What is an Account Servicing Payment Provider (ASPSP)?
In a rapidly evolving financial landscape, Account Servicing Payment Service Providers (ASPSPs) are reshaping how consumers and businesses interact with their finances.
ASPSPs are key players in the open banking ecosystem. They’re responsible for providing secure access to customer account data and enabling payment services under the laws and regulations of the European Union’s Payment Services Directive second revision (PSD2). They are central to fostering innovation and promoting competition in the financial services industry in the EU.
In this article, we’ll cover what Account Servicing Payment Service Providers are and the role ASPSPs play under PSD2 (and PSD3) and across open banking.
What is an ASPSP?
An ASPSP (Account Servicing Payment Service Provider) is a financial institution that provides and maintains payment accounts for customers, including banks, building societies, and some electronic money institutions.
ASPSPs enable customers to access their account information and perform payment transactions. Some examples of ASPSPs you may encounter in daily life include large traditional banks as varied as Santander, Nordea, or Deutsche Bank, etc. Then there are the challenger or neo-banks, such as Monzo, N26, or Revolut, plus pan-European electronic money institutions such as Wise and PayPal.
For their customers, ASPSPs are responsible for a range of key services, including:
- Opening and maintaining payment accounts
- Processing payments
- Providing access to funds
- Offering overdraft protection and other credit facilities
- Delivering fraud protection and other security measures
Different types of Account Servicing Payment Provider (ASPSP)
Broadly speaking, ASPSPs can offer three different types of service:
- Account Information Services (AIS): With the customer’s consent, AISs provide access to customers’ account information – e.g. transaction history, account balances, and other financial data. They’re often used for credit and affordability checks, as well as for personal financial management tools. Read more about AIS.
- Payment Initiation Services (PIS): PISs allow third-party providers (TPPs) to initiate payments directly from customers’ bank accounts. They’re typically used for e-commerce payments and recurring payments such as subscriptions. Read more about PIS.
- Confirmation of Availability of Funds (CAF): CAF services provide confirmation that a customer has sufficient funds in their account to complete a transaction, helping protect businesses from fraud and reduce the risk of chargebacks.
Different types of ASPSPs cater to everything from traditional banks to fintech startups. Their diversity helps ensure a dynamic balance between stability, innovation, and personalised services. In short, they meet the varied demands of modern businesses and consumers alike.
What is the connection between ASPSPs, PSD2, open banking, and PSD3?
Under the EU’s Payment Services Directive 2 (PSD2), ASPSPs must grant TPPs access to account data or let them initiate payments on behalf of customers – provided the customer gives their consent. This opens the door for services like AIS and PIS, making open banking services more flexible and customer-focused.
Indeed, ASPSPs play a central role in open banking, a system introduced under PSD2 (forthcoming PSD3 legislation and expanded in the UK’s own Open Banking Initiative) to boost competition and innovation in the financial sector.
Aside from providing access to customer data and enabling payment initiation, under open banking, ASPSPs also serve to provide APIs to ensure secure communication between ASPSPs and TPPs while safeguarding customer data.
Here are some examples of open banking use cases using ASPSPs:
- Payment providers: Customers can use TPPs, such as Brite Payments, to make instant, secure payments directly from their bank accounts without relying on traditional card networks. You can read more about Pay by Bank services and instant account-to-account payments in our explainers.
- Budgeting apps: TPPs can aggregate data from multiple bank accounts to help users manage their finances with ease.
- Lending platforms: Lenders can access borrowers’ financial data to assess their creditworthiness in real-time. Read more about this in our open banking for consumer lending explainer.
In open banking, one of the main benefits of ASPSPs is that they integrate data from multiple accounts to give customers a clearer view of their finances. ASPSPs also enhance financial services by enabling TPPs to develop innovative products, such as budgeting tools and streamlined instant payment solutions.
With the upcoming Payment Services Directive 3 (PSD3), the role of ASPSPs is set to grow even further, focusing on strengthening security, improving customer trust, and ironing out any gaps left by PSD2.
In essence, it’s all about making financial services safer, smoother, and more innovative for everyone involved.
Read more about PSD3 in our explainer.
Want to learn more about the benefits of open banking?
If you would like to learn more about the benefits of open banking and how payments, such as instant account-to-account payments are providing the next-generation payments services that businesses across Europe need, then get in touch. Or if you would like to find out more information about related topics then check out our resources page.
