What Are The Functions of the PSP and the Acquirer?
In order to successfully lead an online business, it is essential that payments are processed in a safe and reliable way. Here you will find an elaboration on the functions of two important parties involved in the processing of an online payment.
The Payment Service Provider
A Payment Service Provider (PSP) is a company that enables the connection between an online shop and other market participants such as banks or credit card acquirers. Through this, the costs for the integration and processing of different payment methods is significantly reduced. The merchant profits from services such as Risk Management, Reporting or Fraud Protection and, in addition, is relieved from the safety requirements of the card industry. Furthermore, the PSP provides the possibility of offering multiple currencies.
The PSP offers various services concerning the acceptance of electronic payments and integrates different payment methods such as e.g. credit and debit cards, bank payment, e-banking and e-Wallets. Usually a PSP is not bound to an Acquirer or a payment network. This permits the integration of several different national and international payment methods over just one PSP.
The advantages in an overview:
- Easy adding of new payment methods which leads to more orders and more revenue
- Reduction of integration and processing costs
- Risk reduction for the online merchant concerning security and lost revenue due to the implementation of address and credit controls
- PCI-Compliancy. All companies who process, save or forward credit card data must be PCI-certified. By having a contract with a PSP and the matching payment module you can save yourself the costs for a certification. This is the case for all sellXed payment modules.
The Payment Service Provider of course charges a premium for this service. Generally it is put together as follows:
- A small one-time set-up fee
- A monthly fee for the provision of the services
The Acquirer enters the process during the confirmation request of the payment. After having sent the request to the PSP, the PSP forwards the payment information to the Acquirer (who will then redirect the information to the issuer). Based on the credit limit on the card and its validity, the payment will either be accepted or rejected. This confirmation/rejection is then sent back to the PSP via the Acquirer. The Acquirer therefore acts as a middle-man between Payment Service Provider and Issuer. The main function of the Acquirer consists of capturing the authorisation and the processing of card payment transactions. The Acquirer therefore has a buffering function which protects the merchant from having to deal with ever-changing legislations, card schemes, etc.
No fixed costs are levied for the services of the Acquirer. The Acquirer merely charges a small transaction fee which differs depending on the country and sector ends and usually moves between 1.5% to 3% of the average price of the product.