Understanding Payment Service Providers (PSPs)

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Libby James
Merchant Services Expert

Libby James is co-founder, director and an expert in all things merchant services. Libby is the go-to specialist for business with more complex requirements or businesses that are struggling to find a provider that will accept them. Libby is regularly cited in trade, national and international media.

What is a Payment Service Provider?

A Payment Service Provider, commonly known as a PSP, stands as a versatile alternative to the traditional merchant account and payment gateway setup. Unlike the latter, a PSP offers a comprehensive service that includes both technical payment processing and fund collection. This all-encompassing approach extends to managing contracts with banks and card acquirers, as well as overseeing the settlement of collected funds.

Key Functions of Payment Service Providers

Payment Service Providers integrate various electronic payment methods such as credit/debit cards, e-banking, and e-wallets. The beauty of opting for a PSP lies in its ability to seamlessly integrate with multiple payment methods across a single platform, making it an ideal solution for both national and international transactions.


The Role of a Payment Service Provider in Transaction Processing

In essence, payment service providers collaborate with acquiring banks (payment processors) to handle the entire transaction process. Here’s a brief breakdown of how the transaction unfolds:


Customer initiates payment.

Transaction details are sent to the acquiring bank.

Information is transmitted to the credit card network, which forwards it to the issuing bank.

The issuing bank decides whether to approve the transaction and communicates the decision back to the credit card network.

The credit card network relays the decision to the acquiring bank, which, in turn, informs the payment service provider.

Once authorised, the issuing bank transfers funds through the credit card network to the acquiring bank for deposit into the PSP’s merchant account.

Advantages of Choosing a Payment Service Provider

Single Contractual Relationship: Establishing a relationship with a PSP grants access to various banks and payment methods through a single contractual agreement.

Fraud Prevention: PSPs often come equipped with their own fraud prevention resources and are compatible with third-party anti-fraud services.

Flexible Addition of Payment Methods: Adaptable to changing business needs, PSPs allow for easy integration of new payment methods as technology evolves.

PCI Compliance: Reputable PSPs handle PCI certification, saving costs for merchants and ensuring compliance.

How Payment Service Providers Benefit Your Business

Payment Service Providers streamline the payment process, allowing you to concentrate on your core business activities without worrying about payment logistics. By accepting various payment methods, including credit cards and Direct Debit, PSPs ensure you don’t turn away potential customers, ultimately boosting sales.

Payment Service Provider vs. Payment Gateway: Understanding the Difference

One common question revolves around the distinction between Payment Service Providers and standalone Payment Gateways. Unlike payment gateways, PSPs manage contracts with banks and acquirers directly, providing a comprehensive service that encompasses payment processing and fund collection.


International Payment Services Providers

Merchant Advice Service (MAS) collaborates not only with UK-based Payment Services Providers but also has access to international solutions, catering to businesses across Europe, China, and Australia. Our experts can guide you on accepting multi-currency transactions through international Payment Services Providers.

Automated Billing Services

Merchant Advice Service, in collaboration with industry experts, offers automated billing services, streamlining monthly paperwork and invoicing for businesses. Speak to our advisors to explore how bill payment service providers can work for you.


Start Your Internet Payment Services Provider Application Today

MAS advisors are ready to assist you in finding the ideal Payment Services Provider for your business now and in the future. Discuss your requirements with us today, as we provide intermediary-based access to Payment Services Providers.

FAQs about Payment Service Providers:

Commonly Asked Questions
What is a Payment Service Provider (PSP)?
A PSP, or Payment Service Provider, is an alternative to a standard merchant account and payment gateway, offering a comprehensive service that includes technical payment processing and fund collection.
How does a PSP differ from a standard merchant account and payment gateway?
Unlike a standard merchant account and payment gateway, a PSP provides a full service, handling both technical payment processing and money collection, while also managing contracts with banks and card acquirers.
What electronic payment methods do PSPs integrate?
PSPs integrate various electronic payment methods, including credit/debit cards, e-banking, and e-wallets, allowing businesses to offer multiple payment options.
Why choose a PSP over a standard merchant account?
Choosing a PSP streamlines the payment process, offering the advantage of a single contractual relationship, fraud prevention resources, flexibility in adding payment methods, and PCI compliance services.
How does a PSP handle transaction processing?
PSPs collaborate with acquiring banks to manage the entire transaction process, from customer initiation to fund deposit into the PSP’s merchant account.
What are the benefits of using a PSP for online payments?
PSPs simplify the payment process, accepting various payment methods to ensure businesses don’t turn away potential customers, ultimately boosting sales.
How does PSP service differ from payment gateway providers?
PSPs hold contracts with banks and acquirers directly, offering a comprehensive service that includes payment processing and fund collection, whereas payment gateway providers agree to contracts directly with the merchant.
Can a PSP cater to international businesses?
Yes, Merchant Advice Service collaborates with international Payment Services Providers, offering solutions for businesses across UK, Europe, China, and Australia.

How Merchant Advice Service Can Help

Merchant Advice Service collaborates with industry experts to provide tailored advice for merchants seeking the right PSP. Whether you are looking for national, international, high-risk, or third-party PSP solutions, our advisors can guide you through the process.

For more advice like this, visit our blog page!

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Libby James

Libby James Co-founded Merchant Advice Service alongside David Bird in 2016. Her finance background, coupled with retail and customer service experience, gave Libby the drive to bring transparency and non-biased advice to the world of merchant services. Having come from the heavily regulated mortgage and insurance industry, Libby found it puzzling that other financial sectors lacked regulation and transparency leaving customers confused and unable to make informed decisions when it came to accepting card payments. This was soon to become Libby’s obsession!

With the help of some of the industry’s best, Libby began to research acquiring banks, complex terminology/regulation, and the problems customers experience within merchant services and payment gateway markets. She spent years on sourcing solutions for complex clients, which previously others were unable to assist with. Libby established relationships with brokers and banks which would soon form the cornerstone of Merchant Advice Service. As a result Libby has been featured in high-profile publications across the web.

Libby is proud to be the entrepreneur’s champion, supporting start-up businesses regularly. Her industry insights can often be found on LinkedIn where she provides free of charge advice and money saving pointers. It’s safe to say she has her finger on the pulse of everything card payments related.

Libby speaks of her experience in founding and running Merchant Advice Service…

‘Merchant Advice Service is one of my greatest achievements to date. We help business owners to overcome card processing issues which can become detrimental to their business. We assist SME’s in finding suitable card payments solutions, helping them create their vision. Each and every day is different, exciting and fore filling. As technology advances I can’t wait to see the way in which the merchant services market advances, and I’m pleased that our business will play a part in educating company owners along the way.’

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