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The Voice of Payment Institutions across Europe

What is a Payment Institution?

The term “Payment Institution” refers to a category of payment service providers which came into being as a result of the enactment of the Payment Services Directive (PSD). The five main objectives of the PSD were to:

  • achieve a single payment market in the EU;
  • provide the regulatory framework for a single payment market;
  • create a level playing field and enhancing competition;
  • ensure consistent consumer protection and improving transparency; and
  • create the potential for more efficiency of EU payment systems.

The Directive therefore aimed to remove legal barriers to the provision of payment services in the EU, to allow citizens and businesses to make all kinds of payment easily, safely, timely and cost efficiently, and to open the market to new entrants such as payment institutions. It established a set of specific rules for all payment service providers, including banks and payment institutions.

What are payment institutions allowed to do?

The new category of payment institutions can offer their customers the following services:

  • Executing payment transactions (including credit transfers, direct debits, through payment cards or a similar device);
  • Issuing and/or acquiring of payment instruments;
  • Money remittance;
  • FX services;
  • Ancillary services;
  • Credit can be granted for a maximum of 12 months if this credit is closely linked to a payment service provided.

The PSD is currently being reviewed and the list of activities the Payment Institutions can carry is expected to increase (to include for example Payment Initiation Services).

For more information, follow the link to our FAQs.  

What is the difference between a payment institution and an e-money institution?

The main difference between the two types of payment service providers is that only e-money institutions can issue electronic money. E-money is a digital equivalent of cash stored on an electronic device or remotely at a server.

Who is becoming a payment institution?

Since the PSD came into force across the EU in 2009, many payment institutions have emerged in the market.

  • Some providers had already been active in the payments business before the new rules came into effect. These are now regulated at EU level by the PSD and can take advantage of the European passport.
  • Many new players are entering the European payments market. 

In terms of business sectors, the following types of businesses have been seeking authorisation as PIs:

In terms of geography, where have payment institutions been formed?

The payment institution sector represented by EPIF is active in all Member States of the EU, as well as all other European countries.