Payment Service Providers (PSPs): Everything You Need to Know

By offering a range of services, PSPs enable merchants to accept payments from customers using various payment methods.

In this article, we'll cover the basics of a payment service provider and explore essential considerations when choosing one. We'll also highlight a new evolution in payment processing that can help you optimize your business.

We’ll cover:

• What is a payment service provider?
• What services do payment service providers offer?
• How do PSPs process a payment?
• Payment service providers: Some key players
• What are the benefits of using a payment service provider?
• How do you choose a payment service provider?
• Why you should use more than one payment service provider
• Why use Primer for your payment orchestration
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Note: Do you want to integrate with more PSPs without the hassle? Contact one of our payment experts to learn more.

What is a payment service provider?

A Payment Service Provider, often called a PSP or merchant service provider, gives businesses the tools they need to accept payments from customers using credit cards, debit cards, or Alternative Payment Methods (APMs).

Simply put, a PSP’s main job is to ensure that money moves safely and smoothly between buyers and sellers. They do this by offering a range of services to a merchant, including a payment gateway, payment processing, and merchant accounts.

Let's explore this in more detail.

What services do payment service providers offer?

Processing payments is complex and involves various solutions at every step. Not long ago, merchants needed to acquire the tools to facilitate each step in the payment lifecycle separately. As you can imagine, that created a ton of complexity and was, more often than not, incredibly inefficient.

Enter the Payment Service Provider (PSP). PSPs were created to simplify merchants' lives by offering gateway, processing, and acquiring services in one package. This means merchants can handle an entire payment from start to finish with a single integration. Just think about Stripe’s promise of allowing merchants to accept credit card payments with just seven lines of code.

Over the last decade, as the payment processing ecosystem has become more complex, PSPs have added more services to give merchants more value. Let's explore some of these services offered by payment service providers today:

• Payment processing: PSPs oversee the movement of funds from a customer's bank account to the merchant’s account. Payment processors manage transaction authorization, clearing, and settlement.
• Payment gateway: A payment gateway facilitates the transfer of information between a customer and a merchant’s acquiring bank.
• Fraud prevention: Fraud detection and prevention tools help safeguard transactions against fraudulent activities and illegitimate chargebacks.
• Currency conversion: Currency conversion services are crucial for global businesses that must accept and/or make payments in multiple currencies.
• Reporting and analytics: Payment data is increasingly valuable for businesses because it helps them track and optimize the payment process. Payment Service Providers typically provide transaction reports, financial analytics, and insights.
• Payouts and disbursements: Some PSPs offer payouts and disbursements, meaning businesses can send money to vendors, affiliates, or service providers using the same provider they use for accepting payments.

How do PSPs process a payment?

The role of PSPs fits right into the bigger picture of online payment transactions. Let’s break it down step by step.

1. When Jennie purchases a new watch online using her credit card, she enters her details during the online checkout and clicks 'pay.'
2. The PSP's payment gateway captures this information and sends an authorization request to the PSP's acquiring engine. This request includes crucial transaction details such as card information, 3DS data, transaction initiation, recurring payment status, and network token usage.
3. The acquiring engine then forwards this request to the card network (Visa or MasterCard) associated with the card used for the transaction.
4. At this stage, the PSP steps back as the card network directs the information to the issuing bank, which assesses whether to approve or decline the payment.
5. The card network overseeing card transactions communicates the issuer's decision to the PSP's acquiring engine.
6. If the payment is approved, a temporary hold is placed on Jennie’s account, showing that the funds are reserved and moving from her bank to the merchant’s account.
7. When the merchant decides to finalize the payment, the PSP manages the funds transfer from Jennie’s bank to the merchant’s account and may handle reconciliation.

Payment service providers: Some key players

There are a lot of PSPs in today’s market. Here are a few of the key global players you may have encountered:

• Adyen
• Braintree
• Checkout.com
• Stripe
• Worldline
• Worldpay

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See the full range of PSPs that Primer supports. 

What are the benefits of using a payment service provider?

The primary advantage of employing a PSP is that it consolidates most—if not all—essential payment services into a single package. This is a shift from a decade ago when merchants had to set up separate integrations for different payment gateways and processors.

This streamlined approach not only simplifies things but also boosts performance. A PSP can enhance key performance indicators (KPIs) like transaction speed and reliability by handling the entire payment process from start to finish.

Also, as previously discussed, PSPs extend their support beyond payment processing. They may assist in various areas such as fraud management, reporting, reconciliation, and compliance, providing comprehensive solutions for merchants.

