🧠 All boundaries are in your head
(or how to tell the difference between a fintech, a PSP, and a bank — and why it matters)

In 2025, digital finance looks sleek: smooth UIs, instant transfers, zero-fee P2P, and emojis in transactions. But under the hood? A wild mix of licenses, tech, and legal models.

Let’s break down who's who — in plain English, no marketing fluff.

🏦 What is a bank — and why are they still important?

A bank is the backbone of the financial system. It:

• Accepts deposits
• Issues loans
• Is legally allowed to manage other people’s money
• Is regulated by banking authorities (EBA in the EU, FCA in the UK, FDIC/OCC in the US)

Key feature:
A bank can use customer funds — which means it’s fully responsible for their safety.

Banks aren’t always dinosaurs. Some offer APIs, embrace open banking, or acquire fintech startups. But at their core, they operate under a strict model: “We’re licensed. We hold your money.”

💳 What about Payment Service Providers (PSPs)?

A PSP is the engine of payments. It:

• Processes online payments (cards, APMs, crypto)
• Executes payouts
• Connects to merchants via APIs

PSPs may hold EMI or PI licenses in the EU, MSB in Canada, or be registered with the UK FCA.

They’re not banks. They don’t store funds.
They move money. They’re infrastructure.

PSPs don’t need sexy UIs for consumers. They’re built for businesses that sell or pay.

Why do PSPs matter?

• Integration speed
• Approval rates
• Access to global payment rails

🤖 Fintech — a lifestyle?

Fintech isn’t a legal category. It’s a mindset for building financial products.

Fintech can be:

• An investing app (Robinhood)
• A borderless transfer service (Wise)
• A cashback analytics card (Revolut)
• A cloud platform for PSPs (Stripe)

Fintech ≠ licensed. Fintech = user-centric.
It often runs on banks or PSP infrastructure, yet appears to users as a full-blown solution.

🔀 Where’s the line? Why should you care?

Blurry examples:

• Revolut: bank (in EU), fintech, and PSP.
• PayPal: not a bank, but acts like one. Regulated as an MSB in the US.
• Stripe: a PSP that launches banking features via partners.

Why it matters:
💼 For businesses: to know who holds your funds, who moves them, and who just shows a nice dashboard
🔐 For compliance: to understand who’s liable to the regulator
📈 For scaling: to know who can open new markets — and who’s just an interface

So instead of thinking “bank vs fintech vs PSP,” ask:

• Who holds the money?
• Who processes the transaction?
• Who handles the data?
• Who is regulated?

All borders are in your head.
Knowing the difference isn’t theory — it’s how you manage risk, cash, and user experience.

If you’re in the industry — know the structure.
If you’re a client — know who you’re trusting.

‍