Open banking AISP vs PISP explained

Managing finances has become easier thanks to open banking, and at the center of this development are two essential players: AISPs (Account Information Service Providers) and PISPs (Payment Initiation Service Providers). These terms might seem technical, but their real-world impact on businesses and individuals is significant.

The introduction of the Second Payment Services Directive (PSD2) in 2018 was a pivotal moment. For the first time, banks were legally required to securely share financial data with authorised third-party providers, provided customers gave their consent. This created opportunities for services like AISPs and PISPs to offer businesses and consumers better financial tools and services.

Now, in 2025, the groundwork laid by PSD2 has matured, and the PSD3 draft legislation introduced in 2023 promises to refine and expand open banking regulations. This progress is reshaping how financial data is accessed and used, making it crucial for businesses to understand how AISPs and PISPs work.

In this blog, we’ll explore how AISPs and PISPs operate, the value they bring, and why they’re increasingly essential for businesses. If you’re looking for reliable solutions in this space, Finexer is here to help you make the most of open banking.

Let us guide you through:

PSD2’s Role in Open Banking

When the Second Payment Services Directive (PSD2) came into effect, it wasn’t just another regulation—it marked a turning point for how financial services operate. PSD2 required traditional banks to share customer financial data securely with authorised third-party providers (TPPs), provided customers gave explicit consent. This allowed businesses to develop new tools and services that could access and utilise financial data directly from banks.

For consumers, this meant more control over their financial information. For businesses, it opened doors to accessing valuable insights and simplifying payment processes. By mandating open access to financial data, PSD2 created a level playing field that encouraged innovation and improved services for end-users.

📚 Learn more about PSD2 & Open banking

Who Are TPPs?

TPPs, or third-party providers, are companies authorised to offer services under the open banking framework. Among them, two categories stand out:

1. AISPs (Account Information Service Providers): These entities specialise in accessing and aggregating financial data from multiple accounts.
2. PISPs (Payment Initiation Service Providers): These providers handle the initiation of payments on behalf of customers.

Both AISPs and PISPs play distinct but complementary roles in simplifying financial processes for businesses and consumers.

📚 Best TPP for Startups in the UK

Why Licensing and Compliance Matter

Operating as a TPP is not just about offering services; it requires strict adherence to regulatory standards. In the UK, for instance, TPPs must be licensed by the Financial Conduct Authority (FCA). This ensures that providers meet high standards for data security, transparency, and accountability, protecting both businesses and consumers from risks.

What is an AISP?

An Account Information Service Provider (AISP) is a key player in the open banking ecosystem. Simply put, AISPs are authorised entities that can securely access and aggregate financial data from multiple bank accounts with the customer’s explicit consent. Their primary role is to provide a consolidated view of a customer’s financial information, enabling better financial management and insights.

For example, imagine using a budgeting app that shows all your bank accounts in one place. That’s the work of an AISP in action. These services make it easier for individuals and businesses to monitor transactions, track spending, and gain insights into their financial health.

How Do AISPs Work?

The process begins with customer consent. Once granted, the AISP uses secure Application Programming Interfaces (APIs) to access the customer’s financial data from participating banks. This data is then aggregated and presented to the user in a meaningful format.

Here’s a simplified breakdown:

1. A customer grants permission for an AISP to access their bank account information.
2. The AISP retrieves the data via the bank’s API in a secure and regulated manner.
3. The data is consolidated, analysed, and presented to the customer, often through user-friendly dashboards or apps.

This access is strictly read-only, meaning AISPs cannot initiate payments or make changes to the account.

Benefits of AISPs

For businesses, AISPs offer significant advantages:

1. Centralised Data Access: AISPs eliminate the need for manual data gathering by providing a unified view of financial information across multiple accounts.
2. Improved Financial Insights: With access to customer transaction patterns, businesses can tailor services and develop better financial products.
3. Automation of Processes: AISPs can automate tasks like financial reporting, credit assessments, and Know Your Customer (KYC) checks, saving time and resources.

For individuals, AISPs simplify personal finance management by:

• Offering a clear picture of their financial standing.
• Helping them track spending habits and set budgets.
• Providing insights into savings opportunities.

Learn more about Account Information Services Provided by Finexer:

1.Open banking Verification

2.Open banking Authentication

3.Income & Balance verification

4.Real-Time Bank Transaction Data

What is a PISP?

A Payment Initiation Service Provider (PISP) is another critical component of the open banking ecosystem. Unlike AISPs, which focus on accessing and aggregating financial data, PISPs specialise in initiating payments directly from a customer’s bank account, provided they have given explicit consent.

Think of it this way: instead of manually entering card details or going through traditional payment gateways, a PISP enables a direct, secure transfer from the customer’s bank account to the merchant. This not only simplifies the payment process but also makes it faster and safer.

How Do PISPs Work?

The functionality of PISPs revolves around secure API connections between banks, users, and merchants. Here’s how a typical PISP-enabled transaction works:

1. A customer initiates a payment on an e-commerce platform or app.
2. The PISP steps in to securely communicate the payment request to the customer’s bank.
3. The customer authenticates the transaction (often via their banking app).
4. Once authenticated, the bank transfers the funds directly to the merchant’s account.

This process eliminates intermediaries like card networks, resulting in faster settlements and reduced transaction costs.

