What is a Payment Services Provider (PSP)?

The era in which a merchant could simply accept payments for their goods in cash ended a long time ago. In recent years, we have seen the rise of multiple payment options across all areas of business. We’ve written extensively about the practicalities of dealing with these payment options in the past, but the importance of partnering with a Payments Service Provider (PSP) has really been underlined by the events of the past year. 

Business is changing 

The Covid-19 pandemic and the restrictions that were introduced to combat the virus have exaggerated the shift in shopping and payment habits of customers that were already taking place. These changes are now becoming firmly entrenched on a global basis. 

According to a Back To Business study published by Visa – one which specifically examines the prospects for the post-Covid payments landscape – 63% of consumers now say that they would switch to a company that offers contactless payment options. In the same study, it was revealed that 78% of customers now factor safety into their thinking when choosing a payment option, and 46% regard offering contactless payments as amongst the most important safety measures a merchant could take. 

The same concerns were picked up in MasterCard research which found that contactless payments were growing 2.5 times faster than non-contactless alternatives in the Asia-Pacific region, again due to concerns around safety. American Express also found that 70% of US merchants had reported customers requesting a range of ‘safer’ payment options, including contactless tap-and-go payments and mobile app payments. 

In addition to being driven by the particular circumstances of 2020-21, the switch toward a range of different payment methods is marked by generational differences. Millennials, defined as those reaching adulthood early in the 21st century, are clearly the customers of the present and the future for any merchants currently operating. 

The pandemic has fast-forwarded our transition to digital 

The Back to Business report previously referenced found that 82% of this cohort had switched to a new shopping or payment method during the course of the pandemic, while IBM stated that the pandemic had accelerated the shift from physical stores to digital shopping by approximately five years. The report which included this insight also stated that 18% of consumers in North America and Europe had started shopping online for the first time during the pandemic. 

The Salesforce Shopping Index found that global online sales rose by 71% during the second quarter of 2020, and new payment methods such as QR codes are predicted to become a vital aspect of digital commerce during the next five years, accounting for 27% of all transactions by 2024. 

The speed and range of the changes that are taking place in the area of payment provision can seem overwhelming to merchants who are already busy with the task of running their business on a day to day basis. That’s why working with an experienced PSP like NOIRE can make all the difference. 

In simple terms, NOIRE will deal with the kind of shifts in customer demand highlighted above, alongside the constantly evolving regulatory landscape, leaving the merchant free to take advantage of what is now a genuinely global marketplace. 

Do I need to work with a Payment Services Provider (PSP)? 

The question for any merchant not yet working with a PSP but perhaps thinking of making the switch is what exactly a PSP offers. The quick answer is that a PSP acts as a buffer between merchant and customer, processing transactions seamlessly and securely, but there’s more to the partnership than that. 

Without working with a PSP, a merchant would often have to create their own merchant account and open a subsidiary in many of the countries in which they wish to take payments. For any merchant operating on a global scale (which is to say the vast majority of merchants in all sectors) this would represent a massive logistical and administrative task. A PSP, on the other hand, already has the infrastructure in place to take payments on a genuinely global basis, and as soon as a merchant signs up with a PSP they will be able to access banks and card networks across the world. 

A key aspect that is simplified when working with a PSP is the legislative hurdles that have to be cleared to take payments from the widest possible range of methods. 

A directive such as Payment Services Directive 2 (PSD2), which was introduced in 2020, places strict and complex obligations on merchants themselves and the payment platforms being used. These obligations – including the protection of cardholders’ data and the monitoring and testing of networks – become greatly reduced when working with a PSP. 

The security risks faced by any merchant accepting payments from their customers become the responsibility of the PSP rather than the merchants themselves. Choosing the right PSP means that the merchant can always be sure that the payment processing their business handles conforms to the latest legislation. 

How does a PSP affect customer experience? 

At the other end of the merchant-customer experience, a PSP will improve the experience of the customer as far as making payments is concerned. Different markets in different parts of the world tend to operate with a wide range of payment options. In addition to the globally utilised solutions such as VISA and MasterCard, many markets offer options that are unique to their location, such as the iDEAL system in the Netherlands. A PSP will be able to connect with the full range of payment processing systems, creating a seamless experience for customers who – as the research cited above demonstrates – cite payment provision as a key driver of when and where they shop. 

From PCI compliance through to a streamlined customer experience and state of the art fraud protection, working with a PSP like NOIRE can offer everything a merchant needs to trade seamlessly in markets across the globe. As the physical barriers to trade become a thing of the past, a PSP can remove the last practical impediments to a merchant trading as simply with customers thousands of miles away as they do with those a few hundred yards down the road. 

NOIRE Keeps It Simple 

Working with a PSP like NOIRE means entering into a genuine partnership that can transform the scale of business you are able to carry out, the markets and customers you can reach and the income you can draw in. If you’d like to know more about how our commitment to simplicity, security and flexibility could help your business achieve its global aims, please contact us today.