Why Does Your Business Need a Payment Service Provider?
Payment service providers (PSPs) are pivotal in the digital payments landscape. Their services enable merchants of all sizes to accept various payment methods since consumer preferences differ. Retailers can gain more customers and increase sales by offering more payment choices.
What PSPs Do
A PSP is a third-party business partner that provides the technology required for merchants to take different payment methods from their customers. They help connect retailers to financial networks to support collecting credit and debit card payments, electronic bank transfers and more.
PSPs—also called merchant services providers—make payment collection simple, convenient, efficient and secure. They enable businesses to choose a processing option outside of their banks and generally work with numerous financial institutions and card networks. These broad industry connections help make the services more cost-effective and often come with additional features for more value. The result is a seamless payment experience for companies and their consumers.
Functions and services PSPs offer include:
- Payment processing
- Transaction security and fraud prevention
- Payment gateway integration
- Multichannel and cross-border payments
- Reporting and analytics
- Customer support
Types of Payment Service Providers
Numerous types of payment service providers exist with certain distinctions among them:
- Acquirers and merchant account providers: These entities are typically financial institutions like banks. Under these options, each retailer has a separate account and merchant identification number (MID). Conversely, a PSP allows numerous businesses under one account and an overall shared MID.
- Payment gateways: Merchants use these solutions to process debit and credit card transactions. They include e-commerce portals and physical point-of-sale (POS) readers. Modern payment gateways may even support payments in digital currencies.
- Aggregators: Merchant aggregators are PSPs that enroll retailers under the PSP’s MID instead of each merchant having a separate one. The retailer is the “sub-merchant,” and the aggregator collects and allocates the funds for each company it represents.
- Digital wallet providers: These companies offer financial transaction apps for connected devices that securely store passwords and payment information. They deliver consumers the convenience of being able to shop without a credit or debit card in hand.
- Mobile payment providers: These businesses provide a specialized digital wallet explicitly made for mobile devices. For example, Apple users can store their payment information in Apple Pay and use their iPhone or iPad to make purchases online or on the go at contactless terminals.
- Peer-to-peer (P2P) payment providers: P2P payment providers like PayPal and Cash App make it easy to move money between individuals. When users send money, the P2P provider deducts it from a linked bank account. Once the recipient claims the funds, they can withdraw or use them.
Benefits of Using Payment Service Providers
- Simplified payment process: A PSP makes collecting payments a hassle-free experience for retailers and customers alike.
- Enhanced security and fraud protection: PSPs rely on robust security encryption tools and offer safeguards against payment fraud through features like verification.
- Accessibility and global reach: Many PSPs support selling in different currencies, so it’s easier for you to be accessible worldwide and establish a global market.
- Integration and compatibility: A PSP works with numerous technology partners in various industries to ensure its solutions integrate with common tools.
- Analytics and reporting capabilities: Built-in metrics and reporting help you understand your business’s unique transaction data and simplify reconciliation.
- Customer support and service: Well-regarded PSPs offer 24/7 technical support and around-the-clock customer service to ensure satisfaction.
Key Considerations When Choosing a PSP
Consider these factors when selecting the best PSP for your company:
- Business type and industry requirements: Not every PSP works with every retailer or serves all industries. List your organization’s unique needs to ensure a potential PSP partner can meet them.
- Payment methods and currencies supported: Your customers’ payment preferences and locations often dictate the options you want to offer. Choose a PSP supporting the forms you need and the currencies you sell in.
- Security and compliance measures: Accepting card transactions means following the Payment Card Industry Data Security Standards (PCI-DSS). Look for a PSP that heavily invests in secure technology and is PCI-DSS compliant.
- Transaction fees and pricing structure: Every PSP prices differently based on factors like transaction volume and payment type. Ensure pricing is clear and transparent to avoid potential billing surprises.
- Integration options and developer-friendly application programming interfaces (APIs): The ideal PSP solution for your business will work with your existing tools. Look for a partner providing numerous integrations and developer-friendly APIs for straightforward implementation.
- Reputation and trustworthiness: Working with a well-respected PSP is essential in such a dynamic industry. Choose a company with proven technology and expertise to keep pace.
- Customer support and service level agreements (SLAs): A reliable PSP will be invested in your company’s success. Ensure your provider offers ongoing support and a service level that meets your business’s needs.
Factors to Evaluate for Success
Multiple aspects contribute to your company’s successful PSP integration and implementation, like:
- Technical integration requirements: Does your current tech stack meet the technical specifications? Is an update or upgrade necessary?
- Testing and sandbox environments: Does the PSP offer a sandbox environment to test the technology so you can have more confidence in their viability with your processes? Are there any potential hiccups in the process to resolve before full implementation?
- Onboarding and account setup process: What support does the PSP offer during onboarding? How easy is it to establish your account?
- Compliance and regulatory considerations: Does the software meet your specific industry regulation needs? Will it automatically comply with future changes?
- Scalability and future growth potential: Can the PSP scale effectively as needs change? Do they offer support for future growth by helping you identify and implement new technologies and trends?
Choose CSG Forte
It’s more important than ever for your business to offer the payment acceptance methods your customers prefer. Doing so helps you stay competitive and resilient in a dynamic retail environment. CSG Forte is an award-winning payment services provider with a fully scalable and PCI-DSS-compliant payment platform. Our team has the expertise and resources to help you identify, implement and support the best solution for your needs.