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From:
http://www.spiritual.com.au/articles/psychics_mediums_qa_tclemens.htm

What is a medium and how do they differ from psychics?

Many people have this question.  In short a medium raises their energy in order to connect with those in the afterlife.  The mediums should be able to give you enough information during the reading to make you comfortable that they are connected with someone you recognize.

A psychic usually connects with YOUR psychic energy and gives you a glimpse of the future.  It is true that a medium does use psychic ability, which is really just another term for energy.  In our society, however, it has come to be, that the word psychic is more connected with those who foretell the future.  It becomes even more confusing because many professionals do both!  Just try to remember a medium connects with the spirit in the afterlife and psychics usually tell you about you and your future.

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From the Basic Course in Spiritualism:

PSYCHIC? OR MEDIUM?

So many Spiritualists do not realize and never consider the vast difference between a psychic and a medium.  In fact, the general public uses these terms interchangeably, as do some Spiritualism workers in the field.

A psychic need not be a medium at all, but through the use of instinct or psychology, or even mental telepathy, they are able to prophecy and direct along what seems to be super-normal lines.  While they may not always be conscious of it, they may have latents mediumistic ability, but are not credited with the talent.  Rarely do they use this quality of spirit power, since they are unaware of its presence and rely wholly on the quality of their subjective mind power to form their demonstration.

A medium is one who, through the power of clairvoyance and its attendant facets, is in direct contact with a discarnate entity.  This ability enables them to give certain detailed facts, which prove that the knowledge is received from a conscious, living communicative entity.  This ability is factual, and is not dependant upon the qualities of the subjective mind.

This ability is able to co-ordinate the subjective and spirit force to make the message objective.  The point of difference in these two faculties is this: a true medium is always a psychic, but the psychic does not practice  mediumship, since they do not have contact with a conscious entity.

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DEFINITIONS

MEDIUMSHIP is the ability of human instruments to attune themselves, through their inherent psychic faculty, to the vibrations of the spirit entities and through peculiar chemical properties of their physical bodies to produce the ectoplasm necessary for the manifestation of physical phenomena.  In mental phenomena the intelligence is conveyed entirely through the mind of the medium.

The phenomena of mediumship involves the psychic powers of a medium and the directing powers of spirit intelligence.  Spirit communication requires the co-operative efforts of these two factors and under suitable conditions communication can take place.

ECTOPLASM is an outer layer of protoplasm; an emanation from the medium's body.  It is an ethereal substance, which is sensitive to thoughts and exudes from mucus membrane of the medium's body.  It is used as the basis of all manifestations of physical mediumship (the word was coined by Professor Charles Richet).