Vocabulary Practice: Institutions

Read the text again and answer the questions with some of the words in bold.

Payment services are the principal and most common form of financial services offered on the market. They include a broad spectrum of operations, such as money remittance, transactions using a payment card, depositing and withdrawing money from a payment account, execution of transfers, standing orders, and direct debits, FX services, etc. It comes as no surprise that their provision is strictly supervised.

The delivery of payment services within the European Community is governed by the Payment Services Directive (PSD). It was enacted by the European Commission with a view to eliminating the fragmentation of the payment services market in Europe and boosting competition in the sector. The directive specifies the institutions entitled to provide payment services. It addition to credit institutions (such as banks) and certain authorities (such as government bodies and central banks), it lists Electronic Money Institutions (EMIs), and establishes the new category of Payment Institutions (PIs). According to Article 4(4), “a payment institution is a legal person that has been granted authorization (…) to provide and execute payment services throughout the Community”. Such an authorization must be obtained from the Central Bank of a given member state.

Organizations which are not EMIs or credit institutions may apply for an authorization as a Payment Institution on condition that they fulfill specific capital and risk management requirements in the EU member state where they are established. Every country has to appoint a competent authority for supervising Payment Institutions and monitoring their compliance with business rules, as specified in national legislation.