Definition of a PSP
PSPs, or commonly known as Payment Service Providers, are third parties that help retailers accept payments from their customers.
What does a PSP do?
A PSP works closely together with banks managing the process from start to finish. Here is a breakdown of how the process works:
- Your customer makes a purchase and pays. This initiates the transaction, and the payment details will be sent to the acquiring bank.
- The data is then sent to the credit card network. It then sends your customers transaction details to the bank that issued the customer’s card.
- The bank then approves or denies the transaction.
- The bank that issued the customer’s card will pass the approved or denied decision to the credit card network which in turn passes that information back to the acquiring bank.
- Later, the decision is passed on to the payment service provider. The PSP then shares the outcome with the customer and the seller.
- When the payment has been approved, the customer’s issuing bank will send the payment to the credit card network. The credit card network passes the payment on to the acquiring bank, which then deposits the funds into the PSP’s retailer account.
