Lithuania is small, with less than 3 million inhabitants, but its economy is larger than that of the two other Baltic nations, Estonia and Latvia, and the country performs well globally thanks largely to the economic and financial benefits it reaps by being an EU member.

Because of the country’s proximity to and trade relationship with Russia, the geopolitical situation poses potential challenges for the Lithuanian economy. However, none of those dynamics affect the nation’s payment sector, which has remained healthy and diverse. When expanding to the Lithuanian market, businesses should focus on the regulatory environment and customers’ desires when crafting a payment strategy. Businesses can prepare for success by:

• Catering to local preferences
  
• Prioritizing security and privacy
  
• Building an adaptable customer experience
  

The state of the market

Lithuania is a member of the EU and the euro area, so its currency is the euro. The Bank of Lithuania, the country’s central bank, plays a key role in overseeing the nation’s payment environment; beyond domestic regulations, the European Central Bank (ECB) also has influence in Lithuania.

Security and interconnectedness are the foundation of Lithuania’s payment systems. These systems adhere to the EU’s revised Payment Services Directive (PSD2), implement Strong Customer Authentication (SCA), and participate in the Single Euro Payments Area (SEPA).

Government support has made Lithuania particularly welcoming for business and fintech improvement, and many large international corporations have outposts in the country.

Payment methods

Lithuania has a quickly developing and innovating economy, and it has adopted more technologically advanced payment options. But the country still relies on cash, owing to its deep historical roots. Here are the most common payment methods:

Usage

Lithuanians still use cash widely, with ECB data showing that 62% of point-of-sale (POS) transactions in 2022 were conducted with cash. But government regulations have contributed to the evolution of payments. Regulatory initiatives tend to promote electronic transactions. For example, tax authorities give incentives for card payments, which are geared toward improving transaction transparency and combating financial fraud. The Lithuanian government also imposes limitations on cash use for specific transactions to reduce the risk of money laundering. Since 2022, cash payments exceeding €5,000 have been restricted, and the recipient of a larger cash payment is required to report it to the tax authorities within 10 days.

That same year, according to the ECB, credit and debit cards accounted for 32% of POS transactions in Lithuania, and over 53% of all card payments were contactless. This might be due in part to a policy shift during the COVID-19 pandemic in which the pending cap for contactless transactions without personal identification number (PIN) entry increased from €25 to €50.

Digital wallets and mobile payments have also gained prominence, with 36% of Lithuanian customers using mobile payment apps for contactless POS transactions. These changes reflect a gradual shift away from cash to methods such as contactless payments and QR codes.

Data from the Bank of Lithuania shows that 69% of people with payment accounts used mobile apps developed by payment service providers in 2022, up from 56% in 2021. Of those, 66% used these apps to make payment transfers, while 36% used them to make POS payments with their phones and 6% made them with smartwatches or other wearables.

Popular B2C payment methods in Lithuania

• Cash
  
• Credit and debit cards
  
• Peer-to-peer (P2P) apps (e.g., Wise, Revolut, TransferGo, Paysera)
  
• Direct bank transfers
  
• Digital wallets
  

Popular B2B payment methods in Lithuania

• Debit and credit cards
  
• Direct bank transfers
  
• Cash for sums under €5,000
  

Trends

Multiple fintech businesses operate in Lithuania, including Revolut. This digital banking business provides multicurrency accounts, digital wallets, and cryptocurrency trading to over 30 million customers globally. Other fintech businesses such as TransferGo and Paysera have established themselves as leading providers of cross-border payment solutions.

Digital wallets (e.g., Apple Pay, Google Pay, local solutions such as MoQ) are increasingly popular, showing the rise of contactless and mobile payments in Lithuania.

Ease and friction of entry

The Lithuanian government has aimed to develop a business-friendly economy in recent decades. However, businesses operating in Lithuania must consider a few factors about the payment market.

Taxes

The value-added tax (VAT) rate in Lithuania is 21% for most goods and services. However, reduced VAT rates of 5% or 9% apply to specific categories such as books and pharmaceutical products. Businesses are responsible for collecting VAT from customers and remitting the tax to the government. Proper VAT compliance is important because late or incorrect remittances can result in fines.

Chargebacks and disputes

In Lithuania, as in many other European countries, banks have voluntary chargeback procedures in various card operating contracts, according to the European Consumer Centre. For example, Visa’s and Mastercard’s agreements allow chargebacks for nondelivery and lack of conformity. However, institutions don’t often publicize those procedures. The window during which customers can file a chargeback depends on the agreement but tends to be 120–180 days. Once a financial services provider informs the business of a customer’s chargeback request, the business has 14 days to respond; if it doesn’t, the refund is automatically granted.

Lithuania also implements SEPA regulations, which have specific provisions for chargebacks. These provisions grant customers the right to request a refund for direct debit transactions within eight weeks.

International payments

The Lithuanian economy handles many international payments because of the country’s membership in the EU. Here’s how they work:

• Currency conversion: Currency conversion in Lithuania follows EU regulations, specifically PSD2. This directive ensures transparency in conversion rates and fees by requiring financial institutions and payment providers to disclose all costs of currency conversion. These costs might include service fees and the exchange rate markup over the interbank rate. Disclosures are required on websites and at the physical point of transaction.
  Multiple customer-friendly businesses handle currency conversion for individuals, including Paysera, Revolut, and Wise.

• SEPA transfers: As part of the EU and the euro area, Lithuania is part of SEPA. This simplifies bank transfers denominated in euros, facilitating cross-border transactions within the euro area.

• International trade relationships: Lithuania has strong payment ties with other EU member states because of EU regulations. This partnership enables easy cross-border payments and builds economic integration. The nation has especially strong relationships with its neighbors in the Nordic-Baltic region: Latvia, Estonia, Sweden, Denmark, and Finland.

