Lithuania vs Ireland for a Payment Institution Licence: Which Should You Choose?

Lithuania and Ireland are two of the most frequently chosen EU jurisdictions for a payment institution licence. In short: both regulators must decide within 3 months of a complete application, and both apply the same PSD2 capital minimums. Lithuania offers a direct process and a large payments banking market. Ireland offers strong international brand weight and expects a substantial local presence.

Since 1 January 2021, UK-authorised payment institutions have lost the ability to passport payment services into the European Economic Area, meaning any firm wishing to serve EU customers must obtain a separate licence from an EU member state regulator. This article provides a detailed, practical comparison to help firms make an informed jurisdiction decision based on commercial objectives, speed requirements and regulatory strategy.

What Is a Payment Institution Licence?

A payment institution licence is the regulatory authorisation required to provide payment services within the European Economic Area under the Payment Services Directive 2 (PSD2), transposed into national law by each EU member state. Regulated payment services include money remittance, payment execution, payment initiation services (PIS), account information services (AIS) and merchant acquiring. The licence is issued by the national competent authority: the Bank of Lithuania (Lietuvos bankas) in Lithuania and the Central Bank of Ireland in Ireland. Once authorised in either jurisdiction, a firm can passport its services across all 27 EU member states and the three additional EEA states (Norway, Iceland and Liechtenstein) without obtaining separate national licences. Passporting follows a notification procedure under PSD2: the firm tells its home regulator where it intends to operate, and the home regulator informs the host-state regulator within one month.

Who Needs an EU Payment Institution Licence?

This requirement typically applies to:

• UK-authorised payment institutions that lost EU passporting rights following Brexit and need to serve EU customers
• Fintech companies providing cross-border payment services within the EEA
• Money remittance businesses operating across EU member states
• Payment initiation service providers accessing EU bank accounts under PSD2
• Account information service providers aggregating data from EU-based banks
• Merchant acquirers processing payments for EU-based merchants
• Non-EU firms establishing a regulated presence within the EEA for the first time

The choice between Lithuania and Ireland is not a question of regulatory standard. Both apply PSD2 requirements in full. The decision turns on substance expectations, regulator process, cost, banking access and the firm's target market positioning.

Key Regulatory Requirements: Lithuania vs Ireland

Capital requirements. Both jurisdictions apply PSD2 minimum capital requirements identically. Money remittance services require €20,000 initial capital. Payment initiation services require €50,000. Payment execution and merchant acquiring require €125,000. Once trading, own funds are calculated under the PSD2 methods. The Central Bank of Ireland agrees conditions and a capital level with each firm at its decision stage.

Local substance. Both regulators expect the firm to be run from the jurisdiction. PSD2 requires a payment institution's head office to be in the member state of its registered office, with part of its payment business carried on there. The Bank of Lithuania assesses whether the heads of the institution are of good repute and suitably qualified, and expects real decision-making in Lithuania. The Central Bank of Ireland expects a substantive Irish presence, with key decisions and risk management carried out in Ireland, and it may interview holders of Pre-Approval Controlled Function (PCF) roles, meaning the directors and senior managers who need its approval. Neither regulator will accept an entity with no real local presence.

Regulatory process and language. The Bank of Lithuania checks an application for completeness within 5 business days and must decide within 3 months of receiving a complete application. The state fee for a payment institution licence is €898, paid before applying, and the Bank encourages applicants to contact it early to discuss which services need licensing. The Central Bank of Ireland runs a three-stage process: an exploratory stage that starts with a Key Facts Document of about 15 to 20 pages submitted at least 5 working days before an initial meeting, an assessment stage, and a decision stage. It aims to complete 90 percent of assessments within 90 business days and states that it completes its assessment within 3 months of a complete application. It also notes that firms often take over 12 months to supply all the information it needs, so preparation drives the timeline.

AML framework. Both regulators require a comprehensive AML/CFT programme compliant with EU Anti-Money Laundering Directives. Both regulators review the AML framework as part of the authorisation assessment, so it should be complete and tailored to the business at submission. Both require a tailored risk assessment, CDD procedures, ongoing monitoring, SAR processes and sanctions screening.

