Blog Post
Why Lithuanian EMIs Can’t Launch Card Issuing or Acquiring Without Automated Reconciliation
What is an EMI? Introduction to Electronic Money Institutions
Before diving into the complex world of card operations, let’s set the baseline. Electronic Money Institutions (EMIs) are licensed financial entities that provide payment services and issue e-money, but unlike traditional banks, they focus on innovative and flexible payment solutions.
EMIs exist to strip away the legacy friction of traditional banking. They offer faster onboarding, agile cross-border payment solutions, and act as the engine for fintech innovation - all with a significantly lower barrier to entry than obtaining a full banking license.
Electronic Money Institutions (EMIs) are licensed financial entities that provide payment services and issue e-money, but unlike traditional banks, they focus on innovative and flexible payment solutions. Lithuania has become a top choice for EMIs thanks to its supportive regulatory framework and EU passporting opportunities, attracting fintech companies across Europe.
When we talk about the European fintech scene, Lithuanian EMIs lead the pack. The Bank of Lithuania has actively positioned the country as a primary destination for establishing an electronic money institution in Lithuania, creating a streamlined path for companies looking to dominate EMI card issuing and broader financial services across the EU.
Card Issuing vs. Card Acquiring: The Two Pillars of EMI Growth
Once an EMI establishes a solid user base, the natural next step is expansion. This usually happens in two distinct directions: Issuing or Acquiring. While they are two sides of the same coin, they present different operational challenges.
What is Card Issuing?
Card Issuing is when an EMI provides physical or virtual cards (Debit, Prepaid, or Credit) to its customers.
- The Goal: It allows your users to spend the funds they hold in their e-wallets at millions of merchants worldwide or withdraw cash from ATMs.
- The Revenue: The EMI earns revenue primarily through interchange fees (a small % of every transaction) and user fees (monthly subscriptions, FX fees).
- The Reconciliation Challenge: Every time a user swipes a card, money leaves your safeguarding account. You must ensure that the amount deducted from the user’s balance matches the amount the card scheme (Visa/Mastercard) claims from your settlement account.
What is Card Acquiring?
Card Acquiring is the business of processing payments for merchants.
- The Goal: It enables businesses (your clients) to accept card payments from their customers, whether online (e-commerce) or in-store (POS).
- The Revenue: The EMI charges the merchant a Merchant Discount Rate (MDR) and transaction fees.
- The Reconciliation Challenge: This is even more complex than issuing. You receive bulk settlements from Visa/Mastercard, which combine thousands of individual sales. You must "unpack" this bulk sum, deduct your fees, and settle the correct net amount to each individual merchant’s account efficiently.
Both pillars offer massive growth, but they generate millions of data points. Attempting to manage card issuing for EMIs or card acquiring in Lithuania manually isn't just risky; it guarantees failure. This is exactly why automated reconciliation for EMIs is the silent backbone of every successful card program.
What is Card Scheme Reconciliation?
At its core, card scheme reconciliation for EMIs is the process of matching internal transaction records against the settlement files provided by major card networks (like Visa or Mastercard). It ensures that every cent your core banking system says was spent or received actually matches the money moving through the card network.
When a customer buys a coffee, that transaction bounces between the merchant, the acquirer, the card scheme, and your EMI. The card scheme sends daily (or sometimes more frequent) reports detailing these movements. If your internal ledger doesn't match the scheme's report, you have an exception that needs to be investigated.
Why Reconciliation Matters
- Regulatory Compliance: If your books don't match the card schemes, you don't actually know how much money you hold. For a regulated entity, this is an existential threat.
- Common Challenges: Relying on spreadsheets creates costly delays, human errors (dropped rows, missed decimals), and compliance risks that can lead to safeguarding breaches.
Why Automated Reconciliation is Non-Negotiable
Let’s be blunt: Lithuanian EMIs cannot scale card operations without automation. Here is exactly why making the leap to automation is mandatory for survival and growth:
- Operational Efficiency: Automated systems handle massive, high-velocity transaction volumes instantly, allowing your team to focus on growth rather than data entry.
