Lietuvos bankas’ Payments Market Strategy presented to the public: focus on security, innovation and consumer needs

"Our goal is for every person in Lithuania to be able to make payments safely and conveniently in both everyday situations and unforeseen circumstances, regardless of where they live or what services they choose. We must reduce the scale of fraud, strengthen the resilience of the system and ensure that payment services are competitive, attractive and accessible to all," says Gediminas Šimkus, Chair of the Board of Lietuvos bankas.

The Payments Market Strategy sets out the following directions:

• Enhancing the security and resilience - stricter combat against fraud, increasing the responsibility of service providers and ensuring preparedness to ensure payments even in unforeseen circumstances (from geopolitical threats to natural disasters).
• Increasing the accessibility of services - seeking to enable all residents, regardless of their place of residence or skills, to have access to services both remotely and in person and to ensure access to cash in regions. The Strategy also aims at further increasing competition and enabling consumers to easily and simply switch payment service providers.
• Driving innovation - strengthening market competitiveness and reducing dependence on non-European payment solutions.

The Strategy has been prepared following an assessment of the development of the Lithuanian payments market, the geopolitical environment and the expectations expressed during dialogue with payment service providers and users.

Over the past decade, Lithuania has become part of the euro area, the payment habits of residents have changed significantly, new payment services (such as instant payments, payment initiation services, e-invoices) have emerged and become popular, and new market participants (e.g., electronic money and payment institutions) have been actively established. Currently, licensed financial market participants in Lithuania provide payment services to 40 million customers throughout the European Economic Area.

New challenges have also emerged. Since 2020, the number of fraud cases has increased more than 11 times, and the amount of funds swindled has increased more than 4 times. Last week, Lietuvos bankas submitted to the Government drafts of the Law on Payments and the Law on Consumer Credit, which strengthen consumer protection and provide payment service providers with more tools and responsibilities in the fight against financial fraud. In the face of the russian aggression, cyber-attacks and other threats, there is a growing need to strengthen the resilience of infrastructure to cyber and geopolitical threats and to reduce dependence on non-European payment solutions.

Surveys conducted by Lietuvos bankas show that the physical accessibility of payment services is still important to many residents, hence the aim is to respond appropriately to their needs and to ensure that consumers receive the services they want in a manner that is convenient for them (especially in the regions). In 2022, financial market participants installed 100 ATMs in the country's regions. This allowed a quarter of a million residents of 40 municipalities across the country to withdraw cash more quickly and conveniently. However, access to cash and the need for physically access to financial services vary across municipalities, so this issue needs to be addressed individually, through cooperation between municipalities and financial institutions.

In order for Lithuania to strengthen its market competitiveness and integration with euro area countries, it is important to strive to introduce a new European payment solution at points of sale that would ensure competition with non-European payment cards. Our country is one of the leaders in the usage of instant payments, however we are not yet taking full advantage of the opportunities they offer. For further development, the Single Euro Payments Area (SEPA) request-to-pay scheme or alternative solutions could be used. This would allow to offer new, more convenient payment services to residents and businesses, while giving payment service providers more opportunities to provide services in the euro area countries.

Lithuanian Payments Market Strategy up to 2030