What are Agents & What is Outsourcing?
Under Article 66 of PSD2, a Payment Services User (PSU) has the right to make use of a Third Party Provider (TPP) to obtain payments services.
Member States shall ensure that a payer has the right to make use of a payment initiation service provider to obtain payment services as referred to in point (7) of Annex I. The right to make use of a payment initiation service provider shall not apply where the payment account is not accessible online.
These TPPs are Regulated Entities in their own right with Payment Initiation Services (PIS), Account Information Services (AIS), or Card Based Payment Instruments Issuing (CBPII) roles.
The TPP identifies itself and communicates securely with the Account Servicing Payment Service Provider (ASPSP) to facilitate these payment services.
This is the Three Party Model:
However, in the real world, there are a number of examples where a ‘fourth party’ is involved. These fourth parties are separate entities contracted by TPPs to provide services on behalf of the TPP (that we will call 2a and 2b for now). This is the Four Party Model:
These ‘fourth parties’ may offer consumer services to PSUs on behalf of the TPP (for example, marketing and managing the PSU’s access to the TPP’s products and services) or provide technical services (for example, to integrate with ASPSP interfaces and technically accessing the PSU’s accounts) on behalf of the TPP.
The fourth party may belong to the same legal entity (the TPP) or equally, be a different legal entity from the TPP, i.e. they are acting as an Agent for or an Outsourcer of the TPP.
Budget Insight is a TPP that uses a number of ‘Agents’ to carry out the payment services that they are authorised to perform. This includes Lydia Solutions that offers the Lydia mobile payments app.
SumUp is a TPP that uses an ’Outsourcer’, Token, to technically connect to banks and access their customers’ accounts.
Various terms are popularly used to describe the parties within the three and four party models:
The Account Holder.
The entity publicly offering the payment services (for example, via an app or a website) to the PSU.
The entity that technically accesses the PSU’s account.
The entity holding the account for the PSU that is accessed and/or the entity that provides the dedicated interface (the API).