Last editedMar 20222 min read
If you run a small business in the UK you’ve likely noticed the explosion of new payments that have changed the way we do business in recent years. In-person mobile payments software, E-Wallets, and Payment Service Providers have enabled merchants to accept payments from customers in more ways than ever. The more simple, convenient and secure it is for customers to pay you, the more likely they are to keep coming back to your business.
But none of this would be possible if it weren’t for open banking services and tools like AISPs and PISPs. You may well have heard these terms used before but be unsure what they mean and how they apply to your business operations. Here, we’ll look at AISP vs PISP and what they mean for your business and its customers when it comes to getting paid.
What is open banking?
There was a time when only banks could manage the handling of business and consumer bank account information. Today, however, open banking enables all kinds of regulated service providers to allow data and payments to be sent and received between bank accounts.
The companies that manage these services fall into two camps: AISPs and PISPs.
Companies must register as one or the other with the FCA before offering financial service APIs to users.
What is an AISP?
An Account Information Service Provider is authorised to connect to a person’s bank account and use their account information to provide a service. However, they are not allowed to move money into or out of said account.
There are lots of businesses and services that use AISPs including:
credit checking services
money management services and apps
price comparison tools
What is a PISP?
Payment Initiation Service Provider (PISP), on the other hand, is not only able to access read-only data from a bank account, but they are also authorised to initiate payments on a customer’s behalf.
Naturally, this lends itself well to retailers and other businesses that want to initiate bank-to-bank payments. However, PISPs are also used by financial management tools. These can move money between accounts automatically to ensure that the user does not incur overdraft fees by moving, for instance, money from a savings account into a current account.
PISPs can be very useful in simplifying buyer journeys, allowing businesses to connect directly with the bank accounts of frequent shoppers. This saves time and effort for the customer as payment information does not need to be repeatedly entered manually.
How does open banking benefit your business?
Open banking enables businesses like yours to accept a broader range of payments from customers. So they can pay using the method that is easiest and most convenient for them. What’s more, open banking can enable businesses to avoid the extensive fees and confusing charges that can come with accepting credit and debit card payments.
GoCardless, for instance, uses open banking to offer Instant Bank Pay (in the UK and Germany). This allows merchants to send payment links to customers and request one-off payments.
This quick, easy and secure payment method facilitates bank-to-bank payments powered by open banking, and payment confirmation is instant so the customer has complete peace of mind.
Because the process is carried out via payment request links, it’s super easy for businesses
to get paid. The customer simply needs to click the link and go with the flow.
We can help
If you’re interested in finding out more about AISP, PISP, and how open banking can benefit your business, get in touch with our financial experts. Discover how GoCardless can help you with ad hoc payments or recurring payments.