What is a Payment Service Provider?
A Payment Service Provider (PSP) is essential for any business taking money from customers online, as without one, there would be no link between the customer and the bank account belonging to the business. The more methods of payment the PSP is able to accept, the larger the potential customer base.However, even more importantly, the PSP should be both secure and reliable.
Payment Service Provider Fees
Typically, a PSP will charge two sets of fees: a one off setup fee and a processing fee, usually on a per transaction basis. Both of these fees vary between providers, and there will also be some variation in the fees charged by a provider depending on the number of payments taken. PSPs will generally try to encourage large companies taking lots of payments to use their service by offering them lower fees.
The setup fee is usually between around £100 and £300, whilst the transaction fees will vary depending on the type of cards used. PSPs typically charge 1% – 5% for credit card transactions, whilst debit card fees are typically between 20p and 70p. It is therefore important to consider whether the type of product or service being offered is one that customers are more likely to pay for using a credit card or a debit card, as this will have a bearing on which PSPs offer the best value for money.
Payment Service Provider Security
Whilst keeping costs down is extremely important to running a profitable business, customers value security highly when shopping online, so selecting a PSP offering a good level of security is equally as important. If a customer does not feel that the website they are shopping on is secure, they are likely to take their business elsewhere.
If a security breach was to occur during payment processing, it can do irreparable damage to the reputation of a business. This is not only important to big businesses where security breaches reach the headlines, but also smaller businesses as customers will be more inclined to look at reviews from past customers before making a purchase.
Maximising Customer Numbers
There are a number of ways in which visitors can be turned into customers. Once a potential customer has seen a product or service they would like to purchase, they will add it to their basket and head towards the checkout. If the checkout process is secure, they will continue the process, and will require a suitable card in order to make a payment.
Online transactions are typically made using a credit card, debit card or pre-paid card. In the UK, most of these cards will belong to the Visa, MasterCard or Maestro families. Selecting a PSP who is capable of accepting all of these types of payments is therefore vital to maximising the customer base in the UK.
If there is a strong probability of the business attracting customers from outside of the UK, choosing a PSP who is able to take payments from cards that are popular elsewhere, for example American Express, is also something worth taking into consideration.
Payment Service Provider Support
There are likely to be occasional technical issues with even the best PSPs. Even if they are not at fault themselves, issues such as the customer’s internet connection cutting out during a transaction can occur from time to time. A PSP that is able to promptly sort out any issues for both the business and the customer is often worth paying extra for.
Other support that may be offered by a PSP includes providing details of transactions and breakdowns of customer data. This information will be invaluable to some businesses, and surplus to requirement for others, so it is important to make sure if it is included it is a requirement andnot to pay extra for it if it isn’t a necessity.
Selecting the most suitable PSP will involve a compromise between fees, security and services offered. For most, a PSP that performs reasonably well in all of these categories will be suitable; however some businesses may find themselves needing to give more weighting to one of these areas when choosing the best provider.
This article was written by a financial blogger from London.