Payment institution VS Electronic money institution
Le 9 February 2022
Payment institution (PI)
The status of payment institution was created in 2010 following the implementation of the PSD1 (Payment Services Directive). Regulated under the supervision of the ACPR (Autorité de Contrôle Prudentiel et de Résolution of the Banque de France), this status is mandatory when an organisation wishes to provide payment services on a professional basis.
This status allows to offer several payment services such as:
- Opening payment accounts for third parties
- Acquiring funds on these payment accounts
- Processing and securing payment data of third parties
Electronic money institution (EMI)
Also, under the authority of the ACPR, the status of electronic money institution was created three years later, in 2013. This status is complementary to that of payment institution. Like the payment institution status, the electronic money institution status is mandatory when an organisation wishes to provide e-money services. It should be noted that an electronic money institution can also distribute payment services in the same way as a traditional payment institution.
What is the difference with a traditional bank?
A traditional bank is a credit institution. Still under the authority of the ACPR, this status allows it to offer other complementary services such as the delivery of means of payment (e.g. chequebooks), savings accounts or credit solutions. Before the establishment of the status of payment or electronic money institution, only credit institutions were entitled to provide payment services.
The major difference between e-money or payment institutions and credit institutions lies in the receipt of customer funds. PI and EMI cannot use customer funds for their own account, nor can they invest them in a savings or investment product, unlike traditional banks.
Payment and e-money institutions, also known as payment providers, do not compete directly with credit institutions like traditional banks. On the contrary, a payment or e-money provider develops innovative solutions for specific needs of physical or digital businesses that traditional banks do not usually address (omnichannel payment experience, process automation, marketplace payments, e-money wallets, IT integration projects …).
PI vs EMI : Some figures
If a company wishes to distribute payment services, it can either obtain payment or electronic money institution status, a complex and highly regulated process, or become a Payment Service Provider with an existing institution. If it simply wishes to use innovative payment or e-money services without bearing the burden of compliance, then it can call directly on a payment or e-money provider that has the necessary authorisations for its project.
CentralPay is an electronic money institution with 20 years of experience in payments. We assist companies in setting up payment services.