TPP stands for ‘Third Party Provider’.
In the context of open banking it means a company that accesses your financial data from your bank and uses it to offer you further services. TPPs must be regulated by the financial regulator in their respective EU member state - in the UK that’s the FCA.
TPPs have to seek regulatory approval for two separate statuses under open banking:
- Account Information Service Provider (AISP)
- A company authorised as an AISP can access your financial data from your bank and present it in different ways - such as aggregating all your accounts in one place, and categorizing your transactions. On its own, AISP-status doesn’t allow a company to actually interact with your money i.e. it cannot move your money from one account to another, or authorize payments on your behalf.
- Payments Initiation Service Provider (PISP)
- To be able to move your money and use it to pay for things, a TPP must also be licensed as a PISP. There are strict data security and regulatory requirements that must be met to become a PISP, in order to protect against things like fraud and money laundering.
Bud is a regulated TPP in the UK, and is both AISP and PISP authorised.