Payment Service Providers vs 3rd Party Processors
Payment service providers (PSP) offers merchants online services for accepting credit card payments or other payment methods such as payments based on online banking. Typically, a PSP can connect to multiple acquiring banks and card networks, thereby making the merchant less dependent of financial institutions - especially when operating internationally. Furthermore, a PSP can offer reconciliation services, risk management and multi-currency functionality.
On the other hand there are Third Party Processors who are independent processors contracted with by a Bank or Processor to conduct some part of the transaction processing process.
When using a payment service provider the following should be considered:
# The business apply’s for a merchant account directly with a PSP.
# Customer’s credit card statements have the business name on them.
# Use with a Payment Gateway (Seamless integration available).
# Some fixed monthly fees in addition to processing costs.
# Possible setup fee.
For 3rd party processors:
# Must use 3rd party processors checkout system (Paypal has one exception).
# No fixed monthly fees.
# Some have setup fees.
# Most have high processing costs (Paypal and Google Checkout don’t).
# No contracts.
# Business and customer have limited protection from being ripped off.