- Accuracy & Audit Readiness: Automation ensures 99.9% matching accuracy. When the Bank of Lithuania asks for your safeguarding reports, you can hand them over immediately.
- Faster Dispute Resolution: Automated systems instantly track the lifecycle of a transaction, giving your team the data needed to resolve chargebacks before they cost you money.
- Seamless Integration: Plugs directly into platforms like Marqeta, Thredd (formerly GPS), or Enfuce via API.
Our automated reconciliation system, Reconwizz, is fully customizable, allowing Lithuanian EMIs to define matching rules, integrate seamlessly with card issuing platforms, and generate audit-ready reports tailored to their operations.
How an Automated System Works
Moving from a manual process to a system like Reconwizz transforms a chaotic back office into a streamlined engine.
1. Flexible Data Ingestion (API & CSV)
Data doesn't always come in a perfect stream. That’s why a modern system must be agnostic to the source. Reconwizz can pull data directly from third-party APIs (like your card processor or banking core) in real-time. However, for legacy systems or partners that still rely on static files, it effortlessly ingests CSV, Excel, or XML files manually uploaded or dropped into a secure folder. Whether it's a live data feed or a messy spreadsheet, the system takes it all.
2. Powerful ETL and ELT Capabilities
Raw data is rarely ready for reconciliation immediately. This is where Reconwizz shines. Using advanced ETL (Extract, Transform, Load) and ELT (Extract, Load, Transform) processes, the system can manipulate your data in any way necessary before matching.
- Transformation: It can split merged columns, reformat dates, convert currencies, parse complex strings, or apply logic to clean messy descriptions.
- Normalization: It standardizes data from different sources so that a "Transaction ID" from Visa looks the same as the "TxID" from your internal database.
3. Unlimited Custom Reporting
Reporting requirements for EMIs change constantly. With Reconwizz, you are not limited to "standard" templates. If the data exists in the system, we can build the report.
- Regulatory Reporting: Generate safeguarding reports or capital adequacy data instantly.
- Scheme Fee Analysis: Breakdown interchange fees and scheme costs per transaction.
- Audit Trails: Export full, immutable logs of every match and exception for external auditors.
Case Study: A Tale of Two EMIs
EMI Alpha decides to save money on software and uses Excel. By month three, they hit 15,000 transactions a day. A timezone discrepancy causes a €40,000 mismatch that takes two weeks to find. They delay their marketing push because the back office simply cannot handle more volume.
EMI Beta integrates Reconwizz before their card operations automation goes live. By month three, handling 15,000 transactions takes exactly five minutes of a finance manager's morning to review three flagged exceptions. They confidently scale to 100,000 daily transactions by month six, passing their first regulatory audit with zero findings. That is the definition of EMI reconciliation success.
Steps to Implement Automated Reconciliation
- Assess your transaction volume and data sources: Identify where your data lives - whether it's in APIs, SQL databases, or daily CSV exports.
- Define your transformation needs: Determine what cleanup your data needs. Do dates need reformatting? Reconwizz's ETL engine can handle this.
- Automate ingestion and matching: Set up the pipelines (API or file-based) and let the software do the heavy lifting.
- Define your reporting requirements: Tell us exactly what reports the Bank of Lithuania or your board requires, and we will configure the output to match.
- Customize workflows with Reconwizz: Work with the Reconwizz implementation team to tailor the matching rules to your EMI’s unique core banking setup.
Conclusion
At the end of the day, automated reconciliation isn't just a "nice-to-have" feature - it is the foundational requirement for any EMI looking to succeed in issuing or acquiring. You cannot build a modern, scalable financial product on a back office that belongs in the 1990s.
If you are preparing for an EMI card issuing project or a broader card program launch, setting up your back-office infrastructure should be step one. Reconwizz provides the fully customizable, reliable, and scalable automated reconciliation engine that Lithuanian EMIs need to grow fearlessly and stay compliant.
Every EMI has slightly different ledgers, fee structures, and internal logic.