A payment service provider (PSP) is a company that assists online traders, merchants, and other businesses in electronic transactions that makes dealings easier and more convenient. Online banking can include online bank transfers between accounts and direct debit, both of which can be automated if the account holder wishes to do so. Many PSPs offer services such as e-wallets, e-checks, and prepaid cards.
Between the customer and the online business, a payment service provider acts as a go-between for providing products and receiving payments. A PSP is also in partnership with acquiring banks, which allow transactions through credit and debit cards. Businesses that use PSPs hand over to the latter the responsibilities of collaborating with banks, keeping the transfers constantly operating and supplying a selection for payment. By doing this, businesses have less financial accountability both to banks and customers. They can also do away with minding the technical aspects of e-transactions, especially for dealers and owners who are not “techies.”
The issue of security is a constant concern for choosing a payment service provider. Bank account information, personal data, and cash transactions all pass through these providers, so security breaches and theft are not rare. In the US, the Financial Crimes Enforcement Network oversees the dealings of payment service providers nationwide. Most, if not all, PSPs and online businesses create privacy policies to inform customers how information is acquired, used, and securely stored.
Some payment service providers already have a system of fraud prevention measures for additional protection. For instance, if a purchase for an unusually huge quantity for just one product is requested, a payment service provider can warn the business owner before any dealings are set up. Other PSPs provide additional financial services such as multi-currency and conversion. A different currency, once transacted, can be automatically converted to the local currency where the business is located.
Other features made available through a payment service provider include a reporting tool. Once an order is requested, the PSP immediately sends a message to the business owner, usually by email or other means. Some entrepreneurs also look for additional features such as simple interface for the business owner’s easier access and a shorter checkout process for the customer’s hassle-free purchase. Usually, a payment service provider charges its clients per transaction using either a percentage or a fixed cost.