Payments

PSP (Payment Service Provider)

A provider that bundles gateway, processing and merchant services so a business can take payments without its own acquiring relationship.

A Payment Service Provider offers the whole payment stack as one product: gateway, processing, and merchant services under an aggregated account.

The trade is speed against control. Onboarding takes hours rather than weeks, but pricing is blended, the merchant relationship is with the PSP rather than an acquiring bank, and the PSP can freeze funds at its own discretion.

Businesses at scale usually move to direct acquiring for cost and control, and keep a PSP for markets where they lack a local entity. Running more than one is the normal end state, which is why routing belongs above the processor rather than inside it.

Payment gateway and processor The gateway routes a transaction; the processor moves the money. Many products do both, which is why the terms blur.
Settlement and payout Funds moving from the card networks to your bank account, usually in batches and net of fees.
Authorization and capture Authorization reserves funds; capture takes them. The gap between the two is where a lot of billing logic lives.

PSP (Payment Service Provider)

Related terms