Put simply, a “payment institution” is an undertaking that provides payment services and which is not a CRR credit institution or an e-money institution. The term “payment institution” was defined in 2007 by PSD 1 and transposed into the respective national law in 2009 (in Germany it is contained in the Payment Services Supervision Act, ZAG).
Payment institutions generally require a licence from the supervisory authority responsible for them (BaFin in Germany). In some member states of the European Economic Area there are exceptions to the licensing requirement if the payment institution only provides payment services to a limited extent and only in its home country. In Germany, payment institutions are supervised by BaFin and the Deutsche Bundesbank. They have to comply with numerous regulatory and anti-money laundering requirements (e.g. they need to maintain a certain amount of equity capital, minimise their risks and identify their customers).