Payment Initiation
Payment initiation is the regulated service (PIS) in which a licensed provider starts a credit transfer from a payer's bank account, with the payer's explicit consent and authentication. The provider never holds the funds and never sees the payer's banking credentials.
The flow has five steps. The payee's platform creates a payment request — amount, beneficiary IBAN, and reference — and presents it to the payer, who selects their bank and is handed to that bank's own app or website to approve the payment under strong customer authentication. The bank executes a credit transfer. The initiating provider receives the status and confirms the outcome to the payee. Because every field is pre-filled by the requester, there are no mistyped IBANs, amounts, or references.
PIS was created by PSD2, in force since January 2018, and is performed by authorized payment institutions under supervision. Its weak point has been variable bank-API quality; the PSD3/PSR package agreed in November 2025 tightens performance requirements precisely there.
Why it matters in real estate
Payment initiation turns "please transfer the rent and quote reference 4471-B" into a two-tap approval that cannot be filled in wrong. For a property manager, the reference discipline is the point: UrbanPay initiates each request with contract, property, and tenant references attached, and reconciles the incoming transfer automatically when it lands. Pricing starts from 0.25% per successful payment — a €1,000 rent payment at 0.25% costs €2.50.
Initiation also anchors move-in. A new tenant is verified (KYC), signs the lease with an eIDAS e-signature, and is immediately presented with an initiation flow for deposit plus first month, settling over SEPA Instant before keys change hands.
Key facts
- Payment initiation (PIS) was created by PSD2, in force since January 2018.
- PIS providers initiate transfers but never hold client funds — money moves bank to bank.
- Strong customer authentication at the payer's own bank is mandatory for each authorization.
- PSD3/PSR, agreed in November 2025, brings tighter performance requirements for the bank APIs PIS depends on.
Related terms
PIS is the service layer defined by PSD2, operating within open banking, producing A2A payments as its output.
Frequently asked questions
Does the payment initiation provider touch the money?
No. The provider transmits the payment order and receives status messages; the funds move directly from the payer's bank to the beneficiary's bank as a credit transfer. In UrbanPay's case, payments run on regulated rails via partner entities supervised by the FCA and BaFin, and client funds never touch UrbanPay's balance sheet.
Does the payer need to type an IBAN or reference?
No — that is the operational advantage. The requesting platform pre-fills beneficiary, amount, and reference; the payer only reviews and approves inside their own bank's interface. Misdirected rent caused by a transposed digit, or unreconcilable transfers with blank references, disappear as a failure category.
What happens when an initiation fails?
The provider receives a failure or rejection status immediately — insufficient funds, abandoned authentication, or a bank-side error — and the platform knows the payment did not happen. That enables same-day retry or dunning. Note the pricing model follows success: UrbanPay charges from 0.25% per successful payment.
See the initiation flow end to end: A2A initiation.