Payment Institution (PE)
The status of payment institution was created in 2010 following the introduction of the PSD1 (Payment Services Directive). Regulated under the supervision of theACPR (Autorité de Contrôle Prudentiel et de Résolution of the Banque de France), this status is mandatory when an organization wishes to provide payment services on a professional basis.
This status makes it possible to offer several payment services such as :
- Open payment accounts for third parties
- Acquire funds on these payment accounts
- Process and secure third-party payment data
Electronic money institution (EME)
Also under the authority of the ACPR, the status of electronic money institution was created 3 years later, in 2013. This status is complementary to that of payment institution. Just like the status of payment institution, the status of electronic money institution is compulsory if an organization wishes to provide electronic money services. It should be noted that an electronic money institution can also distribute payment services in the same way as a conventional payment institution.
What’s the difference with a traditional bank?
A traditional bank is a credit institution. Still under the authority of the ACPR, this status enables us to offer other complementary services, such as means of payment (e.g. checkbooks), savings accounts and credit solutions. Prior to the introduction of electronic money and payment institution statutes, only credit institutions were entitled to provide payment services.
The major difference between e-money or payment institutions and credit institutions lies in the way they receive customer funds. Unlike traditional banks, EPs and EMEs cannot use customer funds for their own account, or invest them in savings or investment products.
Electronic money or payment institutions, also known as payment providers, are not in direct competition with credit institutions like traditional banks. On the contrary, a payment or e-money provider develops innovative solutions for the 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, etc.).
EP vs EME: Facts and figures
If a company wishes to distribute payment services, it can either obtain the status of Electronic Money or Payment Institution, a complex and highly regulated process, or become a Payment Service Provider Agent with an existing Institution. If you simply want to use innovative payment or e-money services without having to bear the burden of compliance, you can call on a payment or e-money provider that has the necessary approvals for your project.
CentralPay is an electronic money institution that has been a payment expert for 20 years. We help companies set up payment services.