Account Servicing Payment Service Providers (ASPSP) are fundamental to open banking as we know it.

Encompassing banks, building societies and payments companies, ASPSPs provide and maintain financial accounts for their customers. Using technology called application programming interfaces (APIs), registered third parties like TrueLayer can connect to an ASPSP’s accounts to provide open banking services.

So what do you need to know about ASPSPs? Does every bank fall into this category? And how do they differ from other open banking providers? Here are a few crucial facts about ASPSPs and open banking.

What is an ASPSP?

An ASPSP is an organisation that offers payment accounts to their customers. Consisting of banks, payment companies and other financial institutions, ASPSPs must be able to store payment data or initiate payments. They must also give customers online access to their accounts.

To understand ASPSPs, it helps to take a look at the open banking regulations behind them. The Revised Payment Services Directive (also known as PSD2) brought open banking into effect throughout Europe.

PSD2 lets consumers give regulated companies — known as Third Party Providers (TPPs) — permission to access their financial data and initiate payments on their behalf. When it passed in 2015, each EU member state had to draft its own legislation to govern its enforcement and regulation.

These laws are known as Payment Services Regulations (PSRs). In the UK, for example, the Financial Conduct Authority (FCA) is responsible for upholding the country’s PSRs.

So what does all this have to do with ASPSPs? Ultimately, PSRs define who these providers are and what responsibilities they hold.

While ASPSPs can generally be defined as companies that offer payment accounts to their customers, that’s not the only criteria they need to meet under PSRs. If a company is designated as an ASPSP, they’re required to publish Read/Write APIs, which give TPPs either read access to gather customer data, or write access to initiate payments.

To learn more about the requirements of ASPSPs, take a look at the UK regulation chapter in our definitive open banking guide.

What is a voluntary ASPSP?

A voluntary ASPSP is a financial institution that has opted to share customer data by choice. While many account providers are required to provide Read/Write APIs, many others have chosen to do so because they want to experience the advantages of open banking.

Voluntary ASPSPs benefit from open banking in several ways. By registering as ASPSPs, account providers can access customer data and leverage payments infrastructure to create innovative new products. They can also use shared standards to develop APIs that integrate better with other products.

How is an ASPSP different from an AISP/PISP?

While they may sound similar, ASPSPs play a very different role to account information service providers (AISPs) and payment initiation service providers (PISPs). The latter two are types of TPPs that access accounts through APIs to collect data or make payments.

Say you wanted to buy something online using Pay by Bank. With your permission, the merchant uses TrueLayer’s Payments API to connect to your bank account and fund the purchase. In this case, TrueLayer is a PISP, accessing your account to make a payment. Your bank is the ASPSP, maintaining the account from which data and payments can be drawn.

While AISPs and PISPs are both TPPs, they interact with ASPSPs in different ways. AISPs are registered with the FCA to provide account information services (AIS). This involves drawing and displaying read-only financial information in applications such as account aggregation.

Crucially, AISPs can’t initiate payments, which is what sets them apart from PISPs. By offering payment initiation services (PIS), PISPs can move money between accounts while also accessing customer data. However, customers must give permission to these payments. Topping up an investment app through a bank transfer is just one example of PIS in action.

Should your business become an ASPSP?

The short answer is probably not. Unless your business offers payment accounts to customers, you won’t benefit from registering as an ASPSP. In those rare cases, standards from the Open Banking Implementation Entity can help you develop compliant and effective APIs.

For most companies, the benefits of open banking come from accessing customers’ financial data. As a result, they’re much better served by becoming an AISP or a PISP. There are both direct and indirect ways of doing this, and it’s important to identify the right option for your business.

Luckily, there are plenty of resources available to help you make the most of open banking. Partnering with industry experts will help you find the option that’s right for you.

Check out our definitive open banking guide to learn more about ASPSPs, AISPs, PISPs and everything in between.