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22 September 2017 Supervision

Question:

What is a payment initiation service?

Answer:

A payment initiation service is a service to initiate a payment order at the request of the payment service user with respect to an online payment account held at another payment service provider.

Explanation

Payment initiation services are particularly important for online purchases. If the payment service provider has initiated a payment at the request of the user, the account servicing payment service provider must immediately allow the payment service provider access to information on the initiation of the payment transaction. The payment service provider can then indicate to the online retailer that the payment has been successfully initiated. Payment initiation services can also relate to credit transfers, irrespective of any underlying obligations between the payer and the payee.

An account servicing payment service provider will in most cases be a bank, but can also be a payment institution that offers current accounts (services referred to in points (1) and (2) of Annex I to PSD2).

Payment initiation services can be provided by banks, e-money institutions or payment institutions with a licence for the service under point (7) of Annex I to PSD2. It is not possible for exempted payment institutions to provide payment initiation services.1

If an e-money institution or a payment institution wants to offer payment initiation services, it does not need to have a contractual relationship with the account servicing payment service provider.2

1 See Article 32(1) of PSD2.
2 See Article 66(5) of PSD2.