We will show you what a PSP payment provider is, how it works, and the benefits of using one — among other things. This way, you can begin with a new era of payment methods for 2021 and boost your business in the process.
What are PSPs (payment service providers)?
Let’s look at several defining characteristics:
- PSPs are companies that serve as intermediaries between commerce and banks.
- They are not financial institutions. Rather, these are companies that offer you the technology you need for various purposes.
- Thus, for example, they give you the possibility to make a money transfer from your bank account, if you are a buyer, to the account of the receiver of the payment.
- The entire process described above is carried out online.
- PSPs are reliable entities in most cases.
- Digital wallets, credit cards, and other financial tools are involved in the process.
- We must differentiate between a PSP and a traditional merchant account. For example, the latter provides its own account to sellers.
- A PSP, on the other hand, creates a type of mix of a variety of different sellers operating together.
- Therefore, PSPs assume all the financial risk for each transaction with which they are connected, as in the case of PSP payment.
- In addition, they allow and facilitate access to payment by means of cards such as MasterCard, Visa, and so on.
- The party that receives the payment is someone (an individual or legal entity) who is involved in online commerce.
- These systems are well regulated from a legal point of view.
How do PSPs (payment service providers) work?
Learning about how a PSP works will give you more information about what these e-commerce players really are.
Their most important function is to process online payments. This process has certain complexities. In addition, the PSP payment meaning or, if you prefer, the payment process, has certain steps.
First, the customer or user puts the card into the card reader. Subsequently, the customer must enter their PIN and then the bank forwards the data for the card to the respective bank.
The issuing bank then requests authorization to pay via the PSP. The receiving bank then authorizes the transaction once it has verified that the customer has sufficient funds. Finally, the sending bank sends the payment to the receiving bank. In addition, a notification of the transaction’s acceptance is sent to the card reader.
When shopping online, a PSP offers you a variety of payment methods. Bank transfer and direct debit are included. In addition, real-time bank transfers are included through the use of online banking and a credit card.
If you are a seller and hire the services of a PSP, you will become a more independent seller. You will no longer depend so much on the traditional financial system to manage your transactions.
The main PSPs on the market
What is an example of a payment service provider? Rather than look at just one, let’s look at the top payment service providers:
- PayPal is the most important, well-known, and used PSP by digital commerce players.
- But, today there are many alternatives such as Shopify Payments, Square, Apple Pay, Amazon Pay, and Google Pay, which are some of the most important and well-known. Amazon Pay is even authorized by the U.S. Internal Revenue Service.
- At this point, you need to know that there is yet another excellent alternative to the ones we have just mentioned. Is GoCardless a PSP? Of course, it doesn’t require a physical credit card.
- In addition, GoCardless is a company designed for recurring transactions. What’s more, it is a processor that supports subscription payments. It also supports invoices with integrations for Xero and Zuora.
- With GoCardless, you can collect payments in over 30 countries — and it is a very reliable PSP. In addition, it calculates the best day and time to carry out the transaction so that it is much more likely to be successful. This reduces the failed payment rate by 15%.
- There additionally exists another option nowadays: PayRetailers, a Brazilian company that will offer you several alternative payment methods or payment gateways. This is done so that a wide range of businesses can access a greater number of customers.
- There are several local and also international payment methods to support your localization efforts.
- With PayRetailers, your customers will be able to pay you much more easily since they are provided with different payment options. In addition, the chances of the customer abandoning the transaction at the time of payment are considerably reduced.
- Your business will get an excellent boost in Latin America thanks to PayRetailers. Undoubtedly, it will be a good option because the tools offered by PayRetailers will adapt to the characteristics of your business — that is sure.
Benefits of using a PSP to pay
The benefits of PSP gateway payment services are many and varied. Let’s look at them.
PSPs carry out the entire payment process without you having to worry about whether you will receive payment or not. In addition, payments can come from many sources or channels, including credit cards. Moreover, many PSPs have a currency converter service.
Transactions can be undertaken no matter where in the world the sender is located or where the recipient of the payment is. PSPs do not require additional fees for security. This is a given. They also have high standards in terms of security and reliability.
The data belonging to users of international payment processors is safeguarded with utmost respect. In addition, a PSP is usually much more comprehensive in terms of handling payment processing. Tools like Shopify, Stripe, and Square include billing methods. They also include reporting functions.
In conclusion, PSPs have become an indispensable tool for digital commerce. Thanks to PSPs, the payment process has been streamlined and made much more secure. Remember that we at PayRetailers will help you find the best option for your company, especially when it comes to PSP payment providers.