Russia has historically been among Lithuania’s top five trading partners. However, countries worldwide have imposed sanctions on Russia after its invasion of Ukraine in early 2022, substantially weakening its relationship with Lithuania (and other EU nations).

Security and privacy

Lithuania’s membership in the EU means it must adhere to the bloc’s stringent security and privacy rules. Though these might increase requirements for businesses, they significantly benefit customers.

• Data protection laws: Lithuania, like the rest of the EU, adheres to the General Data Protection Regulation (GDPR), which sets stringent standards for customer data protection. The GDPR mandates explicit consent for data collection and gives customers the “right to be forgotten,” guaranteeing that their data can be erased upon request.

• PSD2: Under PSD2, payment service providers are required to implement SCA. Most transactions involve two-factor authentication to enhance security.

• State Data Protection Inspectorate: Lithuania’s national data protection authority is responsible for monitoring and enforcing compliance with the GDPR. The authority can impose fines on entities that do not adequately protect customer data, and it aims to create a rigorous standard for data protection.

• Anti-Money Laundering (AML) laws: Lithuania follows EU directives on AML and Counter-Terrorist Financing (CTF). Financial institutions must implement comprehensive systems to monitor and report suspicious financial activities. Noncompliance can result in severe penalties, reflecting the country’s commitment to financial security. The Financial Crime Investigation Service specializes in AML efforts and further strengthens Lithuania’s security. The service conducts thorough reviews and investigations into suspicious financial activities, acting as a safeguard against illicit operations.

Key success factors

The Lithuanian payment sector prepares businesses for success. But as with any complex system, it presents challenges. Consider these factors when shaping a payment strategy in the country:

• Pace of technology adoption: Lithuania has been slow to adopt emerging payment technologies, particularly mobile payments. In 2022, only 36% of Lithuanian customers used mobile payment options for POS transactions. This slow pace poses a challenge for businesses because they must support multiple payment systems to serve different consumer preferences. This can also increase system complexity and complicate user experience design.

• International capabilities: Lithuania is part of SEPA, which simplifies transactions across the euro area, but challenges exist for international transactions beyond SEPA. Varying regulations, different transaction fees, and fluctuating exchange rates contribute to the complexity and cost of international transactions. Lithuania’s exports totaled more than $46 billion in 2022, which shows the scale of annual cross-border transactions.

• Regulatory adherence in data management: The GDPR increases compliance demands on businesses operating in Lithuania. Noncompliance can result in penalties of up to €20 million or 4% of a business’s global annual turnover. This regulatory environment has necessitated substantial investments in data governance systems, especially for payment systems in which data sensitivity and the frequency of data exchange are key concerns.

• Geopolitical concerns: Lithuania has historically maintained a trading relationship with Russia, but that has been severely affected by Russia’s invasion of Ukraine. Lithuania shares a small border with Kaliningrad, a Russian exclave. The country also has a much longer border with Belarus, a strong Russian ally. These geographic realities have complicated overground shipping and trade, creating potential sanctions loopholes. Though the majority of businesses conducting business in Lithuania are unlikely to be affected by these realities, they should understand the full picture of the country’s economic situation.

Key takeaways

Businesses that seek to enter the Lithuanian market should cater to local preferences, prioritize compliance with strong security measures, and focus on the customer experience. Here’s an overview to remember as you create and execute your business plan:

Cater to local preferences

• Support multiple payment methods: Though international card networks such as Visa and Mastercard are widely used, it’s helpful to also provide local payment methods such as Paysera to cater to a broader customer base. Ensure you can accept cash; a substantial part of the customer base still relies on it. Accepting multiple payment methods signals to customers that you respect their payment choices, increasing trust and completed transactions.

• Provide multilingual payment interfaces: Lithuania’s diverse population speaks various languages, including Lithuanian, Russian, and Polish. To create a more relatable user experience, provide payment interfaces in multiple languages. Localization goes beyond translation; it’s about making the payment process easy and familiar to customers of different linguistic backgrounds.

• Use SEPA for direct debits: SEPA is influential in Lithuania, especially for recurring payments such as subscriptions and utility bills. You can simplify recurring payments by adopting SEPA-compliant payment gateways. This simplifies transactions and aligns with local preferences for direct debits.

Prioritize security and privacy

• Prioritize data privacy compliance: Lithuania, as an EU member state, adheres to strict data privacy regulations that include the GDPR. Ensure your payment processes are GDPR compliant. Handling personal and payment information with care and transparency builds trust with Lithuanian customers, who are increasingly conscious of the need for data protection.

• Secure online shopping data: The revenue of Lithuania’s ecommerce market was estimated to be about $1.13 billion in 2024, and there has been an accompanying surge in online credit card payments. To give customers confidence when interacting with your online presence, assure them that you’re providing a secure yet convenient online checkout experience.

• Invest in security: Lithuania values data security highly. You should increase customer confidence and trust through investments in advanced security measures, including two-factor authentication and encryption.

Build an adaptable customer experience

• Implement multicurrency options: Lithuania’s position as a growing tourist destination means your business can benefit from providing multicurrency payment options. Letting customers pay in their preferred currencies increases convenience and satisfaction, especially for international travelers and expatriates residing in Lithuania.

• Adapt to mobile payment preferences: Though mobile payments aren’t as widespread in Lithuania as they are in other EU countries, they are increasing. You should be prepared to accept them while maintaining flexibility in the other payment methods offered.

• Provide real-time customer support: Easily accessible customer support can address payment-related issues promptly, leading to smoother payment experiences. Giving customers options such as live chat or immediate assistance by phone can help ensure customers have a positive payment experience.