Here’s Everything You Need To Know About Account Servicing Payment Service Provider

What Is An Account Servicing Payment Service Provider (ASP)?

Account Servicing Payment Service Provider, often abbreviated as ASP, is a financial institution or entity that offers payment services to consumers and businesses. ASPs play a crucial role in facilitating transactions, managing customer accounts and ensuring the security and efficiency of payment processes. They are responsible for the safekeeping of customer funds and ensuring the availability of account information.

ASPs can include traditional banks, payment institutions, e-money institutions, and fintech companies. Their services range from traditional banking activities like account management and payment processing to innovative solutions like mobile payments and peer-to-peer transfers.

What Is An AISP Licence?

An AISP licence, or Account Information Service Provider licence, is a regulatory authorisation that allows a financial institution or fintech company to provide account information services to consumers. These services involve accessing and aggregating financial data from multiple bank accounts held by the consumer, thus offering a consolidated view of their financial information. AISPs do not initiate payments but focus on providing insights into the customer’s financial health.

AISPs play a pivotal role by offering consumers a secure and standardised way to access their account information from various banks, thus promoting competition and innovation in the financial sector.

What Is AISP In Ecommerce?

An AISP can be integrated into the payment process to enhance the customer’s shopping experience. For instance, when a customer makes an online purchase, an AISP can access their bank account information to verify the availability of funds, reducing the risk of payment failures or fraud.

This ensures a smoother transaction process and builds trust between the customer and the ecommerce platform.

What Is An Example Of An AISP?

A prominent example of an AISP is Yodlee, a financial data aggregator that offers account information services to consumers and businesses. Yodlee allows users to link their bank accounts, credit cards, and other financial accounts to its platform, providing a consolidated view of their financial information.

Many personal finance management apps and fintech companies rely on AISPs like Yodlee to offer their services.

What Is The Difference Between AISP And PISP?

The full form of AISP is Account Information Service Provider and the full form of PISP is Payment Initiation Service Provider.

While AISPs focus on accessing and aggregating account information, PISPs are responsible for initiating payments on behalf of customers, thus enabling direct transfers from one bank account to another.

What Is PSD2?

PSD2, or Payment Services Directive Two, is a set of regulations introduced by the European Union to foster competition, innovation, and security in the payment services industry. It is a significant milestone in the financial sector for several reasons:

• Increased Competition: PSD2 encourages competition by allowing third-party providers (TPPs) like AISPs and PISPs to access bank account information and initiate payments. This breaks the monopoly of traditional banks and promotes the development of new payment solutions and services.
• Enhanced Security: PSD2 mandates strong customer authentication (SCA) for online transactions, making it more difficult for fraudsters to access customer accounts and initiate unauthorised payments. This helps protect consumers and businesses from financial fraud.
• Improved Consumer Rights: The directive gives consumers more control over their financial data and payments. It allows them to grant or revoke consent for third-party access to their accounts and promotes transparency in fees and charges.
• Innovation & Open Banking: PSD2 paves the way for open banking, enabling the collaboration of banks and third-party providers in offering innovative financial services. This leads to the development of new payment methods and financial products.