Digital transactions are rising sharply in Cyprus as consumers and businesses increasingly turn to electronic payments, mobile banking and fintech applications.
The shift is being driven by the wider digitalisation of the economy, as well as European developments around the digital euro and new payment technologies.
Dozens of fintech start-ups have set up operations in Cyprus in recent years, while traditional banks are investing in digital services as they try to respond to changing customer habits and new competitors.
The Central Bank of Cyprus plays a key role in the sector’s development, monitoring technological changes and seeking to shape a safe operating framework for new financial services.
The European Central Bank views fintech as an important driver of modernisation in the European financial system, while stressing that innovation must be accompanied by strong supervision, cybersecurity and consumer protection.
Fintech, short for financial technology, refers to the use of innovative digital technologies in financial services. Digital wallets, online lending, investment apps, artificial intelligence and blockchain technologies are creating a new banking ecosystem that promises faster transactions, lower costs and greater flexibility for consumers and businesses.
According to the ECB, fintech companies place technology-driven innovation at the centre of their business activity. They may operate in areas such as payment services, credit scoring and automated investment advice, using artificial intelligence, big data or blockchain.
ECB figures show that 77.7 billion cashless transactions took place in the eurozone in the first half of 2025, an increase of 7.7% compared with the previous year.
Card payments remained the most widely used form of electronic payment, accounting for 57% of all cashless transactions. Contactless payments also continued to rise, showing that consumers prefer fast and easy options for everyday purchases.
In Cyprus, card use is even more pronounced. Based on ECB data, card payments in Cyprus accounted for 74.5% of cashless transactions in the first half of 2025, placing the country among the leading eurozone members in the use of electronic payments.
The rise of fintech also poses challenges for traditional banks. According to estimates cited in the source, non-traditional players have captured between 4% and 8% of total banking revenues in the eurozone, putting pressure on banks’ profitability and market share.
Fintech services generally have much lower overheads and can charge lower transaction fees than traditional banks, which still rely heavily on charges and commissions. Digital banks, blockchain, artificial intelligence and automation are changing the way people transact, invest and save.
However, the rapid growth of the sector also brings risks, including job losses linked to automation, cyberattacks, excessive reliance on algorithmic investments and the risk of over-indebtedness.
The regulatory environment remains crucial for the banking system. Banks must comply with strict rules on capital adequacy, consumer protection and risk management, while many fintech companies operate under a less strict framework, creating imbalances in competition.
At the same time, increased digitalisation is heightening cybersecurity risks. Data protection and the integrity of transactions have become key priorities, while investment in security systems and fraud-prevention mechanisms is now essential to maintain customer trust.
Despite growing competition, banks retain a strong advantage in reliability. Their long-standing presence in the market and supervision by regulators continue to strengthen customer trust, particularly in matters involving deposits and large transactions.
Banks are increasingly transforming into platforms offering integrated financial services, while fintech companies continue to drive innovation in specific areas of the market.
One of the latest examples of the changing payments landscape is peer-to-peer payments, or P2P payments, which allow direct digital money transfers from one person to another without the need to visit a bank or use traditional payment procedures.
In practical terms, P2P payments allow people to send and receive money through a mobile phone app without using an IBAN, relying instead on the recipient’s mobile number.
The IRIS system, a P2P service for instant transfers between individuals using only a phone number, is currently operating in Greece.
In Cyprus, the process of creating a similar system is under way in cooperation with JCC and the Greek company Interbanking Systems, known as DIAS. However, it has not yet been clarified when the project, involving all banks, will be completed.
Once implemented, the system will allow instant money transfers between all bank customers without the need to exchange IBAN numbers, using only the recipient’s mobile phone number.
The rapid spread of P2P payments has also raised concerns over cybersecurity, personal data protection and electronic fraud. Experts say strict user identification and anti-money laundering rules are crucial for the sector’s safe development.
Despite the challenges, analysts expect peer-to-peer payments to continue growing in Cyprus as consumers increasingly choose fast, easy and digital forms of transactions, gradually reducing their use of cash and traditional banking procedures.