Payments glossary · Core
Payment Service Provider (PSP)
A payment service provider (PSP) is a company that lets businesses accept and manage electronic payments, typically bundling a payment gateway, acquiring or access to acquirers, alternative payment methods, fraud tools, settlement and reporting under one contract.
How Payment Service Provider works
The term is used in two ways. In everyday use, a PSP is the provider a merchant signs up with to take payments online or in store: it connects the checkout to the card schemes and other payment methods, moves the money and reports on it. In EU and UK law the phrase is wider, covering banks, payment institutions and e-money institutions that provide any regulated payment service, from acquiring to money remittance and payment initiation.
PSPs differ in how much of the payment chain they own. Some are licensed acquirers themselves; others resell an acquirer's service as a payment facilitator, or act purely as a technical gateway that routes transactions to acquirers the merchant contracts with directly. This determines who holds your funds, who underwrites your business, how quickly you are paid and who handles disputes.
When comparing PSPs, check the payment methods and currencies supported in your target markets, the pricing model (blended or interchange++), settlement timing and any reserve, whether your industry is accepted, the onboarding documents required, and whether the provider is authorised by a regulator such as the FCA in the UK or a national authority in the EU.