Payment Service Providers (PSPs) for Online Businesses

All online businesses need a payment service provider so that they can accept secure electronic payments of various kinds from customers. Receiving an online payment is more complex than receiving an over-the-counter payment in a brick-and-mortar store. The payment process takes seconds but a complex network of payment processing tools are needed to complete the transaction. You will need to find the providers that best meet your business requirements.

The payment processing tools needed to complete a successful online sale:

Your customer makes a purchase from your website/app/mobile store and enters his details at checkout. A payment gateway then receives and verifies the transaction and consumer data and routes information to the payment service provider (PSP). The PSP then submits an authorization request to the customer’s issuing bank/card network and to the merchant’s acquiring bank for approval of the transaction. Once approved, funds are transferred to your merchant account. The funds remain in the merchant account until being transferred to your business account where you will have access to the funds.

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Payment Gateways

For security reasons a customer’s payment information cannot be sent directly to a payment processor, so a payment gateway provides the necessary pathway for receiving online payments, authorizing credit card payments or direct payments. The payment gateway process ensures the customer’s payment data is genuine, secure and encrypted. At this point, fraud protection measures are invoked which will lead to the final acceptance or decline of the transaction request.

The payment gateway service can be provided by a bank, a PSP or by a separate specialized financial service provider.

Using a payment gateway the transaction information is transferred from the payment portal (online store, mobile phone etc.) to the acquiring bank or front end processor.

The payment gateway sends an authorization request for the transaction to the front-end payment processor. The request is forwarded to the card network/acquiring bank for approval. Once approved the transaction request is transmitted to the back-end payment processor which actually moves the money from your customers’ account to your merchant account.

Payment Service Providers

Payment service providers (PSP) operate a payment gateway or payment processor service. They offer your business a single payment gateway through which you can accept electronic payments by multiple payment methods. This is especially suitable for businesses that are regarded as high-risk by legacy banks.

With a good PSP, your online business can receive payments via bank transfer, credit card, e-wallets etc. The PSP allows these electronic payments to be made swiftly, easily and conveniently by your clients. Examples of good payment service providers include PayPal; Authorize.Net; Google Checkout; Amazon Payments; Dwolla and others.

The service not only processes the payment but can also keep a record of which client has paid, how much, and when. With a PSP you have an ongoing record of your online transactions and can refer to it in the event of a dispute or misunderstanding with your client over payment. With the many payment service providers available, accepting online payments does not have to be a headache. Finding the right payment service provider (PSP) for your particular business is vital to your business’s success.

The leading PSPs manage the technical connections between multiple acquiring banks, payment networks and credit cards. With a PSP your business will not have to connect directly with each individual financial institution and network; this makes doing international transactions a lot easier. In addition to managing the technical connections and providing a single payment gateway for your clients, some PSPs can also process next-gen payment methods like cryptocurrencies; e-wallets, vouchers and prepaid cards.

As you can see, a PSP is much more than a payment gateway. A payment gateway is a technical solution to making payments while a PSP provides a full-service including the technical payment process; wide range of payment methods; maintaining the technical contacts with banks, card networks etc.; reports; direct checkout; fraud prevention and more.

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Merchant Accounts and PSPs

Finding the right PSP for your online business is essential. Contact us if you need guidance choosing a high-risk PSP that meets your business’s present and future needs as well as meeting regulations. We have the experience and knowledge to assist you and your business whether it is for forex, drop-shipping, eCommerce package solutions, affiliates, gaming or media related.

Merchant Accounts

A merchant account receives the funds from completed sales. From there the funds are transferred to your business bank account or your e money bank account where you can access the money. The transfer from your merchant account to your business account usually happens on a regular payout schedule (for example twice a week, weekly, monthly).

Payment processing services; payment gateway services; Independent Sales Organizations; Member Service Providers and some large banks may provide merchant accounts. There are two types of merchant accounts:

  • Dedicated merchant accounts are set up specifically for use by a single business to receive and process card payments. With a dedicated merchant account, rates are negotiable and you set the payout schedule. Dedicated merchant accounts are only a viable option if you have the resources to handle your own security, payments and technical infrastructure. However, a dedicated merchant account will allow you to directly process payments.
  • Aggregate merchant accounts are set up for use by multiple companies; rates are non-negotiable and there is a set, predetermined pay-out schedule. With this type of merchant account, your payment processor is paid according to the volume of your sale (low sales = low rates; high volume of sales = high rates).

A dedicated merchant account is best for controlling your funds but an aggregate merchant account can be easier and quicker to obtain.

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