PSP (Payment service provider)

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:

  1. Your customer makes a purchase and pays. This initiates the transaction, and the payment details will be sent to the acquiring bank.
  2. 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.
  3. The bank then approves or denies the transaction.
  4. 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.
  5. Later, the decision is passed on to the payment service provider. The PSP then shares the outcome with the customer and the seller.
  6. 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.

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Examples of PSPs

Some of the most renowned PSPs are:

  • Adyen
  • PayPal
  • Stripe
  • Mollie

Choosing the right payment provider for your business is one of the most important decisions you make when you are setting up your online store. Have a Sana Commerce web store and interested in knowing more about setting up payments? Read more here.

What are the benefits of having a PSP (Payment Service Provider)?

Aside from the benefit of allowing your company to accept any card and bank payment, having a PSP offers you a ton of different benefits such as:

  • Processing different currencies: Having a PSP allows your business to process payments from different currencies. And accepting and processing global currencies is the first step in making your e-commerce internalization successful.
  • Reporting of all transactions: A PSP provides you with a transaction reporting feature. The feature often consists of monthly reports and real-time reporting. With it, you can more easily track your transactions.
  • Increased security: Most PSPs have very high-security standards for payments. With a PSP you remain PCI DSS compliant and can rest assured that your customers’ data is protected from security threats.

Read up on 4 essential tips for better B2B e-commerce security.

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