RegRally Insights: EMI/PI Regulation

ECOVIS ProventusLaw welcomes you to the newest newsletter on EMI/PI Regulation, which is dedicated to everyone who wants to understand the latest trends and developments in EMI/PI regulation area, get tips from our experts, and deepen their knowledge.

Bank of Lithuania Unveils Payments Market Strategy 2030

The Bank of Lithuania has presented its Payments Market Development Strategy until 2030, emphasising three strategic pillars: enhancing security and resilience, increasing accessibility, and fostering customer mobility and innovation. Stakeholders are invited to review and provide feedback on the proposed measures.

Key Highlights:

Payment Growth Trends: Between 2017 and 2024, domestic card payments nearly doubled, while credit transfers rose from 180 million to 476 million. Lithuania leads in instant payments, which comprise 72% of interbank payments—far ahead of the euro area average (18%).
Combating Fraud: Over 13,000 fraud cases totalling €20 million were reported in the last decade, and the Bank advocates for broader use of payee verification services and additional anti-fraud tools.
Resilience in Crises: The strategy explores offline card payment solutions to ensure continuity during power or connectivity outages.
Customer Empowerment: Proposals include easier switching between providers, greater fee transparency, and alignment with European payment schemes to stimulate competition and innovation.

Interested parties, including payment service providers, authorities, consumers, and businesses, are invited to participate in the consultation until 23 May 2025. Feedback can be submitted via email to [email protected].

Lithuanian Supreme Administrative Court Seeks CJEU Clarification on Direct Debit Licensing

In an ongoing dispute between Alternative Payments, a payment institution, and the Bank of Lithuania, the Lithuanian Supreme Administrative Court (LVAT) has requested a preliminary ruling from the Court of Justice of the European Union (CJEU) regarding the interpretation of EU law on direct debit services. Until the CJEU provides its answers, national proceedings are suspended.

Core Issue:
While the Bank of Lithuania cited 10 violations in its decision to revoke the firm’s license, LVAT refers only one issue to the CJEU—whether Alternative Payments unlawfully provided direct debit services without the necessary license.

Key Questions Referred to the CJEU:

1. Definition of Provider:
Whether only the payer’s payment service provider can be considered a provider of direct debit services, or if this definition also includes the payee’s payment service provider, especially under Directive (EU) 2015/2366 (PSD2) and Regulation (EU) No 260/2012.

2. Scope of Activity:
Whether a payee’s payment service provider that transmits direct debit instructions, but does not directly execute the debit, and instead collects funds via prior payer consent into limited-function accounts, qualifies as providing a direct debit service under EU law.

Reminder: Wind-Down Plan Now Mandatory for EMIs and PIs

As of April 9, 2025, the amended Resolution No. 03-33 of the Bank of Lithuania has come into effect, introducing mandatory wind-down plan requirements for electronic money institutions (EMIs) and payment institutions (PIs).

Under Resolution No. 03-33, institutions must prepare and formally approve a wind-down plan that ensures the orderly termination of e-money issuance and/or payment services. The collegial management body must adopt the plan and include:

Impact and risk assessments
Termination procedures and mitigation measures
Decision-making structure
Allocation of resources
Internal and external communication strategies

Our recommendations:

1. Initiate your wind-down planning immediately if not already in place.

2. Review and update internal policies to ensure complete alignment with the Resolution.

3. Adapt operational processes to support effective wind-down execution.

Our law firm provides complete assistance in drafting compliant wind-down plans and reviewing internal documentation to meet the current legal and regulatory expectations of the Bank of Lithuania. Read more.

Direct Access to Payment Systems Now Available for EMIs and PIs Across the EU/EEA

Electronic money institutions (EMIs) and payment institutions (PIs) across the EU and EEA can now obtain direct access to central bank-operated payment systems, including retail systems like CENTROlink. This major regulatory development enables EMIs and PIs to offer euro credit transfers and instant payments directly, without relying on intermediary banks.

The initiative is expected to:

Boost competition in the EU payments market
Expand consumer choice by encouraging more innovative and cost-effective services
Accelerate the uptake of instant payments in the euro area

The Bank of Lithuania, a pioneer in this field, has allowed EMIs and PIs to access CENTROlink since 2016, with instant payments enabled in 2017. The broader EU-wide implementation follows the Eurosystem’s July 2024 policy, formally establishing access rules for non-bank PSPs.

The transition to direct participation in CENTROlink began on April 9, 2025. Current users with addressed BICs will gradually switch to direct participant status via updated contractual arrangements, with full migration expected by year-end 2025.

From June 2025, Non-Bank PSPs Gain Direct Access to TARGET: New ECB Guidelines

Starting June 16, 2025, non-bank payment service providers (NB-PSPs)—such as payment institutions and electronic money institutions—will be eligible to apply for direct access to the Eurosystem’s TARGET payment system, under new guidelines from the European Central Bank (ECB).

Key Highlights:

Eligibility & Oversight: Access is contingent upon strict risk management and security requirements. National central banks (NCBs) and the ECB retain discretion to grant or deny access.
Operational Standards: NB-PSPs must meet bank-equivalent standards and submit an annual compliance report.
Balance Limits: TARGET account balances are capped at 2x the peak daily outgoing transfer volume over the past 12 months. These caps will be reviewed monthly, then quarterly, and later annually.
Penalties for Breaches:
- 0.03% daily charge on amounts exceeding the balance limit.
- €1,000 daily fine for ongoing non-compliance.
- Repeated violations may result in termination with one month’s notice.
Reporting Duties: Monthly reporting on peak and average overnight balances and daily settlement obligations is required.