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:
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.
The new category of payment institutions can offer their customers the following services:
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.
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.
Since the PSD came into force across the EU in 2009, many payment institutions have emerged in the market.
In terms of business sectors, the following types of businesses have been seeking authorisation as PIs:
The payment institution sector represented by EPIF is active in all Member States of the EU, as well as all other European countries.