How do you choose a payment service provider?

PSPs aren’t created equal. Each provider has strengths and weaknesses, such as its range of solutions or geographical reach. That’s why choosing a PSP that aligns with your business’s unique needs is crucial.

But with so many options, how should you decide which PSP to use? Let’s break it down.

1. Work out your requirements: Start by listing out what you need. Consider both your must-haves and nice-to-haves. Think about the payment methods you want to support, the regions you operate in, and any specific features important to your business.

2. Research options: Identify potential PSPs and start narrowing down your choices by eliminating those that don’t meet your criteria. Tip: Don’t rely on online research–ask your network for recommendations and check out industry reports.

3. Compare fees: Once you have a shortlist, compare the setup fees, transaction fees, and any additional charges each PSP offers. Be mindful that different PSPs have varying fee structures. Tip: Decide whether you prefer a blended pricing model, which is more straightforward, or an IC++ pricing structure, which offers more detail and could help you optimize costs better.

4. Make your decision: Narrow your list of potential PSPs and contact them. Ask for references from businesses like yours that have successfully used that PSP. You should have a clear winner.

Considerations when choosing a PSP

• Payment methods: Verify if the PSP supports your customers’ preferred payment methods, including localized options. Assess the ease of adding new payment types.

• Security and compliance: Ensure compliance with industry standards like PCI DSS. Look for robust security measures encompassing encryption, fraud detection, and chargeback management.

• Global vs. local: If you operate internationally, choose a PSP with a global network of banks and the ability to handle multi-currency transactions. 

• Integration: Evaluate how easily the PSP can integrate with your existing platform. Look for user-friendly APIs or plugins that streamline the setup process and minimize technical headaches.

• Customer support: Fast and efficient resolution of payment-related issues is vital to your revenue. Dedicated support is beneficial for small businesses with limited resources.

• Future-proofing: Consider whether the PSP can scale with your business. It should support future growth by adapting to new markets, emerging payment methods, and increasing transaction volumes.

• Reporting and analytics: Optimizing your payment systems can unlock revenue opportunities, so check what reporting tools and analytics you can access.

• User experience: Put yourself in your customers’ shoes. Does the PSP provide a user-friendly, seamless, and consistent payment experience?

• Redundancy and reliability: Downtime can hurt your revenue and damage customer trust. Verify the PSP’s redundancy measures and uptime guarantees to ensure your payment system is always available.

• Contract terms: Go over the contract terms with a fine-tooth comb, reviewing key aspects like the length of the agreement, monthly fees, and any termination fees.

• Compliance and legal considerations: Do your homework to ensure the payment service provider works and complies with legal requirements in your industry and region.

Why you should use more than one payment service provider

The era of relying solely on a single PSP for payment processing has ended. 

Think about it: Putting all your revenue eggs in one basket by relying on a single PSP can be risky. If that PSP experiences significant downtime, your entire revenue stream could come to a standstill overnight.

Even in the absence of such a nightmare scenario, finding one PSP that meets all your service requirements across every market without any compromises is incredibly tough. And even if you do find one, how can you be sure they’re offering the best performance and pricing without any benchmarks for comparison?

That’s why top merchants are turning to a multi-PSP strategy. By using multiple PSPs, businesses can diversify their payment processing, reduce the risk of downtime, and optimize for better performance and cost. However, managing to build a multi-PSP setup isn’t a walk in the park. It involves upfront development costs and ongoing maintenance, which are resource-intensive and can slow your business down. 

Enter payment orchestration.

Payment orchestration is one of the hottest topics in payments. Our latest research finds that 87% of merchants are considering using orchestration in the next 12 months. Why? Because payment orchestration platforms allow merchants to scale their payment stack without complexity, utilizing the services of multiple payment providers without needing to spend the time and effort integrating with them directly.

Simplifying your payment stack by connecting with various payment services is just the beginning. With payment orchestration, you gain the freedom and flexibility to execute your payment strategy swiftly, turning payments into a powerful growth engine for your business.

Let’s look at a few of the ways this happens.   

Optimise costs by managing all payment processors in one place

There are a few ways that using a payment orchestration platform can help you optimize costs:

• Having all your PSPs under one roof allows you to compare performance more efficiently. You can use this data to negotiate more favorable contract rates with your payment processors based on actual performance data.

• By unifying your payment stack, you eliminate the need for separate integrations. This reduces the initial development costs and ongoing maintenance expenses associated with managing different PSP integrations.

