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Payment Service Provider

Overview#

Payment Service Provider (PSP) offers shops online services for accepting electronic payments by a variety of payment methods including payment Cards, bank-based Payment Transactions such as direct debit, bank transfer, and real-time bank transfer based on online banking.

Typically, they use a Software as a Service model and form a single payment gateway for their clients (merchants) to multiple payment methods.

Typically, a Payment Service Provider can connect to multiple acquiring banks, Card Processors, and Payment Network. In many cases, the Payment Service Provider will fully manage these technical connections, relationships with the external network, and bank accounts. This makes the merchant less dependent on Financial Institutions and free from the task of establishing these connections directly, especially when operating internationally. Furthermore, by negotiating bulk deals they can often offer cheaper fees.

Furthermore, a full-service Payment Service Provider can offer Risk Management services for payment Cards and bank based payments, Payment Transaction matching, reporting, fund remittance and fraud protection in addition to multi-currency functionality and services. Some PSPs provide services to process other next generation methods (payment systems) including cash payments, wallets, prepaid cards or vouchers, and even paper or e-check processing.

Payment Service Provider is thus a much broader term than a Acquirer which is how the Payment Card Industry refers to them.

Payment Service Provider fees are typically levied in one of two ways: as a percentage of each transaction or a fixed cost per transaction.

US-based on-line Payment Service Providers are supervised by the Financial Crimes Enforcement Network (or FinCEN), a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to implement Anti-Money Laundering, terrorist financiers, and other financial crimes.

There are more than 900 Payment Service Provider in the world. More than 300 offer services for Europe and North-America. See also Third Party Payment Service Provider (TPP);

More Information#

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