# EP

> Payment Institution (Établissement de Paiement)

A status created by DSP1 for players specialising in payment services (transfers, direct debits, acquiring, AIS, PIS) without deposits or credit. Typical cases: Lydia, Qonto, Fintecture, Bridge.

_Category: acteur_

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## Definition

An **EP** (_Établissement de Paiement_, payment institution) is a licensed payment service provider, but neither a bank (EC) nor an electronic money issuer (EME).

Created by DSP1 (2007, transposed in France in 2009), the status opened the payments market to specialised non-banking players. The ACPR grants the licence in France, and an EP can passport its licence across the entire EEA.

## The 8 authorised payment services

The licence covers all or part of a limitative list (Annex I of DSP2):

1. **Cash deposit** into a payment account.
2. **Cash withdrawal** from a payment account.
3. **Execution of operations** (transfers, direct debits, card payments) on an account held with the PSP.
4. **Operations backed by short-term credit** tied to the payment.
5. **Issuing and acquiring** payment instruments (e.g. card acquirer).
6. **Money remittance** (Western Union, Wise in part).
7. **PIS** — payment initiation (created by DSP2).
8. **AIS** — account information (created by DSP2).

The licence is applied for service by service: Bridge was long licensed for AIS + PIS only, Qonto for services 3 and 5.

## EP vs EC vs EME

- **EP** — payments and tied credit only, without deposits or e-money. Min. capital €20K to €125K.
- **EC** — payments + deposits + credit. Min. capital €5M.
- **EME** — payments + e-money issuance. Min. capital €350K.

Many fintechs start as an EP, switch to EME to issue cards in-house, then apply for the EC licence for credit.

## Ring-fencing of funds: the great rule

An EP cannot keep its customers' money on its balance sheet. PSU funds must be ring-fenced:

- in a segregated account at a third-party EC (the dominant method);
- or invested in safe and liquid assets;
- or covered by a guarantee at least equal to the funds held.

This is what protects the customer in case of bankruptcy: their money is recoverable, since the FGDR does not cover EP accounts.

## What an EP cannot do

- **Take deposits**: it only holds payment accounts, not savings.
- **Grant credit** beyond short-term credit tied to the payment (< 12 months in practice).
- **Issue electronic money** (a top-up wallet): the EME licence is required.
- **Join TARGET2 / TIPS directly**, except since 2023 when the ECB is gradually opening access to non-banks.

## In the PSD2 ecosystem

The EP is the historical status of DSP2 fintechs: most AISPs, PISPs and business neobanks started there. Lighter than an EC, it remains heavily regulated (AML-CFT, SCA, ACPR reporting, governance, own funds calculated by volume).

```mermaid
flowchart LR
    PSU["PSU — customer"]
    EP["EP\n(Lydia, Qonto, Bridge…)"]
    EC_TIERS["Third-party EC\n(ring-fencing account)"]

    subgraph SERVICES["Possible services"]
        VIR["Transfers / direct debits"]
        ACQ["Card acquiring"]
        AIS["AIS"]
        PIS["PIS"]
    end

    PSU -->|"Pays in funds"| EP
    EP -->|"Ring-fences client funds"| EC_TIERS
    EP --> SERVICES
    EP -.->|"Licensing + supervision"| ACPR["ACPR"]
```

## Concrete examples

- **French EPs**: Qonto (business account), Lydia (P2P, became Sumeria under EME), Bridge (AIS + PIS), Fintecture (PIS), Shine (business account), Lemonway and Mangopay (marketplaces).
- **EP → EME transition**: Lydia became an EP and then created Sumeria under EME to issue cards in-house and offer a remunerated wallet.
- **Capital by service**: €20K for pure money remittance, €50K for AIS + PIS, €125K for acquiring/issuing — the ACPR also requires a 3-year business plan and a full governance file.
- **Licensing lead time**: 6 to 12 months, more for multi-service. Many go through a PSP agent or a BaaS during the process to get started.
- **Passporting**: a French EP can passport its licence to 29 other EEA countries — which allows Qonto to serve Germany, Italy and Spain from France.
- **Ongoing supervision**: quarterly reporting to the ACPR (own funds, volumes, fraud, DORA incidents), possible inspections, sanctions ranging from a warning to licence withdrawal.

## Sources

- [Établissements de paiement](https://acpr.banque-france.fr/autoriser/procedures-secteur-banque/etablissements-de-paiement) — ACPR / Banque de France
- [Directive (UE) 2015/2366 — Annexe I (services de paiement)](https://eur-lex.europa.eu/eli/dir/2015/2366/oj) — EUR-Lex, 2015-11-25

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Source: https://openfinanceguide.com/en/glossary/ep