EU Payment Institution Licences: Lithuania vs Malta vs Cyprus vs Ireland Compared

The EU Payment Institution Licence

A Payment Institution (PI) licence under the Payment Services Directive 2 (Directive (EU) 2015/2366) authorises the holder to provide payment services throughout the European Economic Area. Payment services under PSD2 include:

• Services enabling cash to be placed on or withdrawn from a payment account
• Execution of payment transactions (direct debits, card payments, credit transfers)
• Issuing of payment instruments or acquiring of payment transactions
• Money remittance
• Payment initiation services (PIS)
• Account information services (AIS)

A PI licence provides full EU passporting rights — a firm licensed in any member state can provide payment services across all 30 EEA countries through freedom to provide services or freedom of establishment.

Four jurisdictions have emerged as the dominant choices for fintech companies seeking PI licensing: Lithuania, Malta, Cyprus, and Ireland. Each offers distinct advantages and trade-offs.

Lithuania

The Bank of Lithuania Advantage

Lithuania has licensed more payment institutions and electronic money institutions than any other EU member state relative to its size. The Bank of Lithuania (Lietuvos bankas) has actively courted fintech businesses since 2016, establishing a dedicated fintech team and streamlined processes.

Licence types:

• Full PI licence (authorised payment institution)
• Small PI licence (limited payment institution — restricted to annual transaction volumes below €3 million)

Capital requirements:

• PSD2 minimum: €20,000-€125,000 depending on services provided
• €20,000 for money remittance only
• €50,000 for payment initiation services only
• €125,000 for execution of payment transactions

Application timeline: 3-6 months for a well-prepared application. The Bank of Lithuania consistently processes applications faster than other EU regulators.

Application fee: Approximately €890

Annual supervisory fee: Based on revenue, typically €1,500-€10,000

Substance requirements:

• At least two directors with relevant experience, at least one of whom should be resident in Lithuania or the EU
• A compliance officer and MLRO accessible to the regulator
• Physical office in Lithuania (not merely a registered address)
• Core management functions performed from Lithuania

AML framework: Lithuania's Law on Prevention of Money Laundering and Terrorist Financing aligns with AMLD5. The Bank of Lithuania applies a risk-based approach but expects detailed AML/CFT documentation in the application.

Banking access: Good. Several Lithuanian banks serve licensed PIs, and the Lithuanian fintech ecosystem includes established relationships with banking partners. CENTROlink, the Bank of Lithuania's payment system, provides direct SEPA access for licensed institutions.

Total cost to licence:

• Advisory and legal fees: €40,000-€80,000
• Capital requirement: €20,000-€125,000
• AML/CFT framework: €10,000-€25,000
• Total: €70,000-€230,000

Malta

The MFSA Approach

The Malta Financial Services Authority has a longer regulatory heritage than Lithuania's fintech-focused regulator, with deep experience across financial services sectors. Malta attracts PI applicants who value regulatory maturity and an English-language common law environment.

Capital requirements:

• Same PSD2 minimums as Lithuania: €20,000-€125,000 depending on services

Application timeline: 6-12 months. The MFSA is thorough and typically issues multiple rounds of queries. Applications involving novel or complex business models take longer.

Application fee: Approximately €2,000-€3,000

Annual supervisory fee: €2,500-€15,000 depending on revenue

Substance requirements:

• At least two directors, preferably with at least one Malta-resident
• Compliance officer and MLRO genuinely based in Malta or readily accessible
• Physical office in Malta
• The MFSA expects more substantial local presence than Lithuania for complex business models

AML framework: Malta's Prevention of Money Laundering Act (Chapter 373) and subsidiary legislation implement AMLD5. The MFSA's AML supervision has been strengthened following Malta's 2019 Moneyval assessment.

Banking access: Challenging but improving. Malta's banking sector has historically been cautious with fintech businesses. Bank of Valletta and HSBC Malta are selective, but newer entrants and EMIs have improved options.

Total cost to licence:

• Advisory and legal fees: €60,000-€130,000
• Capital requirement: €20,000-€125,000
• AML/CFT framework: €15,000-€35,000
• Total: €95,000-€290,000

Cyprus

The CBC Framework

The Central Bank of Cyprus (CBC) has emerged as a credible alternative for PI licensing, offering a combination of EU membership, English-language business environment, and competitive costs.

Capital requirements:

• PSD2 minimums: €20,000-€125,000

Application timeline: 6-9 months. The CBC has improved its processing times and has developed familiarity with fintech business models.

Application fee: Approximately €3,000

Annual supervisory fee: Based on revenue, typically €2,000-€12,000

Substance requirements:

• At least two directors with relevant experience
• Compliance officer and MLRO
• Physical office in Cyprus
• The CBC expects genuine local management but is pragmatic about the practical realities of international fintech businesses

AML framework: Cyprus's AML/CFT framework is governed by the Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007 (as amended), implementing AMLD5. Cyprus underwent a Moneyval evaluation in 2019 with generally positive results.