• Payment orchestrators let you design tailored payment routes that direct transactions to the most cost-effective provider based on specific factors such as region, payment method, or customer ID.
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Leveraging a payment orchestration platform empowers you to manage your payment processes. It makes comparing performance, reducing integration costs, implementing smart routing strategies, and maintaining better control over your PSP relationships easier.

Quickly expand to new markets by adding new payment methods with just a few clicks

Payment orchestrators come pre-connected with hundreds of PSPs and acquirers worldwide. This means that integrating with multiple PSPs, typically taking months to build and maintain, can be completed in just days through a payment orchestrator.

Beyond simplifying PSP integrations, payment orchestrators make adding and managing local payment methods effortless. This is crucial for businesses looking to expand into new countries, as presenting different payment methods at checkout based on a customer’s location provides a personalized experience and boosts conversion rates.‍

Get a better understanding of your payments and optimize payment routes

Managing multiple PSPs often means juggling different portals to access your payment data. You must log into each PSP’s portal separately and export the data. This can make it challenging to understand payment performance because each PSP reports data differently and uses different standards. As a result, merchants aren’t always comparing apples with apples, making it harder to get a clear, unified view of performance across PSPs. 

With a payment orchestrator, all your payment data is standardized and centralized in one place, allowing you to see all your data from one dashboard. You can compare authorization rates across specific regions or acquirers, and understand which payment methods work best.

Beyond the top-line numbers, the best payment orchestrators allow you to go deeper into your data. You can analyze 3DS performance across different markets or PSPs and even drill down to the BIN level. This level of granularity helps you identify specific patterns, optimize conversion rates, and make informed decisions about when and where to implement 3DS for maximum impact.

A payment orchestrator will then let you set up custom payment routes based on your findings. For example, if you discover that payments processed through Adyen in France have higher authorization rates, you can configure your orchestrator to automatically route all French transactions through Adyen. This strategic routing ensures that each payment is handled by the most effective PSP, enhancing both performance and cost efficiency.

As a payment team, a payment orchestrator allows you to deepen your understanding of your payments and create a strategy that is more aligned with your business goals.

A payment orchestrator acts almost like a control panel for all your payment needs, allowing you to:

• Boost authorization rates
• Optimize processing costs
• Recover more revenue
• Reduce payments fraud
• Uncover insights across your payment flows
• Remove technical complexity to scale globally at pace
• Minimize risk with global compliance
• Establish a test and learn mindset

Why use Primer for your payment orchestration

Primer is a Unified Payment Infrastructure. We allow SMEs and large enterprise businesses to shape extraordinary commerce experiences, process every payment with precision, and accelerate business growth without compromise.

Payment orchestration is just one of the powerful use cases we enable. Our platform empowers you to connect with as many Payment Service Providers (PSPs) as you need, effortlessly routing payments to align with your business objectives. With just one integration to our payment API, you can access 100+ payment methods, set up custom payment flows, and track payment performance from a single dashboard.

Primer’s platform is built for ease of use. You don’t need a technical background to get started—our no-code interface allows you to manage your payment processes effortlessly. Whether you’re setting up new payment methods or adjusting existing flows, Primer makes it simple and straightforward.

Here are a few key reasons merchants looking to work with new payment service providers choose to do that using Primer. 

Integrate with new acquirers in days rather than months

A key benefit of using a payment orchestrator is quickly integrating with a new processor without the development effort. We’ve already integrated with the world’s leading PSPs and top local acquirers, allowing you to use the services of new PSPs in just a few clicks—rather than months of development effort.    

With Primer, enabling a new PSP is as simple as:

1. Heading to your Primer Dashboard
2. Giving Primer access to your processor account
3. Choosing which payment methods the processor wishes to enable

The benefits of using Primer are clear for businesses looking to scale quickly and efficiently. When Dabble decided to launch in the US market, they initially faced a daunting choice: set up direct integrations with US payment processors. This approach would have been time-consuming, potentially taking months to complete.

Read the full case study: Dabble picks a winner by partnering with Primer

Use fallbacks, adaptive 3DS, and agnostic 3DS to fully control your payment flow without using code

Most payment orchestrators will allow you to set up and manage custom payment flows. Primer goes a step further. Our platform offers additional features that automate processes even more and help you capture more revenue effortlessly.

Easily set up fallbacks to recover lost revenue

A fallback involves using a second processor if the first fails when completing a payment. Setting this up manually is highly complex since you need to understand the logic of retrying a payment and the code that returns from the processor to know whether you can retry.

