What is a payment institution ?
A payment institution is a company authorized by the competent authorities to provide payment services. Established by the European Payment Services Directive (PSD), this status allows for the provision of online payment solutions without being a bank.
Its mission is to facilitate financial transactions for professionals. It is involved in the collection, processing, and execution of payments, while ensuring the security of transactions and the protection of funds.
A payment institution can offer various services, such as :
- collection of online payments,
- bank transfers,
- SEPA direct debits,
- payment by bank card,
- paiement pour le compte de tiers,
- issuance and management of payment instruments.
Unlike a bank, a payment institution cannot accept deposits from the public or grant loans using the funds collected. Its activities are exclusively dedicated to payment services.
To operate, it must obtain authorization from its country’s supervisory authority and comply with strict requirements regarding security, anti-money laundering (AML), Know Your Customer (KYC) procedures, and the protection of user funds.
What is a bank ?
A bank, or credit institution, is an entity authorized to offer a wide range of financial services to individuals and businesses. In addition to payment services, it can accept deposits, grant loans, and offer savings or investment products.
His role is to assist clients in managing their finances, whether for day-to-day transactions or projects requiring financing.
A bank can, for instance, offer:
- the opening and management of bank accounts,
- payments by card, bank transfer or direct debit,
- loans to individuals and businesses,
- savings products,
- financing and investment solutions.
Unlike a payment institution, a bank may use collected deposits to fund loans, provided it complies with the prudential rules governing its activities.
Banks are subject to particularly strict regulation and are supervised by competent authorities to ensure the stability of the financial system and the protection of depositors.
The main differences between a payment institution and a bank
Although both offer payment services, a payment institution and a bank cater to different needs. The former specializes in managing financial flows, whereas the latter offers a broader range of banking and financing services.
| Criteria | Payment institution | Bank |
| Main activity | Payment services | Banking and financial services |
| Payment accounts | Yes | Yes |
| Bank accounts | No | Yes |
| Payments (card, bank transfer, direct debit) | Yes | Yes |
| Payment on behalf of third parties | Yes | At some banks, though they do not specialize in it. |
| Granting of credit | No | Yes |
| Savings products | No | Yes |
| Public deposits | No | Yes |
Specialization in payments
The payment institution focuses its operations on making and receiving payments. It develops solutions that enable businesses to collect funds, automate financial flows, and manage online payments and disbursements.
Expanded banking services
In addition to payment services, the bank offers financing solutions, savings products, and credit facilities. It supports its clients with all their banking needs.
Different uses
Companies seeking a high-performance solution to manage their payments, collections, or marketplaces often turn to a payment institution. Banks, meanwhile, remain the preferred choice for needs related to financing, bank account management, or savings.
Why choose a payment institution ?
For many companies, a payment institution represents a viable alternative to a bank when it comes to managing financial flows. Specializing in payments, it offers solutions designed to meet the needs of businesses, platforms, and marketplaces.
Expertise dedicated to payments
Payment institutions are dedicated entirely to payment services. Their expertise enables them to design innovative solutions to optimize collections, automate financial flows, and meet the specific needs of businesses, marketplaces, and platforms.
Solutions tailored to businesses
Payment institutions generally offer advanced features to automate financial operations and meet specific needs.
Simplified integration
Thanks to APIs and integration tools, businesses can easily connect payment services to their ERP, CRM, e-commerce platform, or marketplace. This automates financial flows and simplifies data exchange.
Supporting growth
Payment institutions are designed to support business growth. Their solutions are scalable, enabling the addition of new payment methods and the management of increasing transaction volumes without disrupting existing infrastructure.
By choosing a payment institution, companies benefit from specialized expertise, innovative solutions, and tools capable of sustainably optimizing their payment management.
What criteria should be used to choose a payment institution ?
Choosing a payment service provider should not be limited to the cost of services. It is essential to evaluate several criteria to ensure that the solution meets the company’s current needs while also being capable of supporting its growth.
Payment methods offered
The payment institution must support payment methods suited to your business and your customers’ expectations.
Among the key services :
- bank card
- SEPA direct debit
- bank transfer
- Pay by Bank
- payment links.
Integration capabilities
A high-performance payment solution must integrate with your technical environment. The availability of APIs, webhooks, and connectors facilitates the automation of financial workflows and connectivity with your business tools.
Available features
Depending on your activity, certain features may be essential:
- payment on behalf of third parties
- management of remittances
- onboarding and KYC
- transaction reporting
- payment automation
- commission management
Security and compliance
The payment institution must comply with applicable regulatory requirements and implement robust security measures to protect data and transactions.
It is particularly important to check :
- its regulatory approval
- PSD2 compliance
- KYC and AML procedures
- fraud-fighting tools
The quality of the support
Beyond technology, support is a key factor. A payment institution that understands the specific needs of your business can offer tailored solutions and support you as your projects evolve.
By comparing these various criteria, companies can select a payment institution capable of meeting their needs while offering a reliable, secure, and scalable infrastructure.
How does CentralPay support businesses ?
As an authorized payment institution, CentralPay supports businesses in managing and optimizing their financial flows through secure, regulatory-compliant payment solutions.
Its area of expertise covers the entire payment chain, from the collection of funds to the automation of financial operations.
Companies can notably benefit from :
- online payment solutions
- payment on behalf of third parties
- Payment API and integration with business tools
- onboarding and KYC procedures
- automation of payments and financial flows
Thanks to its status as a payment institution, CentralPay enables businesses to rely on a reliable, secure, and scalable infrastructure capable of supporting their growth while simplifying payment management.
Whether for an e-commerce site, a marketplace, or a business looking to digitize its payment collection, CentralPay provides solutions tailored to the specific needs of each business.