Safeguarding. Both jurisdictions require safeguarding of client funds through segregation in a dedicated account at an EEA-authorised credit institution, or coverage by an insurance policy or comparable guarantee. The Central Bank of Ireland describes the safeguarding of customer funds as of paramount importance. In both markets, opening a safeguarding account takes bank due diligence time, so start early.

Banking partner access. Banking relationships are critical for operational viability. Lithuania offers a range of banks experienced with PI clients, including local banks and specialist EMI/PI-focused banking providers. Ireland provides access to major international banks with Irish operations, and an Irish licence can carry stronger reputational weighting when approaching Tier 1 banking partners in other jurisdictions.

The Licensing Process: Step by Step

Step 1. Jurisdiction selection. Compare both regulators against your target markets, banking needs and the substance you can put in place. Some groups establish entities in both.

Step 2. Entity and local infrastructure. Incorporate the local company, appoint the board and senior managers, set up the head office and open a corporate bank account.

Step 3. Application preparation. Prepare the programme of operations, business plan, financial projections, AML framework, safeguarding arrangements, governance documents and fitness and probity forms for each director and senior manager. The core content is the same for both jurisdictions.

Step 4. Submission. In Lithuania, submit the application and supporting documents to the Bank of Lithuania after paying the €898 state fee. In Ireland, submit a Key Facts Document and hold the initial meeting first, then submit the full application once the Central Bank has assigned a case manager.

Step 5. Assessment and decision. The Bank of Lithuania checks completeness within 5 business days and must decide within 3 months of a complete application. The Central Bank of Ireland targets 90 business days for its assessment stage, then issues a minded to authorise letter and authorises once pre-authorisation conditions are met. A complete, consistent application moves through on each regulator's own timetable.

Common Mistakes in EU PI Licence Applications

The most frequent mistake is underestimating substance requirements. Firms that plan to operate a Lithuanian or Irish PI as a remote shell, with no genuine local presence, no local decision-making and all activity directed from the UK, face refusal or significant delays. Both regulators expect genuine local decision-making, consistent with PSD2's head office requirement.

Second, firms often underestimate the time required to establish banking relationships. Opening corporate and safeguarding accounts depends on each bank's own due diligence, so it should start in parallel with the application. This should be initiated in parallel with the application preparation.

Third, submitting AML documentation that is UK-centric rather than adapted to the EU regulatory framework. EU AML requirements differ from UK MLRs 2017 in certain areas. Firms must ensure their AML programme references the correct EU directives, local implementing legislation and the relevant national Financial Intelligence Unit.

What Firms Should Do Now

1. Assess whether your business requires EU market access. If you serve or intend to serve customers in any EEA member state, a separate EU licence is required post-Brexit.
2. Map your target markets, customer types and transaction corridors to determine which jurisdiction best aligns with your commercial strategy.
3. If a direct process is the priority, incorporate the Lithuanian company early so the application can be filed as soon as it is ready.
4. If reputational positioning or Tier 1 banking access is the priority, begin early engagement with Irish corporate service providers and potential Irish directors.
5. Prepare a single comprehensive application pack that can be adapted for either jurisdiction, ensuring AML documentation references EU rather than UK legislation.
6. Begin safeguarding bank discussions early and approach at least three banks in your chosen jurisdiction to manage onboarding timelines.

Regulatory Context and Outlook

The European framework for payment institutions is changing. PSD3 and a new Payment Services Regulation (PSR) were agreed politically in November 2025, and the Council published the final texts in April 2026. The Regulation will apply directly in every member state 21 months after it enters into force, and existing payment and e-money institutions will need to give their regulator the information required for re-authorisation within the transition period. Lithuania and Ireland will apply the same framework, so the differences that remain will be substance expectations, regulator process and the commercial ecosystem.

Regulatory Counsel advises firms on EU jurisdiction selection and manages payment institution licensing applications in Lithuania, Ireland and other EEA member states. We prepare applications to both the Bank of Lithuania and the Central Bank of Ireland and support firms from jurisdiction assessment through to authorisation. Firms seeking specialist support with EU payment institution licensing can contact Regulatory Counsel for a written proposal. See our licensing and authorisation service for details.