Nicosia, Cyprus. Digital payments are moving from a convenience tool to a core part of Europe’s financial infrastructure, as new EU rules and market trends reshape the sector. Cyprus is also recording growth in technology and financial services activity amid the broader shift.
EU payments activity expands
The European Central Bank’s latest payments statistics show that euro-area non-cash transactions reached 77.7 billion in the first half of 2025, up nearly 8 percent year-on-year. Cards accounted for more than half of all transactions by volume.
At the point of sale, cash usage declined from 79 percent of transactions in 2016 to 52 percent in 2024, according to the ECB’s Study on Payment Attitudes of Consumers.
New regulatory framework advances
The most significant regulatory development is the agreement on PSD3 and the Payment Services Regulation. The European Parliament and the Council of the EU reached a provisional political agreement in November 2025.
Final texts are expected in the first half of 2026, with earliest applicability in late 2027 or early 2028. The new framework will replace PSD2 and introduce a directly applicable regulation alongside the directive, harmonising rules across the single market.
Instant payments rules take effect
The EU Instant Payments Regulation has already begun reshaping domestic payment flows. Since January 2025, all euro-area payment service providers offering standard credit transfers must also accept incoming instant credit transfers.
From October 2025, outgoing instant transfers and mandatory verification of payee became requirements. These rules apply uniformly across the eurozone, including Cyprus.
Digital euro project moves to next stage
The ECB’s digital euro project also advanced in October 2025, when the Governing Council concluded the preparation phase and moved the project into its next stage.
A potential first issuance is projected for 2029. The estimated investment cost for the euro-area banking sector is between 4 billion and 6 billion euros.
Compliance demands increase for firms
For payment institutions and electronic money institutions operating in the EU, the new developments create a more demanding compliance environment while also creating a more level playing field for firms that have invested in regulated infrastructure from the outset.
Cyprus records technology sector growth
Cyprus has positioned itself in recent years as a destination for technology and financial services companies. According to Invest Cyprus, more than 800 technology or technology-related companies currently operate in the country.
Foreign direct investment reached about 8.5 billion euros in 2024, an increase of around 60 percent year-on-year, with 2.6 billion euros directed toward the technology sector. Three Cyprus-based fintech firms appeared on the CNBC/Statista World’s Top Fintech Companies 2025 list.
Economic backdrop supports expansion
The European Commission’s Autumn 2025 forecast projected Cypriot GDP growth of 3.4 percent for both 2024 and 2025. In the fourth quarter of 2025, the country recorded 4.5 percent year-on-year growth, the second-fastest rate in the EU.
Services, particularly information and communications technology, have been a primary driver of that growth.
