Payment initiation service provider (PISP)
A payment initiation service provider (PISP) is a regulated firm authorised by the Financial Conduct Authority (FCA) to initiate payment orders directly from a user's bank account on their behalf, with that user's explicit consent. As defined by Open Banking Ltd, a PISP provides an online service to initiate a payment order at the request of the payment service user with respect to a payment account held at another payment service provider. Unlike an account information service provider (AISP), which can only read data, a PISP can move money, making it the regulated category that powers open banking rent payments and direct account-to-account transfers.
How a PISP initiates a payment
A PISP connects to a user's bank via a standardised open banking API. When a user instructs a payment, for example, paying rent through a property management platform, the PISP securely communicates that instruction to the user's bank, which then transfers funds directly to the recipient. No card details are required, and no card network is involved. In the UK, most PISP-initiated payments settle through the Faster Payments network, which means funds typically arrive within seconds. The user authorises each payment through their own banking app or online banking portal using strong customer authentication, a biometric, PIN, or equivalent security method, before the PISP can proceed.
The PISP does not hold the money at any stage. It acts as an intermediary between the payer's bank and the payee, sending and confirming the payment instruction. Once the user's bank has authorised the transfer, the funds move bank-to-bank and the PISP confirms that the instruction has been initiated.
How PISPs are regulated in the UK
PISPs must be authorised or registered under the Payment Services Regulations 2017 (PSR 2017), which implemented the EU's Second Payment Services Directive (PSD2) into UK law. Full authorisation is required to provide payment initiation services, registration is not sufficient, as it is for the account information-only AISP category. Authorised PISPs appear on the FCA register and must meet ongoing requirements covering data security, consent management, strong customer authentication, and liability for unauthorised transactions.
Both AISPs and PISPs are required to obtain the user's explicit consent before accessing any account data or initiating any payment. That consent can be withdrawn at any time, and neither provider can act beyond the scope of what the user has authorised.
How PISPs are relevant to landlords
Landlords receiving rent through an open banking-enabled platform are likely receiving funds initiated by a PISP. When a tenant pays rent via an account-to-account payment rather than a standing order or bank transfer set up manually, the instruction travels through a PISP. This matters for landlords because PISP-initiated payments are faster and more verifiable than traditional payment methods, reducing the window of uncertainty between a payment being made and a landlord being able to confirm it.
Landlords using August can connect their bank accounts via open banking to track incoming rent payments in real time. This works through AISP permissions. August reads transaction data rather than initiating payments. Where a platform does initiate rent collection on a landlord's behalf, it will hold or be working through a firm that holds a PISP authorisation.
Statutory context
PISPs are defined and regulated under the Payment Services Regulations 2017 (SI 2017/752). The PSR 2017 sets out the scope of payment initiation services, the authorisation requirements, consumer protection obligations including refund rights for unauthorised transactions, and the liability framework that governs PISPs in relation to the banks they communicate with. Following the UK's exit from the EU, these regulations are maintained domestically under the oversight of the FCA and HM Treasury.
Frequently asked questions
Is a PISP the same as an AISP?
No. An AISP can only read account data in read-only mode and cannot initiate transactions. A PISP can initiate payments. Some providers hold both authorisations and can offer both services; others hold only one. Where a firm provides both, it must have obtained FCA authorisation for both functions separately.
Do landlords need to be a PISP to collect rent through open banking?
No. Landlords access PISP-powered rent collection through regulated property management platforms or payment service providers that hold the relevant FCA authorisation. The landlord is the beneficiary of the payment, not the initiator, and does not need their own PISP licence.
What happens if a PISP initiates a payment I did not authorise?
Under the PSR 2017, if a payment is initiated without the user's consent, the user's bank must refund the amount immediately. The PISP is then liable to the bank for the loss. This consumer protection framework applies regardless of how the payment was originated.
