Overview: Payment Service Provider (PSP)
The whole process of payments can turn out to be complex, but if you wish to take credit or debit card payments at your corporation, you’ll have to understand all the concepts behind them. PSP or Payment Service Provider is an important term in the financial world and has also become an integral part of the whole payment ecosystem.
If a corporation wishes to offer a simplified payment experience to its clients, then a payment service provider should be its initial choice. Because of its popularity and demand, it’s important to learn everything about it. Keep reading along!
What is a payment service provider?
So, what exactly is a Payment Service Provider? Well, a PSP or merchant service provider is someone who can be termed as a 3rd party that helps merchants in accepting payments. In easier terms, payment service providers make it easier for merchants to take debit/credit payments by linking them to the main financial institution. They offer a payment gateway, and a merchant account, ensuring that corporations can gather and handle their payments efficiently and simply.
Working Of Payment Service Provider
So, till now we have grasped that payment service providers operate by linking banks or payment processors to control the complete transaction from the start to the end. Let’s now learn how does the whole process of payment service provider work.
- Firstly, the consumer initiates the payment and instantly the transaction information will be forwarded to the exonerating bank.
- Then, as the next step, the detail is forwarded to the network of credit cards, which then forwards these details to the financial institution that issued the card to the consumer.
- After the decision of transaction approval or rejection is taken, the issuing bank sends the decision again to the credit card network, from where it’s sent to the acquiring bank.
- After that, the decision is sent back to the PSP, which then in return shares the decision with both, the consumer, and the merchant.
- Once the payment is authorized, the bank will pass the funds to the card network, which then forwards it back to the receiving bank to be submitted to the payment service provider’s merchant account.
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Examples Of Payment Service Providers
Now let’s have a look at some of the most famous PSP examples:
It is a Dutch payment firm that helps corporations in accepting mobile, e-commerce, and point-of-sale payments. It’s also listed on the stock exchange.
Adyen is known to help merchants in providing digital services by accepting e-payments via methods like credit cards, debit cards, real-time bank transfers, bank transfers, etc. It also forms a link with payment methods existing around the globe. This technology structure forms a payment gateway and provides local acquiring and risk management.
It is a firm formed and located in Chicago that is famous for its specialization in web and mobile payment systems for e-commerce businesses. Braintree offers consumers with payment gateway and their merchant account. The firm got purchased by PayPal on 26th September 2013.
It is America’s multinational fintech firm that operates a digital payment method in various nations that support digital fund transfers and act as an online alternative to conventional paper techniques like money orders and cheques. The firm works like a payment processor for auction sites, commercial users, and several online vendors, for which it takes a fee.
An Irish American business and software firm that has its headquarters in the United States, Ireland, Dublin, and San Francisco. The firm is known to offer software related to payment processing and application programming ports for mobile apps and e-commerce sites.
To decide which is the best payment service provider for you, you must keep in mind the flexibility, cost, and speed provided by every provider. Give thought to your current payment structure and how every PSP will work in it.
Services Offered By Payment Service Provider
PSPs in addition to letting businesses keep the card and bank-related payments, also provide a lot of other facilities that can enhance the payment system for both businesses and customers. So, besides transaction processing, what do PSPs do?
- Privacy — For payment service providers’ transactions, many payment systems guarantee high levels of security. Companies can be certain that their consumers’ financial information is protected by adhering to the PCI DSS.
- Currency handling — Many PSPs also make cross-border transfers easier by handling multiple denominations. This is an essential requirement for any company wanting to break into the worldwide market.
- Payment reporting – Several PSPs will also provide payment reporting services, allowing you to easily balance payments. Even though some suppliers provide live reporting, this will often comprise monthly reports.
Benefits Of Employing Payment Service Provider
There are a lot of advantages of switching to a payment service provider. The main benefit is that they handle the complete process of payments, so you can take care of your core corporation without worrying about your payment completion. Additionally, payments from the payment service providers can be received from any channel, like debit or credit card. By keeping a lot of payment options in your business, you ensure the fact that no potential consumer is left behind. All of this results in a sales boost.
Here are the benefits of employing PSPs:
Accept a range of payment options
PSPs ensure that your clients may easily select from a range of options by supporting multiple forms of payment through one interface. This degree of accessibility contributes to ensuring client satisfaction. It can be expensive to integrate multiple forms of payment into your business, including Internet banking, debit cards, and e-wallets. You can avoid the majority of these by registering with a payment service provider. You simply have to cover a one-time setup cost and a minor monthly charge to enable payments.
The PSP has complete control over all data transmitted during a transaction request. To ensure that only the consumer can read their banking or financial details, this data is extensively protected using SSL (Secure Socket Layer) encryption. As a result, clients feel more secure and are more likely to complete the payment.
Conveniently integrating new methods of payment
PSPs allow organizations to rapidly integrate new methods for payments. Given that payment trends are going to keep changing, this capability is essential. In fact, businesses must provide clients with the most modern payment alternatives.
Once the client’s card information has been validated and the PSP has determined that the customer’s account has the necessary money, the transfer of payments will only begin, otherwise, the transfer is canceled. This makes it less likely that fraudulent transactions may harm your company.
Payment Methods for Payment Service Providers
These days, the majority of PSPs and conventional merchant accounts accept a wide range of payments, such as those made with credit and debit cards, e-wallets, etc.
- Credit and debit cards: PSPs make it simple to accept credit and debit cards everywhere you market, whether physically in-person via smartphone.
- E-wallet payments: Accept electronic wallets like Apple Pay, Google Pay, Samsung Pay, and others for all kinds of transactions, involving mobile banking, in-person purchases, and online shopping.
- ACH e-checks and bank transfers: Accept ACH payments for online purchases and electronic bills.
- Paper checks and cash: The majority of PSPs allow you to keep track of processed payments together with sales made using paper checks and cash.
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Some business owners must choose a payment service provider for their payment needs as it would be the right choice for them. You must think with complete focus about what is that you expect from your corporation before you start switching to PSP. If you are looking for an affordable and flexible payment option that would get your products off the rack digitally, PSP is the right choice for you.
PSP is also a great pick for the ones wishing to sell large volumes and wish to keep their prices as cheap as possible. But if you are operating a huge corporation and wish to get more assistance, then forming a merchant account would be the suitable choice for you.
Some payment firms that are examples of PSPs are Braintree, PayPal, Stripe, Adeyon, etc.
Business owners who wish to expand their business and the growth of their products online can choose payment service providers.
Currency processing, security, and transaction reporting are the few services offered by the PSPs.
- PSPs ensure that your clients may easily select from a range of options by supporting multiple forms of payment through one interface.
- PSP secures transactions by using SSL (Secure Socket Layer) encryption.
- PSPs allow organizations to rapidly integrate new methods for payments.
- PSPs help avoid fraud.