Banking access: Moderate. Cyprus's banking sector experienced significant restructuring following the 2013 banking crisis. Bank of Cyprus and Hellenic Bank are the main domestic banks. Several international banks and EMIs also operate in Cyprus, providing options for PI clients.

Tax considerations: Cyprus offers a 12.5% corporate tax rate and an extensive network of double taxation agreements. For fintech businesses with genuine Cyprus substance, the tax position can be attractive.

Total cost to licence:

• Advisory and legal fees: €50,000-€100,000
• Capital requirement: €20,000-€125,000
• AML/CFT framework: €12,000-€30,000
• Total: €82,000-€255,000

Ireland

The Central Bank of Ireland Standard

Ireland represents the premium option for PI licensing. The Central Bank of Ireland (CBI) is one of Europe's most rigorous financial services regulators, and an Irish PI licence carries significant credibility with banking partners, institutional counterparties, and international clients.

Capital requirements:

• PSD2 minimums: €20,000-€125,000
• The CBI may require higher capital than the statutory minimum for business models it considers higher risk

Application timeline: 6-12 months. The CBI is thorough and applies high standards. Applications from firms with well-prepared dossiers and experienced management teams are processed more efficiently.

Application fee: Approximately €5,000

Annual supervisory fee: Based on a levy calculated on the regulated firm's income

Substance requirements:

• The CBI applies the most demanding substance requirements of the four jurisdictions
• At least two Ireland-resident directors (or senior management)
• Compliance officer and MLRO based in Ireland
• Physical office with appropriate staffing
• Core decision-making and risk management functions must be performed from Ireland
• The CBI expects that outsourcing arrangements do not undermine genuine local management

AML framework: Ireland's Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (as amended) implements AMLD5. The CBI is an experienced and assertive AML supervisor.

Banking access: Excellent. Ireland hosts the European operations of major global banks (including Bank of America, Citibank, Barclays, and JP Morgan) alongside domestic banks (AIB, Bank of Ireland). Irish-licensed PIs have better access to Tier 1 banking relationships than PIs licensed in any of the other three jurisdictions.

Post-Brexit advantage: Many UK-based fintechs have established Irish entities to maintain EU market access following Brexit. This has created a deep fintech ecosystem in Dublin with experienced compliance professionals, legal advisors, and operational support.

Total cost to licence:

• Advisory and legal fees: €80,000-€180,000
• Capital requirement: €20,000-€125,000 (potentially higher)
• AML/CFT framework: €20,000-€45,000
• Local staffing and office: €100,000-€200,000 per annum
• Total first-year cost: €220,000-€550,000

Comparative Summary

Factor	Lithuania	Malta	Cyprus	Ireland
Timeline	3-6 months	6-12 months	6-9 months	6-12 months
Total first-year cost	€70,000-€230,000	€95,000-€290,000	€82,000-€255,000	€220,000-€550,000
Banking access	Good	Challenging	Moderate	Excellent
Substance requirements	Moderate	Moderate-High	Moderate	High
Regulatory credibility	Good	Good	Good	Excellent
Language	English accepted	English	English/Greek	English
Tax rate	15%	35% (effective 5% with refund system)	12.5%	12.5%
SEPA direct access	Yes (CENTROlink)	Via banking partner	Via banking partner	Via banking partner

How to Choose

Choose Lithuania if: Speed and cost-efficiency are priorities, and the business does not require Tier 1 banking relationships or the credibility premium of a major financial centre.

Choose Malta if: The business has a crypto or gaming-adjacent model where the MFSA's institutional familiarity provides advantages, and the timeline can accommodate 6-12 months of processing.

Choose Cyprus if: The business values a moderate-cost jurisdiction with reasonable processing times, English-language proceedings, and a competitive corporate tax rate.

Choose Ireland if: The business requires maximum regulatory credibility, Tier 1 banking access, and is willing to invest in genuine Irish substance. Ireland is the right choice for businesses targeting institutional clients or those that need the strongest possible regulatory endorsement.

Key Takeaways

• All four jurisdictions offer PI licensing under PSD2 with full EU passporting rights — the choice depends on cost, timeline, banking access, and credibility requirements
• Lithuania is the fastest (3-6 months) and cheapest (€70,000-€230,000 total), making it the default choice for cost-sensitive fintechs seeking rapid EU market entry
• Ireland is the most expensive (€220,000-€550,000) but offers the best banking access and highest regulatory credibility, suitable for businesses targeting institutional markets
• Malta and Cyprus sit between the two extremes, each with specific advantages — Malta for crypto-adjacent businesses, Cyprus for its competitive tax rate
• Banking access is often the deciding factor: Lithuanian PIs have good access through the local banking ecosystem and CENTROlink; Irish PIs have access to global Tier 1 banks
• Substance requirements are real and enforced across all four jurisdictions — the days of brass-plate licensing in the EU are over
• The PI licence is the most cost-effective route to EU payment services authorisation, with capital requirements starting at just €20,000 for money remittance