How to Choose a Payment Service Provider (PSP)

The online payment industry is getting more completive than ever, many businesses are enabling various online payment gateway to attract new customers, increase sales, gain market share, and provide a seamless customer’s experience. As you know, there are three parties involved in the processing of payments (payment gateway, payment system and Association of Bank Cards) to encrypt, transfer, process and verify transactions from buyers to sellers.

The payment gateway performs the most important functions in the described scheme. It provides free and secure communication between the merchant website and the payment processor.

For this reason, a reliable payment gateway is a matter of paramount importance, because it provides 75% protection for your money and the money of your customers. And although it seems that using the services of high-profile and popular payment gateways is the best guarantee of security and convenience, in fact, the best solution is to check real user reviews and compatibility. Sometimes, much less colourful truth is hidden behind big promises. In this article, we are going to assess how to choose a payment service provider that is best for your business.

Online Payment Gateway:

A payment gateway is a service provider that authorises any payment on an online portal. Usually, this is an application for an online store, which is synchronized with the bank, so that customers can pay for goods directly from home. Anyone can take advantage of this type of service, including online stores and other service providers that sell something to users. These include non-profit organizations that collect donations online. There are tons of different payment gateways, including Stripe, CyberSource, Authorize.net, Google Checkout, and direct payments by Apple Pay . All of them have their advantages and disadvantages, also, each charge a different commission.

What should be a good payment gateway?

When choosing a gateway, you should pay attention to these things:

#1. Safety: Standard security measures involve the use of TLS , the most common security protocol that uses a wide range of encryption algorithms such as RSA and AES. This is the basic security requirement for a payment gateway, without which the channel becomes vulnerable to both active and passive hacker attacks.

The PCI-DSS standard performs a monitoring function. This document consists of 12 requirements, based on which the payment gateway organizes its activities. When you see that the service follows the PCI-DSS standard (the newer its version, the better), you can be sure that it does everything possible to prevent the theft of your confidential data and finances.

Last, but not least, is two-factor authentication . This is what protects you from the most primitive way to lose money – stealing a bank card. With two-factor authentication, whenever an attempt is made to log into your account, you receive notifications on the selected communication channel, whether it is email or SMS. Verification of your identity significantly reduces the risk of being robbed.

#2. Processing speed: The perception of your site by the user depends on the speed of the payment gateway. The time that the gateway spends on processing transactions from the client should tend to zero. It is important to know that about 25% of all user baskets are abandoned due to the long process of placing an order – calculate how much money you can earn by having a fast and perfectly working gateway.

#3. Quality of support: None of the services is 100% stable, and the probability of encountering technical problems always exists. However, when you receive timely technical support, such problems usually do not affect the overall impression of working with the gateway.

Choose a Provider Based on the Stage of Development of Your Business:

Determine what stage of development your company is at, and which payment provider specialises specifically in your type of business.
It should be borne in mind that with the development of business, previous decisions may become irrelevant. For example, there is a good company, Stripe, which is tailored for start-ups. If the business has reached a particular benchmark and is growing further, such a provider will not be ready for this. Each provider is needed at different phases of the company’s existence.

Besides, a large business should work with several providers to diversify risks. If you have a large company and at the same time you only have one provider – this isn’t a better approach. At least two providers are needed to diversify risks and further withdraw funds.

Pay attention to the Payment Provider License:

The presence of a payment service provider license allows the company to provide merchant accounts for its customers. To do this, the company must register and obtain a permit in the jurisdiction with the most appropriate conditions for its business models, which include the requirements of the financial regulator and tax features. Some licenses allow you to work simultaneously in several markets. So, before Brexit, the British FCA let companies go on the terms of almost domestically presence in any region of Europe. Under these conditions, business representatives will be able to work in the EU until the end of the transition period, which ends December 31, 2020.

Each payment provider has a financial license for each country where they are presented. In Cyprus – CySEC, in the UK – FCA, in Germany – BaFin, etc.

Choose a provider depending on the audience of your business:

When choosing a payment service provider, it’s also worth deciding whether you need to work with a local or international provider of payment solutions.
Local is suitable, for example, for an ecommerce in UK, which mainly accepts shipping only to the UK. For a business that offers products and services to residents of different countries, it is better to stop at an international provider of payment solutions.

Explore Open Source:

There are open sources on the Internet where you can see the profiles of almost all payment providers in all regions of the world.
When choosing a payment gateway provider, consider:
1. Geography (local or international provider)
2. The solution that is right for your needs
3. Risk diversification
4. Reputation
5. License
The choice of the payment service provider should be approached as the business determines which country to choose. In such cases, the company conducts an extensive analysis of countries, taking into account various factors (language, difficulties in opening a legal entity, crime index, GDP level, etc.). So, it is here. We need to develop filters and factors that will allow us to evaluate potential providers and choose the most suitable ones.

Conclusion:

In general, when choosing a payment partner, support and ease of use of the system is important. An individual payment solution is a combination of many things and factors. A good payment service provider can always evaluate the prospects of a business and help it grow.

If your need help choosing the right Payment Services Provider (PSP), and help to integrate a payment service provider with your ecommerce to get the best results, why not speak to us directly, call us on +442034416513 or visit our website on www.cxportal.com and we’ll help you in any way we can.