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Payment Service Provider: Definition and Features

This article will give you an overview of payment service provider features, and list the top suppliers in the UK.

Payment Service Provider Definition

It is quite difficult to define a payment service provider, as the definition of a PSP encompasses many different activities related to taking and enabling payments. In general, a payment service provider supplies the payment framework and value-added services like risk management, fraud protection and transaction reconciliation for online retailers and businesses. There are about 1000 payment service providers worldwide. The definition of a payment service provider describes an institution which offers an online payment solution that allows merchants to accept debit and credit card payments via different channels like a company website or over the phone.

payment service provider

UK Payment service providers are regulated by the Financial Conduct Authority (FCA) and they are required to submit information about their regulation status to customers.

Because regulation ensures that all payment service providers operate in a level-playing field, there is a guarantee that suppliers will have good standards of service provision. This makes comparing payment service providers easier on the one hand, as service features will be consistent across the board, but on the other hand it means that no one provider will stand out from the crowd.

If your organisation needs to select a payment service provider, the main consideration will go to price and features that are included as standard in the terms of service. Expect higher costs from an established payment service provider. Compare payment service providers we have listed below to find the right one for your business.

Payment Service Provider Features

As mentioned earlier, more established payment service providers will be more expensive than others; new providers may be competing on price and have attractive introductory offers for new customers.

Talking of price, some services will be cheaper when doing a price comparison but you will need to check if some features that you will require for your business are charged as extras. Some providers may be cheaper because they have more basic features.

Standard Features of All Payment Service Providers

A payment service provider should be able to offer all these standard features:

  • Security, to prevent card fraud
  • Accept payments from different types of cards, as some providers will only offer a basic service limiting the type of cards accepted
  • Transaction reporting
  • Technical support

Security

The Payment Card Industry Security Standards Council is responsible for issuing the standards that payment card industry providers must comply with. During a transaction, all data between a customer and the merchant is encrypted using SSL (Secure Socket Layer) encryption. Another encrypted communication transfers the data from the merchant to the processing bank. The security of payments is regulated by the European Central Bank through its Recommendations for the Security of Internet Payments.

Accepting Different Types of Cards

Most merchants accept credit and debit card payments and the payment service provider will charge a percentage of the transaction when a customer pays by credit card and a fee per transaction for debit cards. A payment service provider specialising in non-profit may offer a reduced service, for example only accepting debit card payments.


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Transaction Reporting

Reporting features are essential to reconcile transactions. Most providers will offer monthly reports. More expensive contracts with payment service providers may include real-time reporting.

Technical Support

Technical support should always be featured as standard; if the terms and conditions list technical support as an added extra it might be advisable to look at other providers. 24X7 technical support via different channels (phone, online) is ideal.

Leading Payment Service Providers

Expert Market has chosen the following payment service providers as the best in the industry and that offer a number of flexible options for businesses of all sizes.

ProviderFeaturesExtra Costs
IngenicoProvider of multi-channel and all-in-one payment servicesTransactions outside of those included in the contract (100-300)
PaymentSenseOne of the cheapest payment service providersEarly contract termination fees
WebMerchantOffers all-in-one payment solutions and is specialised in mobile solutionsExtra monthly costs for non-low-risk businesses

1. Ingenico

Ingenico is a provider of multi-channel payment services. From online payments to mobile payments, Ingenico provides a transaction management platform for retailers.

Main features include:

  • Simple security certification process
  • Sales management and reporting
  • Software integration

Pricing: starts at £10 per month, while customised online payment solutions start at £19.99. Some transactions are free (100-300 depending on contract), then 15p is charged per transaction.

Pricing: depends on volume of transactions, risk profile and type of cards. Generally speaking, monthly service charges start from £25. Add-on charges include a monthly £20 non-compliance fee if you are not PCI DSS certified.

3. PaymentSense

PaymentSense leverages the buying power of UK businesses to provide affordable online payment solutions.

Main features include:

  • Online payments for small and growing businesses
  • Customised payment web page
  • Online sales reporting

Pricing:Starting from as low as £12 per month depending on volume of transactions, with long term contracts. Cancellation fees will be applied if contract is terminated early.

4. Web-Merchant

Web-Merchant is a provider of bundled online payment solutions including mobile payments.

Main features include:

  • Virtual terminal
  • Online reporting tool
  • Recurring payments
  • Multiple currencies supported

Pricing: £25 per month for normal accounts and £20 per month for low risk businesses.

Benefits of Using a Payment Service Provider

In summary, the key benefits of using a reputable payment service provider include:

  • Ability to focus on your core business, safe in the knowledge that customer data is handled securely
  • Ability to accept payments from multiple channels
  • Boosting sales

Payment service providers may have different types of contracts with standard and extra features, therefore when evaluating either whether to switch providers or choose a provider you should consider that service is essential for the smooth running of your business.

Further Information

If you would like more information about payment service providers, simply fill out the form above and Expert Market will match you to the best suppliers near you.