A payment service provider is essential for any business wanting to reach new and existing customers and offer them the payment methods they expect. But with so many options available, how do you know which one is right for you?
Simply put, payment service providers (PSP) are third-party companies that enable businesses to accept electronic payments from their customers.
Beyond payment processing, whether via credit card, digital wallet, or local payment methods, PSPs typically offer the following: Payment gateway: This is a secure online portal that connects a business’s website or app to their payment processing system. Fraud prevention: Fraud is on the increase worldwide. Thanks to advanced technology, including machine learning, PSPs can detect fraudulent transactions. Compliance: Financial regulations continue to evolve. That’s good news for consumers but can be a tricky burden for businesses. PSPs ensure compliance without the effort. Reporting and analytics: As well as processing payments, the right PSP can also give businesses valuable insights based on this data.
A PSP functions as both a payment gateway and a payment processor, and can connect to multiple acquiring and payment networks. Some PSPs can also act as acquirers (aka merchant service providers), providing risk assessments and other financial services.
A payment service provider (PSP) and a merchant account provider (MAP) both facilitate payment processing for businesses. MAPs are typically banks or financial institutions. They provide businesses with dedicated merchant accounts for processing transactions. Setting up a merchant account involves a thorough underwriting process, where the provider assesses the business’s financial stability and potential risk. This process can be time-consuming. PSPs, on the other hand, streamline the process by not requiring the same level of vetting. This allows for faster setup and easier integration. PSPs offer "aggregated accounts," meaning multiple businesses share a single merchant account, which simplifies the process.
A PSP isn’t just a convenient way to accept payments, it’s an essential part of any business. Rather than having to individually form and manage relationships with payment gateways and banks, PSPs handle this on your behalf, creating connections with acquiring banks through integrations and API tools, saving time and money. As well as making processing and accepting payments faster, PSPs provide access to an ever-evolving group of payment methods. That means happier customers and higher conversion rates, with customers empowered to pay the way they want, whether that’s a traditional credit or debit card, digital wallet, Buy Now, Pay Later, or a local payment method, regardless of where a business is located. Let’s take a closer look at what the right PSP can help your business thrive.