The concepts of “payment institution” and “payment service provider” are different from each other and cannot be used interchangeably. A payment institution is a legal entity authorized or licensed by the Banking Regulation and Supervision Board (the Board) under the Law to provide and carry out payment services. Article 13 of the Law states that banks within the scope of Banking Law No. 5411, electronic money institutions and payment institutions are payment service providers under this Law. Therefore, the term “payment service provider” is defined in the Law as a higher-level concept, and wherever this term appears in the legislation, it should be read as the structure that includes banks within the scope of Banking Law No. 5411 together with the electronic money institutions and payment institutions licensed by the Board under this Law.
Common mistakes in everyday language
In news and contracts, these two terms are often used interchangeably. However, a bank is a payment service provider but not a payment institution, and it is subject to a different law.
When a company introduces itself by saying “we are a payment institution”, it means it has obtained a license from the competent authority. For users, the reliability check is to verify this license in the official list of the competent authority.
Unauthorized companies that use this term may face sanctions.
