Regulators revoke PayrNet’s licence

With news breaking that the Bank of Lithuania has opted to remove PayrNet's regulatory permissions, many fintech companies are understandably concerned.

What’s the situation?

Railsr - which has been having financial and regulatory issues for the last 12 months and filed for bankruptcy earlier this year - and its subsidiary PayrNet, host smaller fintechs, giving them instant access to regulatory permission across Europe. The revocation of licensing could lead to disruptions within the wider fintech industry, affecting card issuing and e-money services.

Lithuanian regulators made the decision due to "serious, systematic and multiple violations" according to Crowdfund Insider. This, therefore, leaves the fintechs that rely on PayrNet for European regulation to either stop trading and potentially go out of business, or continue trading without regulatory permissions.

Sources say that PayrNet incurred over €7 million in expenses, more money than it holds and which it can’t recover and therefore is insolvent. The Bank of Lithuania is now initiating both criminal proceedings “due to multiple violations of local laws, including breaches related to money laundering and terrorist financing prevention”, and bankruptcy proceedings against the company.

What has happened is a wake-up call for the fintech industry as a whole, and serves as an illustration of the risks of operating globally without correlating cross-jurisdictional regulations. In 2022 alone, PayrNet processed a transactional volume of €7.5 billion across the EU.

What can you do?

Our team is speaking with insurers to understand the situation and we are actively talking to all our clients who are affected to provide further information and advice about what this means for their insurance policies.

If you are concerned about how this impacts your insurance or whether you are covered, please get in touch - we are here if you need us.