Dinesh Aryal 08 November 2020 payment service providers, Online Payment,


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Payment Service Provider

·       PSP is a third party that allows merchants to accept wide variety of payments through single channel.

·       PSP works with acquiring banks (Payment processor) to manage entire transaction process from start to finish.

·       Support, Simplicity, Security and Price are main factors on choosing PSP.

·       PSP act as mediator between merchant and acquiring bank

Path of online credit card transaction (Using PSP):

Customer/merchant->Acquiring bank->Credit card network->Issuing bank->Credit card network->Acquiring bank->PSP

Type of PSPs:

1.       Distributors: These build and maintain connection to many different payment method. By connecting to one distributor your online store will be able to accept payment method of several types. Example Skrill


2.       Collectors: Collecting PSP are the streamline settlement for all the accepted payment methods. Without using collectors merchant need to deal with separate settlement for each payment method they accept which would be uneconomical as well as time consuming. Collectors are the PSP of choice for merchants who offer lots of payment methods. Example PayPal, PayMill


3.       Aggregators: Aggregating PSPs accept the payment, collect the fund and contract with the individual payment methods. They differ from collectors in that they contract with the payment company on behalf of multiple merchant; the difference form distributors is that they also collect funds, negotiate the payment terms and settle the merchant bank account. Example stripe,Braintree.

Why PSP?

·       Access Multiple payment method

·       Make transaction securely

·       Prevent frauds

·       Accept multiple currency(in case of international)

·       Get periodically reports on payment

·       Add new method easily

·       Opening accounts with acquiring banks

·       Reconcile transactions easily