Businesses need simple and secure payment solutions. And it doesn't matter — it's an e-commerce site, a mobile app, you still need to secure payments. And to make it so that customers can pay for goods quickly and conveniently. There are two solutions for this — payment gateways and payment Service Providers (PSPs). They perform different functions and offer unique advantages. Which ones? Let's figure it out in this article!
What is a gateway payment service?
This is a system through which all transactions pass when making payments online. The service helps users pay for goods and services using credit or debit cards, e-wallets, bank transfers and other methods. The most important thing to pay attention to is the compliance of the gateway with security standards.
From the customer's point of view, what is a payment gateway provider? The last page in the purchase process, where he enters the card number, expiration date and security code. After entering the data, the customer clicks the “Pay” button, and the payment gateway begins the payment process. The software transmits encrypted transaction data between the seller and the bank.
The transaction data must be verified. The payment gateway checks whether you entered the card number correctly and whether there is money in your account. Just a few seconds, and the bank responds! Based on this, the system decides whether to approve or reject the payment. If everything went well, the gateway sends a confirmation to the seller. Are there any problems with payment? The transaction will be rejected. But don't worry — you can try again or specify another payment method. We also write an article “101 Payment Gateway” specifically about payment gateways — you can read it on our website.
What is a payment services provider?
A payment service provider (PSP) is an intermediary that connects merchants with banks. PSPs provide various services for sellers and customers, we offer to delve into the topic in more detail.
From the seller's point of view:
- PSPs accept payments from cards, digital wallets, and bank transfers;
- The system detects fraudulent transactions, tracks suspicious activity, reduces the number of chargebacks;
- PSP temporarily holds funds until they are ready to be transferred to the seller's account;
- PSPs offer APIs that greatly simplify the integration of the system with merchants' websites and applications.
And what is a payment service provider from the client's point of view:
- The customer enters his card details, and the PSP verifies the correctness of the entered information, confirms the transaction and completes the purchase. It only takes a few seconds — you won't have to wait long;
- All data is encrypted, so it won't fall into the hands of scammers;
- A convenient payment system where you can make a purchase in just a few clicks;
- The ability to convert currencies when shopping on international websites.
What is the difference between a payment service provider and a payment processor?
The payment gateway and the payment service provider (PSP) support online payments, but perform different functions in the payment process. Also, you can find their list and features of the specific providers in our catalog.
The payment gateway is only needed for secure data transfer from the customer to the bank. You don't have to count on any additional functions. PSP also handles payment processing, merchant account maintenance, settlement, fraud prevention, and support for multiple payment methods.
To work with the payment gateway, the seller needs to create a trading account separately in the acquiring bank. And this is both time and money. Unlike PSPs, which create a merchant account themselves.
To work with the payment gateway, sellers need to set it up separately, create an account, and install a processor. PSP provides an all-in-one solution. You don't need to spend extra time on configuration and integration. PSP also always works with international payments and currencies.
The payment gateway is focused on secure transfer of payment data, while PSP is a complete solution for business. It is ideal for businesses that require a fully integrated solution. Gateways are suitable for those who may already have their own banking relationships.