Very often, different payment service providers are called payment systems. However, this is not entirely correct, since the payment systems in the European Union are regulated by four different licenses.

The European Union has adopted appropriate directives aimed at eliminating legal barriers to the provision of payment services in the EU, allowing citizens and businesses to easily and safely make all types of payments in a timely and cost-effective manner and for opening the EU market to new entrants. The European Union established a set of specific rules for all payment service providers, including banks and payment institutions.

These directives are aimed at achieving five main objectives:

• achieve a single payment market in the EU;
• provide a regulatory framework for a single payment market;
• create a single market and increase competition;
• provide consistent consumer protection and increase transparency;
• build capacity to improve the efficiency of EU payment systems;

According to these directives, all payment service providers are divided into two main types:

• Payment Institution
• Electronic Money Institution (EMI) or otherwise called the Electronic Money Issuer (E-money institutions).

In turn, each type of license of payment service providers has its’ own truncated types of licenses, which have limitations. Restrictions mainly relate to the volume of payment services. Thus, the Payment Institution license has a truncated version - Small Scale payment service providers. An Electronic Money Institution - EMI has a truncated version - Small-scale electronic money issuers.

A more detailed description of the license can be found on the relevant pages with proposals for obtaining licenses.