What is a PSP
PSP, which stands for payment service provider, is the party which enables businesses to process online transactions in the form of various payment solutions such as debit and credit card and incorporating payment systems like e-checks and cash payments.
To learn how to become a PSP view our Payment Service Providers section which gives details as to the formation, licensing, compliance and other services we provide.
A PSP explained
In order for a business to commence with processing online payments, a gateway needs to be in place to facilitate for the payments to be made. A PSP is the party which facilitates the payment from the merchant to the bank and can establish the payment gateway for a merchant. Furthermore, the PSP helps with different risks involved in online payments including protection for banks and cardholders against fraud payments.
A PSP is obligated to obtain a PSP license which specifically abides by the laws and regulations of the jurisdiction that the company is established in. A PSP will also have to gain PCI compliance so that they are permitted to offering payment processing to merchants.
In addition, a PSP will have to purchase specific software to process the online payments made to the merchant. The software and gateway requirements are dependant on which payment solutions the company intends to provide. The Payment Service Provider fee is levied in either a specific percentage of each transaction made online or through a set cost of each transaction. Each company decides which method of PSP fees is favorable to their business.
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