct SEPA access as a structural alternative to traditional correspondent banking for SEPA settlement efficiency and cost reduction.
• Consider integration of the Instant Verification Service into fraud prevention and compliance architecture ahead of broader EU adoption trends under PSD3/PSR.
• For fintech entrants: include Latvia in early-stage EU licensing planning, particularly where rapid market entry and payment infrastructure access are priorities.

Lietuvos bankas EMI/PI sector review 2025 – profitability pressure and heightened supervisory focus

Lietuvos bankas’ annual review of the electronic money and payment institution sector highlights continued market growth alongside structural profitability pressure and increased supervisory scrutiny. While transaction volumes and revenues expanded, a significant proportion of institutions remain loss-making, reinforcing a concentrated and unevenly resilient market structure.

Key points

• Market size: 73 EMIs and 44 PIs active at year-end 2025.
• Sector movement: slight net decrease in EMIs (-3) and marginal increase in PIs (+1).
• Financial performance: licensed activity revenue rose 14% to EUR 652.7 million; transaction volumes increased 8% to EUR 166 billion.
• Concentration risk: top 10 institutions generated ~EUR 389 million in revenue.
• Profitability: 53 institutions (48%) reported losses.
• Licensing activity: 3 new licences issued in 2025; 11 targeted inspections conducted.
• Supervisory priorities: AML/CFT compliance, safeguarding of client funds, fraud risk controls, and governance.
• Capital pressure: 1 institution below minimum capital requirements; 11 close to threshold at year-end.

Recommendations

• Apply enhanced due diligence to smaller and mid-tier Lithuanian EMIs/ PIs given elevated loss-making rates and capital pressure.
• Reassess safeguarding arrangements and client funds protection controls across Lithuanian counterparties in light of supervisory emphasis.
• Review AML/CFT and fraud risk frameworks of Lithuanian PSP partners against Lietuvos bankas 2025 supervisory priorities.
• Monitor financial resilience indicators (capital buffers, profitability trends) when onboarding or maintaining Lithuanian EMI/PI relationships.
• Conduct targeted counterparty risk reviews for institutions near minimum capital thresholds to anticipate potential regulatory intervention or consolidation.

Latvia issues first dual MiCA + payment institution licence for Paybis Europe (12 May 2026)

Latvijas Banka has granted SIA Paybis Europe both a MiCA crypto-asset service provider licence and a payment institution licence, making it the first entity in Latvia to obtain dual authorisation. The licence combination reflects supervisory requirements where CASPs providing transfer services involving e-money tokens must also be authorised as payment institutions under applicable payment services law. Paybis Europe becomes the third MiCA-licensed CASP in Latvia.

Recommendations

• Assess whether CASP clients or counterparties engaging in e-money token transfer services require dual MiCA and payment institution authorisation under Latvian or other national regimes.
• Update MiCA licensing and regulatory tracking frameworks to capture dual-licensing developments in Latvia.
• Monitor Latvijas Banka CASP register as an indicator of evolving supervisory interpretation of MiCA–PSD interface requirements.

Latvia issues PI licence to Nexdesk SIA following earlier MiCA authorisation (27 May 2026)

Latvijas Banka granted Nexdesk SIA a payment institution licence for money remittance services, complementing its MiCA crypto-asset services licence issued in December 2025. The combined authorisations enable the firm to provide custody and transfer services involving e-money tokens, reflecting supervisory expectations that CASPs engaged in EMT-related transfers must also hold a payment institution authorisation under applicable payment services rules.

Recommendations

• Update Latvia’s PI and CASP licensing registers to reflect Nexdesk SIA’s dual-authorisation status.
• Monitor Latvijas Banka’s emerging practice of sequential or dual licensing for CASPs engaging in e-money token transfer services.
• Assess whether similar CASP business models require parallel PI authorisation under MiCA Article 48(3) and national payment services legislation.
• Review existing CASP structures with EMT exposure to identify potential gaps in payment institution licensing coverage.

SEB to consolidate Baltic banking subsidiaries into a single Estonian entity (completion expected 2027)

Finantsinspektsioon has confirmed ECB approval for SEB to merge its Estonian, Latvian, and Lithuanian subsidiaries into a single legal entity, SEB Bank AS, to be established in Estonia. Post-merger operations in Latvia and Lithuania will continue as branches. The transaction is expected to be completed in early 2027. SEB will become the largest credit institution in Estonia following the consolidation, while Baltic supervisory cooperation will continue under the Single Supervisory Mechanism.

Recommendations

• Update institutional and correspondent banking records once the merger is completed to reflect SEB Bank AS as the head entity with Latvian and Lithuanian branches.
• Monitor ECB, Finantsinspektsioon, Latvijas Banka, and Lietuvos bankas communications for detailed transition timelines and branch reclassification updates.
• Confirm post-merger AML responsibility allocation remains with local supervisors for each branch jurisdiction and adjust compliance mapping accordingly.
• Review internal counterparty documentation to ensure correct legal entity attribution for SEB group exposures during the transition period.

CJEU referral to clarify the scope of financial supervisory access to personal devices and protected data in inspections

The Regional Administrative Court of Lithuania has referred questions to the Court of Justice of the European Union concerning the scope of financial supervisory authorities’ powers to obtain, access, and retain data during regulatory inspections. The case arises from a challenge to a regulatory fine and concerns access to information stored on personal devices, including personal data, confidential business information, banking secrecy material, and communications potentially protected by legal professional privilege. The referral seeks clarification on the balance between effective financial supervision and fundamental rights under EU law.

Recommendations

• Monitor the CJEU judgment as it may materially reshape the boundaries of supervisory inspection powers across EU financial services.
• Review internal compliance protocols for regulatory inspections, particularly handling of data stored on personal devices and mixed-use digital environments.
• Reassess legal privilege identification and protection procedures during supervisory audits and investigations.
• Update data governance and inspection-readiness frameworks to ensure appropriate segregation of personal, client, and privileged information.