A payment service provider makes it easy for stores to accept payment from you whenever you buy goods in person or online. These providers facilitate the broad range of transactions that take place right around the world on a daily basis. This article will discuss the role that payment service providers play.
Easily Accept Electronic Payments
A payment services provider makes t easy for any merchant to accept electronic payments. For example, if you own a newspaper stand and want to accept digital payments there, a payment services provider makes it possible. They work behind the scenes to facilitate electronic commerce and online business, in every country around the world.
Some people think of payment service providers as just credit card processors but they are often more than that. Although they make credit card payments possible, they may also facilitate a wide rage of other transactions. Merchants pay a nominal fee for the services that they offer and this is often charged on a monthly basis.
No matter how small you think your business is, it’s likely that many of your customers will want to pay via a digital method. If you don’t provide that options for them, they may choose another business that does. If your hairdressing salon is unable to accept an electronic method of payment, you may lose customers who are not willing to do transactions using physical cash.
Do all PSPs handle several types of payments?
IN this article, we will generally refer to PSPs that handle several types of payments. This is because these PSPs are often the most poplar option among merchants, who want to be able to serve a wide range of customers. However, there are also PSPs who specialize in one form of payment.
Some specialize in Card Not Present or CNP transactions. Others specialize in Carp Present or CP transactions. When you’re selecting a provider, consider where you want your business to go in the future and ensure that they can provide the services that you will require. Both types pool all of their clients into a single, large merchant account, making it possible for clients to enjoy the convenience of merchant accounts without signing up for individual accounts.
Electronic Payments Accepted by Payment Services Providers (PSPs)
A payment provider can accept credit card payments, making it easy for you to accept payments in your ice cream store, bookshop or club, once the customer has a credit card. However they are not limited to that. They can also accept debit card payments and payments that are made via a digital wallet.
If a customer has an Apple Pay account, they can make payments in your shop via a payment provider. Even f you don’t have a physical store, you’re probably already using a provider without realizing it. For example, if you accept PayPal payments on your website, you’re already utilizing a provider. PayPal is a payment service provider that’s used in many countries around the world. This processor serves round 28 million merchants.
Some payment service providers are ideal for low-volume merchants, so they make it simple for you to accept electronic payments on your website even if you only sell a dozen bottles of jam a day. They have several pricing plans available, to suit the needs of businesses of different sizes. They frequently offer all in one payment systems, so customers can use the method that’s convenient for them in just one click.
Merchant Accounts and PSPs
In order to benefit from a high volume of digital payments, you’ll sometimes have to create a merchant account with a bank of your choice. The process of creating a merchant account is straightforward and once you do, you can accept debit and credit card payments. If you have a relatively small online store, the platform that you use may make it easy for you to accept debit and credit cards without applying for a merchant account at your local bank.
For example, Shopify merchants do not need to apply for a merchant account at their local bank in order to accept payments at their online store.
However, this is because Shopify is actually a payment service provider. The payments that are made by your customers will still be processed by a payment service provider, since they are processed by Shopify. You don’t have to worry about the process that occurs behind the scenes but you enjoy the convenience of accepting digital payments.
If you use a merchant account for your online or offline store, your bank will give you a specific account number. This number will be associated with all of the transaction information that you send to the bank. Your merchant account number will also indicate that you are the recipient of all funds from all of those transactions. In this case, your bank is referred to as an acquiring bank. The bank is a registered part of a card network, such as Visa and they are authorized to accept transactions done in your store, on behalf of the network.
Acquiring banks use a payment processor and the payment processor uses a payment gateway. The payment gateway is software that communicates transaction information. Your acquiring bank assumes full risk and responsibility for all of the transactions that they process. As stated earlier, you may not need a merchant account but if your business grows to a certain point, you’ll find it economical to open one.
If you’re processing a relatively low volume of transactions, using a payment service provider that offers competitive pricing for this volume s usually affordable. However once your business grows to the point where you process over $20,000 per month in credit card transactions, the fees associated with plans that allow you to bypass a merchant account become prohibitive.
Everything You Need To Do
A payment service provider gives you everything that you need to do business online or offline. They give you the software that’s needed to process each transaction, your checkout and even free hardware, such as mobile readers. Each PSP usually offers you an all in one solution and this makes it easy for small and micro businesses to start accepting payments in one simple step.
Even security is covered by many PSPs. You won’t need to pay a separate fee for PCI compliance because this is often bundled in your account. This gives you the assurance that you need to accept payments via your website while your customers will feel confident whenever they pay for your services and products.
PSPs Often Offer Business Tools
When you create an account with a payment service provider you often gain access to a suite of business tools that make your life much easier. For example, you’ll gain access to invoicing tools that allow you to create branded invoices for each customer, that make it easy for them to contact you in the future or learn about special promotions. You’ll also get reporting tools, so that you can analyze your sales performance on a specific day or another period of time.
You can even get other add-on software tools for a reasonable cost. This makes it easy fro you to do things like set up loyalty programs, even though you may have a relatively small, new online store that sells frozen vegan pizza. Some PSPs even let you set up email marketing campaigns from the same account that you use for processing your digital payments.
Many small businesses have a limited budget initially and a PSP makes it easy for them to offer the same perks to their customers as a major brand without the same kind of spending. Their services are easy to use and you can decide which ones you want to add on to your basic package, all for a modest fee. You usually get a lot of free tools and may not even use all of them
Pricing Structures of a PSP
A PSP is often a good option fro a small business because it uses a flat-rate pricing structure. This means that you will pay the same fee for each transaction that is done in your store, no matter what type of card your customer uses. You may not have to pay a monthly fee and even if you do, it’s often low. If your store uses a PSP, the only costs you’ll usually have to consider will be your transaction fees.
This pay as you go model helps small businesses to save money. If your small business only has 40 transactions per week, you’ll only pay for those 40. If your volume increases to 100 but till remains below a specific amount, you’ll continue to offer convenience to customers without breaking your own budget.
A PSP often offers plans which give new startups lot of flexibility. You can pay on a monthly basis and this is convenient for entrepreneurs who do not want to pay for an annual plan. If your business is steadily growing, paying on a monthly basis may also be a lot more flexible, since you can switch to another plan when you need to.