Across all aspects of the financial world, Open Banking has revolutionized everything from payment methods to budgeting tools and credit assessment tools. This is affirmed by the notion that Third Party Providers (TPPs) can improve access to new financial products and services.
Generally, two types of TPPs are available:
- Account Information Service Providers (companies with AISP licenses)
- Payment Initiation Service Providers (companies with PISP licenses)
What is an Account Information Service Provider (AISP)?
An Account Information Service Provider (AISP) or company licensed by an AISP is a type of financial institution that has access to the user’s financial information on their accounts with other companies. The term AISP is sometimes used to describe EMIs and PIs that, after being authorized by the national regulator, can provide Account Information Service.
AISP licensees act as intermediaries between various institutions, offering a user-friendly interface but with no control over the information. The AISP relies on other firms offering accounts (known as Account Servicing Payment Service Providers (ASPSPs)). ASPSPs include banks, building societies, payment institutions (PIs), e-money issuers, and credit card providers.
What is the purpose of AISP and PISPs?
As opposed to another closely related type of PISP (Payment Initiation Service Provider), AISPs are solely responsible for data management. As such, they cannot perform the transactions themselves. In reality, they are compiling the data and presenting it to the payment service user.
AISPs primarily provide the user with access to financial data, including money management tools, financial forecasting, price comparison, and more. These AISPs connect to multiple ASPSPs to give an overall overview of the users’ financial position and improve the user experience. Essentially, it means that information is consolidated within one interface for the user’s convenience, allowing them to see a full picture at the same time.
In the case of PISPs, customers consent to the provider initiating payments on their behalf. This enables PISP customers to pay for goods and services without the need for a traditional payment card. This is particularly useful for online purchases.
A specific point to emphasize is that the information made available by ASPSPs to AISPs should be the same as information the user has access to through Internet banking, excluding information classified as sensitive payment data.
The use of PISPs and AISPs is replacing previously manual and increasingly complex processes by individuals, financial institutions, and lenders. It is incredibly powerful to be able to easily collect, analyze, and display bank transaction data at the moment, but it is daunting for businesses who have never previously worked with it.
The more you know about the technology and what innovative companies are doing with it, the easier it can be to think of new applications. Companies should therefore thoroughly grasp these processes that will yield success.