The growth of payment and e-money institutions: a diversified payments ecosystem

From regulatory opening to market expansion

The emergence of payment institutions (PI) and electronic money institutions (EMI) is closely linked to the evolution of the EU framework. The first Payment Services Directive marked a turning point by enabling non-bank regulated players to enter the market under harmonised rules.

Luxembourg was among the early adopters, combining regulatory rigour with openness to new business models. This created a predictable environment for firms looking to establish regulated payment activities serving Europe from a single hub. It also reinforced Luxembourg’s role in cross-border payments.

Over time, subsequent milestones, including PSD2 and the evolution of e-money rules, broadened the market further and accelerated the diversity of models operating across Europe.

Diverse models, different customer needs

One clear takeaway from the discussion is that PI and EMI are not a single category of actors. They represent multiple business models, serving different needs:

• enabling marketplaces and global commerce
• providing consumer-facing payment experiences
• supporting merchant services
• delivering connectivity and infrastructure to financial institutions

This diversity has helped raise expectations around usability, cost efficiency and service availability, while also driving innovation across the value chain.

At the same time, participants stressed that trust remains decisive. Operating under a regulated framework, with robust requirements for safeguarding, governance and compliance, is essential to maintaining confidence among users, partners and supervisors.

Complementarity with traditional institutions

Despite the growth of new actors, the conference confirmed that banks remain central to the payments ecosystem. Their strengths in compliance, fraud prevention, liquidity management and operational resilience continue to underpin the system.

Rather than operating in silos, banks and PI/EMI increasingly collaborate through partnerships, shared infrastructures and integrations. This reflects a broader shift towards ecosystem delivery.

What comes next: scale, security and accountability

Looking ahead, PSD3 and the forthcoming Payment Services Regulation are expected to reinforce the direction of travel. The market will support innovation, while also demanding stronger execution, clearer accountability and higher security standards.

Several topics stood out in the forward-looking discussions:

• fraud and liability will remain defining issues, with increasing expectations on PSPs
• instant payments and supporting tools will continue to shape adoption
• innovations around digital identity, tokenisation and AI-enabled processes will enable new use cases, provided governance keeps pace

The message for the ecosystem is consistent. Growth will continue, but success will depend on trusted implementation, not novelty alone.