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What Do AISP and PISP Mean in Open Banking?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedFeb 20232 min read

Account information service providers (AISPs) and payment initiation service providers (PISPs) are integral to open banking. But what are they, how do they work and how are they different from each other?

While open banking is yet to set off in the States, it’s already established and growing in the UK and Europe. For US businesses that collect international payments, or those that simply want to stay ahead of the game, understanding open banking can be a real asset.

In this post we’ll define the terms open banking, AISP and PISP so you can navigate open banking with confidence.

What is open banking?

Before we can explain what AISPs and PISPs are, you first need to get to grips with the basics of open banking.

Simply put, open banking allows approved organizations to access customer bank accounts (with their permission), authorize and initiate payments.

Using application programming interfaces, or APIs, open banking apps can collect financial data and trigger payments. This can help speed up ecommerce payments, while empowering customers who have full control over authorizing transactions.

So what are AISPs and PISPs?

In the UK, the FCA (Financial Conduct Authority) determines which companies can access and use open banking data. This is set to be The Consumer Financial Protection Bureau (CFPB) in the US.

Organizations that are approved for Open Banking are known as third party providers (TPPs). These TPPs are either AISPs and PISPs. The difference basically lies in how TPPs can use the data they collect from open banking.

AISPs

AISPs provide account information services. This means they can access and collect data across bank accounts (with authorization), but they cannot initiate payments from those accounts.

PISPs

PISPS, on the other hand, provide payment invitation services. This entails that they can not only access and collect financial data from bank accounts, but also trigger payments from them. Naturally, this can only be done with the customer’s permission.

How can businesses benefit from AISPs?

Businesses can benefit from an AISP by using them to gather customer data to improve their products and optimize their service.

Through accessing customer bank account data directly, businesses are permitted insight into their customers’ finances. This can help them tailor their product list to the customer, i.e. through presenting options that fit within a customer’s budget. Some businesses use AISP insight in order to analyze their customers’ spending habits too. AISP therefore allows companies to better cater to their customers and drive more conversions through customer segmentation.

Additionally, AISPs are useful for lenders who want to streamline their approval process. For example, AISPs can provide insight as to whether a customer is likely to be able to make repayments on a loan. This can speed up loan approvals while reducing admin costs.

How can businesses benefit from PISPs?

PISPs too can help businesses provide their customers with a better overall experience. As open banking involves fewer steps than other payment methods, and is highly secure, it can be a great way to collect payments from customers.

As well as being quick and easy to set up, it also comes with lower operating costs and processing fees, making it a cost-effective option for businesses as well.

GoCardless and open banking

GoCardless has two key solutions powered by open banking: Verified Mandates and Instant Bank Pay (Available for US businesses collecting payments from the UK).

Verified Mandates helps businesses by automatically authenticating customer bank details as part of the checkout process. Instant Bank Pay, meanwhile, confirms payments in less than 10 seconds and allows merchants to send payment links to customers to request one-off payments.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.