Benefits of PISPs

For businesses, PISPs offer several key advantages:

1. Faster Payments: Direct bank-to-bank transfers mean quicker settlements, improving cash flow for merchants.
2. Reduced Costs: Since there’s no reliance on card networks, transaction fees are often lower.
3. Secure Transactions: PISPs must comply with strong regulatory requirements, such as Strong Customer Authentication (SCA) under PSD2, ensuring payment security.
4. Improved Checkout Experience: Customers no longer need to enter lengthy card details or go through multiple steps, reducing cart abandonment rates.

For consumers, PISPs provide:

• A more straightforward payment process.
• Greater confidence in the security of their transactions.
• No need to share sensitive card information with merchants.

Examples of PISP Use Cases

• E-commerce Payments: Merchants integrate PISP functionality to enable customers to pay directly from their bank accounts.
• Recurring Payments: Subscription-based businesses use PISPs to automate recurring payments securely.
• Savings and Financial Apps: Some apps use PISP functionality to help customers automate savings by transferring money into designated accounts.

Learn more about Payment Initiation services provided by Finexer:

1.Request to pay

2.Instant Refunds & Withdrawals

3.Bulk Payouts

4.Variable Recurring Payments

PISP vs AISP: Key Differences

While both AISPs and PISPs are integral to open banking, their functionalities and applications differ significantly. Understanding these differences is crucial for businesses aiming to leverage their full potential.

Feature	AISP	PISP
Core Functionality	Provides access to and aggregates financial data.	Initiates payments directly from customer bank accounts.
Primary Use Case	Financial management tools, budgeting apps, and credit assessments.	Online payment processing, recurring payments, and savings automation.
Access Type	Read-only access to customer financial data (with consent).	Active role in initiating payments on behalf of the customer (with consent).
Target Audience	Banks, fintech companies, credit agencies, and consumers seeking data insights.	Merchants, subscription services, and businesses looking to simplify payments.
Examples	Budgeting apps like those offering account aggregation or credit scoring tools.	E-commerce platforms and apps providing direct payment options.

AISP and PISP: Complementary Roles

Although their functions differ, AISPs and PISPs often work together to deliver comprehensive financial solutions. For example:

• An AISP might gather and display a user’s account balances across multiple banks, offering a clear financial overview.
• A PISP could then facilitate a payment directly from one of those accounts, streamlining the transaction.

Together, these services provide businesses with the tools they need to:

• Offer more personalised and effective financial products.
• Automate processes like payment initiation and data aggregation.
• Enhance customer trust by providing secure and efficient solutions.

How to Choose an Open Banking Provider

Choosing the right open banking provider can significantly impact your business, especially when integrating AIS and PIS. With so many options available, it’s crucial to evaluate providers based on key factors that ensure reliability, compliance, and alignment with your business goals.

1. Regulatory Compliance

First and foremost, your provider must comply with PSD2 and any upcoming regulations like PSD3. They should hold all necessary licenses, such as authorisation from the Financial Conduct Authority (FCA) in the UK, ensuring they meet the highest standards for security and trustworthiness.

2. Security Standards

Handling sensitive financial data requires rigorous security measures. Look for providers that implement:

• Strong Customer Authentication (SCA) to prevent unauthorised access.
• End-to-end encryption for data in transit and at rest.
• Robust protocols for handling potential breaches.

A provider that prioritises security safeguards your customers’ trust and ensures smooth operations.

3. Data Privacy

Financial data is sensitive, and customers need assurance that their information is safe. Providers should adhere to GDPR standards, clearly defining how they handle, store, and protect data. Transparency in data usage is critical for building customer confidence.

4. Integration Capabilities

The provider’s solutions should integrate seamlessly with your existing systems. APIs should be well-documented, stable, and easy to implement. Ask about their support for customisation, ensuring the services can adapt to your unique needs.

5. User Experience

A smooth and straightforward user experience matters for both your customers and your team. Ensure the provider offers features like:

• Intuitive interfaces for end-users.
• Clear dashboards for tracking and reporting.
• Minimal friction during setup and usage.

6. Transparent Pricing

Understand the provider’s fee structure upfront. Transparent pricing ensures there are no hidden costs that could impact your budget. Whether it’s transaction-based fees or subscription plans, choose a provider that aligns with your financial expectations.

7. Support and Customer Service

Exceptional customer support is often overlooked but is vital for addressing issues promptly. A reliable provider will offer:

• Dedicated support teams.
• Fast response times.
• Resources like FAQs, documentation, and technical guides.

Choose Finexer for Open Banking Services

When it comes to open banking, finding a provider you can trust is crucial. That’s where Finexer stands out. As a fully licensed and FCA-regulated provider in the UK, Finexer delivers secure, reliable, and customer-focused AISP and PISP services tailored to your business needs.

What Makes Finexer the Best Choice?

1. Regulatory Excellence: Finexer complies with all PSD2 and GDPR requirements, ensuring your business stays ahead of regulatory standards while protecting customer data.
2. Unmatched Security: With cutting-edge encryption, secure API connections, and robust authentication protocols, Finexer prioritises safety at every step.
3. Ease of Integration: Our well-documented APIs and dedicated support team make it simple to integrate our services into your existing systems, no matter the scale.
4. Scalable Solutions: Whether you’re a fintech startup or a growing SMB, Finexer’s open banking services adapt to your needs, helping you access financial data and initiate payments effortlessly.
5. Transparent Pricing: We offer straightforward pricing structures, so you always know what you’re paying for—no hidden fees, no surprises.

By choosing Finexer, you’re not just opting for an open banking provider—you’re gaining a partner committed to driving your success with data-driven insights and secure payment solutions. Ready to experience the difference? Get in touch with Finexer today to explore how we can support your business growth through open banking.