PISPs

A Payment Initiation Service Provider (PISP) is a type of third-party payment service provider authorized to initiate payments directly from a consumer’s bank account with the payer’s consent. Under PSD2 in the European Union and related open banking regimes in the UK and elsewhere, PISPs enable payments to be started without routing through card networks.

A PISP does not hold funds or maintain accounts. Instead it connects to a bank’s payment initiation interface to submit a transfer order on the customer’s behalf. The user authenticates the payment with the bank, often via strong customer authentication, and the bank transfers funds to the recipient or merchant.

Regulation and authorization. In the EU, PISPs must be authorized by a national competent authority under PSD2 and are subject to security, risk management, and consumer protection requirements. In the UK and other markets with open banking programs, PISPs operate under similar regimes designed to safeguard data and payments.

Relationship to AISPs and flows. PISPs are distinct from Account Information Service Providers (AISPs), which access account data but do not initiate payments. Both rely on bank APIs and customer consent. Payment initiation can be redirect-based, with the user returning to their bank for authentication, or embedded within the PISP interface depending on the bank’s implementation.

Use and considerations. PISPs can improve checkout experiences, enable fast bill payments, and support alternative payment methods. Their availability depends on banks’ API offerings; successful use requires compliance with regulatory standards, user consent, and robust security to protect funds and data.