A payment initiation service provider (PISP) flow is the end-to-end process where a licensed third-party provider initiates account-to-account payments directly from a customer's bank account through open banking APIs, bypassing traditional payment cards.
Why It Matters
PISP flows reduce payment costs by 60-80% compared to card transactions by eliminating interchange fees. They enable real-time settlement within 10 seconds versus 2-3 days for card payments. European merchants save €12-15 billion annually through PISP adoption, while reducing fraud exposure by 40% since funds transfer directly between bank accounts without card data exposure.
How It Works in Practice
- 1Authenticate the customer through strong customer authentication (SCA) using biometrics or two-factor methods
- 2Redirect the customer to their bank's secure authentication interface via open banking APIs
- 3Obtain explicit consent from the customer to initiate the specific payment amount and merchant details
- 4Transmit payment instructions directly to the customer's bank through PSD2-compliant API channels
- 5Receive real-time payment confirmation and settlement status from the bank within 10-15 seconds
- 6Route transaction status updates back to the merchant's payment system via webhook callbacks
Common Pitfalls
PSD2 requires explicit consent for each transaction - pre-authorized recurring payments need separate AISP licensing
Bank API availability varies between 95-99.9% uptime, creating payment failures during maintenance windows
Strong customer authentication timeouts after 90 seconds can abandon 15-20% of payment attempts
Refund processing requires separate bank rails since PISP flows are push-only payment instructions
Key Metrics
| Metric | Target | Formula |
|---|---|---|
| Authentication Success Rate | >96% | Successful SCA completions / Total authentication attempts |
| Payment Completion Time | <15s | Time from consent to bank confirmation receipt |
| Bank API Uptime | >99.5% | Successful API calls / Total API calls in 24-hour period |