12 Dec PSP Essentials: How to get a PSP
Payment service providers are a third party which offer merchants online services for accepting a variety of electronic payments through a single channel. A PSP offers end to end services for accepting, processing, and managing payments securely. This means they act as a gateway, merchant and ensure security in one product.
For logistics providers, PSPs present a different paradigm. As logistics systems get better and slicker – for example with “sign for delivery” linked to base – payments could be moved into the delivery cycle at point of actual receipt. Pre-authorisation payment would resemble a credit card payment. Fees could then change and the freight company could charge its own fee based on speed of delivery, for example.
In the future, PSPs could link into procurement: payment is made on delivery.
Knowing what types of PSPs are around
PSPs offer different services; some provide all services in one integrated system. These services include:
Opening merchant accounts: A PSP can help the application process for a merchant account to accept debit or credit payments. Otherwise, some PSPs use their own account with the bank and offer a sub-account within this. This is much quicker than opening a new bank account as it avoids the approval process. It also allows for settlement to be processed in as little as 24 hours, unlike the merchant receiving payments for the month in arrears.
Multiple payment methods: different payment methods have different acceptance and authorization requirements. A PSP can support varied payment methods in an integrated system, allowing merchants to easily accept payment from mobile wallets as well as credit or debit cards. This is important for customer satisfaction. The PSP then allows the merchant to view different types of transactions in one platform.
Multiple currency support: PSPs make international purchases easier by supporting multiple currencies. PSPs can support payments in multiple currencies if they have partnerships with banks that process the relevant currencies. When a company is dealing with payments in multiple currencies, a PSP means that a separate merchant account for each currency is not necessary.
Security and risk management: PCI DSS is a compulsory certification for businesses handling credit card information. Merchants can choose to use a PCI DSS compliant PSP to ensure security and risk requirements are met.
Some PSPs specialize in high risk fields, others will not work in this area. A travel business such as the cruise company in one of our challenges is thought of as a risky business. Other risky business include ebooks, gambling and tobacco.
How to find the right PSP for your company
To find the right PSP for your company, it is first necessary to define your requirements: what functional and technical aspects of PSPs are crucial for your business?
From a technical point of view, there are multiple ways that the merchant can take payment details from the customer: payment form on the website, redirecting customers to a hosted payment page or a payment form on your website where payment details are sent directly to a PSP.
A payment form on a website needs high security to be PCI compliant as it is the most risky method of payment for data security. This means that only companies with high revenue can afford this payment method. It is most secure to redirect customers to another page, but the checkout process for user experience is worsened. Finding a middle ground, it is possible to complete payment with a form on the website where the payment data is communicated directly to a PSP.
It is then time to make a long list of potential PSPs and conduct a small assessment of the solution. Next, the creation of a shortlist should involve asking companies to provide specifics and assessment of the PSPs connections to core business.
Some PSPs will have a 2 year contract, others monthly rolling contracts.
The second instalment of this article will include industry insights as to how to find and implement the best PSP for your company.