How Payment Initiation Service Providers are changing the way citizens pay online

Published: Mon Dec 27 2021

Our Payment Acceptance framework enables customers to maximise savings and online security with a fast and transparent solution.

A Payment Initiation Service Provider (PISP) bypasses the requirement for payment through third party services, such as Visa or MasterCard. Instead, PISP enables users to pay from their bank account to the merchant with excellent security and transparency.

How it works: local authority case study

A consumer needs to pay for a service online such as a penalty charge notice. The consumer initiates the transaction by selecting the product/service required, which can be triggered in different ways, such as accessing a QR code or an online payment page.

When prompted, consumers are given the option to pay via their own bank account. PISPs will only initiate these account services if the consumer gives consent by selecting the pay by bank method'.

This payment process uses a banking Application Programming Interface (API) which enables an easy and secure way of exchanging data. The PISP uses the banking API to pay from the consumer's bank account (i.e. it pushes the funds from the consumer's account to the local authority's account).

Top 5 FAQs

We recognise that this service is new to many customers. To help you understand how PISP can benefit your organisation, our customers have suggested some frequently asked questions which we have answered below:

What are the benefits from using PISPs?

There are many benefits. These include:

better user experience: customers can simply authenticate payments using their banking app, resulting in a shorter payment journey
increased transparency: customers can see their account balance before payment and choose which bank account to use
immediate withdrawal: customers no longer have to wait 2 to 3 days for payment withdrawal from their bank account

For CCS customers, additional benefits include:

significant savings: a fixed pence fee as opposed to a variable % fee, by using account to account (A2A) payments
no additional costs such as chargeback fees
lower risk of fraud: no need to share financial data outside your own bank

How can the providers help with the integration of these services?

Firstly, all suppliers on lot 5 of our Payment Acceptance framework offer a sandbox environment. This allows for production-like testing such as integration, realistic end-to-end performance and capacity testing. You are then well prepared before launching a new service.

From onboarding to post-launch, all providers offer dedicated teams to support you throughout the journey. They even offer support or advice on marketing the service.

In addition, providers offer technical documentation, and service go-live can be achieved in as little as 2 to 3 weeks, depending on customer requirements.

How does integration work with an existing payment acceptance strategy/model?

All providers offer integration with existing payment strategies through checkout pages and third party payment providers. They also support the customer's existing payment notifications.

It provides an additional choice that is more secure and risk-free for the consumer, cheaper, and highly converting for the merchant as customers are more likely to complete the purchase.

In general, payment acceptance strategies should centre around user experience and user needs. There have been many payment innovations in recent years serving more varied user needs. PISP services combine the security and cost-effectiveness of manual bank transfers with the ease of card and mobile payments.

What is the pain and gain calculation for customers?

There are pains and gains with all new services and customers have to decide whether it is worth adopting those new services.

Because this payment method is fairly new, the merchant may need to provide information on their website checkout page to explain what is involved. To reap all the benefits, merchants need to provide information about PISP payment to reassure and advise customers.

Despite this, some providers have seen a 46% conversion in customers using this payment method. PISP payments are simple to use and completed in just a few quick clicks, with no account set-up needed. Customers also benefit from bank-grade security as no payment details are stored by any party.

Are there any examples of PISP payments?

The suppliers on lot 5 can provide examples of existing payment journeys. We recommend that you approach all providers in lot 5 for examples as they can provide these to you as part of their pre-market engagement.

Public sector bodies have already adopted this solution in their payment offerings, specifically in the education, government and charity sectors. But, despite this, some providers have seen a 46% conversion in customers using this payment method. PISP payments are simple to use and payments are completed in just a few quick clicks, with no account set up required. Customers also benefit from bank-grade security as no payment details are stored by any party.