With Primer, you can use our Workflows tool to set a trigger and select the fallback processor if a payment fails. We’ve also mapped and standardized decline codes used by PSPs, meaning we will automatically retry a payment depending on the code and chosen fallback processor. This allows you to increase authorization rates while offering a much better customer experience.

Banxa recovered US$7 million in revenue with Primer’s native Fallback functionality in just six months— more than they initially suspected they were losing due to payment failures.

Introduce 3D Secure only when required

In Europe and a few other markets, 3DS is a requirement to complete a payment. While 3DS enhances security by adding an extra layer of authentication, it’s not required outside these regions. In markets where 3DS isn’t mandatory, its implementation can sometimes introduce unnecessary friction, leading to higher payment failures and reduced conversion rates.

With Adaptive 3DS, Primer intelligently decides when to trigger the 3DS authentication process. This smart approach ensures that 3DS is only activated when necessary—specifically when a payment will likely be declined without it. Here’s how Adaptive 3DS benefits your business:

Optimize your payments with network tokenization 

At Primer, we’ve integrated network tokenization into our platform to improve payment security and success rates across multiple PSPs.

Each token is uniquely tied to a specific merchant and customer combination. This means that even if a token is intercepted, it cannot be used across different merchants. Network tokens have been shown to reduce fraud by up to 30%. 

Also, card details are automatically updated, reducing the likelihood of failed transactions due to expired or outdated card information. This reduces friction in the payment process, allowing customers to continue transactions smoothly without needing to re-enter their card details. Visa research has found that businesses using network tokens see an average 4% increase in authorization rates for card-not-present transactions.

Read more: What are network tokens, and why should you use them? 

Get a complete view of your payment analytics in a user-friendly way to help make data-driven decisions 

Many orchestrators will allow you to see your payment data in one place. But at Primer, we’ve invested a lot in making our dashboards, monitors, and platform as easy to use as possible.

With our Observability platform, you’ll be able to see, at a glance, how all your PSPs are performing and slice and dice the data in any way required. You can, for example, check authorization rates across the past 90 days for a specific processor. Or analyze data based on decline reasons, MIDs, BIN numbers, or more.

You can also fully interact with the charts, allowing you to intuitively dig deeper into your data. For example, you can hover your mouse cursor over a chart value to get a summary of a specific metric. You can also click on a particular value within a chart to get a complete list of individual payments. Curating your dashboards and fully exploring table chart data are among the main reasons customers choose Primer.

As Lucas Quinio, Head of Payments at Europe’s leading home furnishings retailer Conforama, says:

“Most payment solutions aren't very user-friendly—you need to have a deep understanding of payments to have any chance of using them. Primer breaks that mold. 

Everyone involved in the RFP commented on how intuitive the platform is and how they could see themselves becoming power users. That's incredibly important as we aim to allow everyone across the business to use payments to meet their goals.”

You can delve into all the features of our Observability platform here: Primer Observability.

How AppsFlyer uses Primer to orchestrate payments and manage multiple PSPs

AppsFlyer is a SaaS leader in marketing measurement, attribution, and data analytics. It has over 80,000 customers, including Disney, TikTok, SHEIN and more.

AppsFlyer initially only worked with one PSP, but its goal was to work with multiple PSPs, allowing it to connect to more payment services, have a more solid payment strategy, and offer customers a better payment experience.

After putting out a tender, AppsFlyer chose Primer to help manage its PSPs. What set Primer apart? In the words of its Senior Payments and Risk Project Manager, Shirly Katzir Kaslasy, it was “usability” and “functionality.”

After going live in January 2024, AppsFlyer can offer many more payment methods, giving customers more options when they pay. They’ve also connected to more PSPs, experimented with different routing strategies, and used fallbacks to increase authorization rates. Thanks to Primer’s ability to build payment flows with no code, they don't rely on the development team to make any changes.

AppsFlyer plans to take subscription payments to another level, and working with Primer will allow Shirly to integrate with a new fraud prevention tool while monitoring performance in case of any issues.

Learn more about AppsFlyer: AppsFlyer redefines the B2B payments experience with Primer.

Use a payment orchestration platform like Primer to manage your PSPs

By embracing the integration of multiple PSPs within a Unified Payments Infrastructure provider like Primer, businesses can transcend the constraints of a singular approach. 

This integration allows merchants to construct a sophisticated payment stack without incurring the costly development resources and stress typically associated with keeping up with cutting-edge payment solutions.

Reach out to one of our payment experts to learn more about how Primer can help you. 

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