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Merchant Account Services: 7 Reasons to Work with a Payment Service Provider

May 25, 2016

Merchant Account Services: 7 Reasons to Work with a Payment Service Provider

May 25, 2016

When launching a new e-commerce website, one of the first decisions companies must make is regarding the selection of a payment processor. But should online businesses partner with a payment service provider (PSP) or work directly with an acquirer (payment processor)? While both options are valid, working with a PSP like 3G Direct Pay is significantly more beneficial to the company than working directly with the acquirer.  Here are 7 reasons why:

1. Long-standing relationships

PSPs work directly with the acquirers, which are usually banks. They have long-term relationships with the banks, who, in turn, trust the PSPs compliance procedures, making it easier to gain approval than if a company would go directly to acquirers who don’t know them. Additionally, PSPs cultivate relationships with a variety of banks that have specializations in different industries and will pair up companies with the acquirers who best suit their needs.

2. Lower processing fees

PSPs are the enablers between the online stores (merchants) and acquirers (banks or credit card companies). Since they work with multiple clients, their overall processing and integration costs are significantly lower, as they receive discounts for bulk processing. Additionally, since most PSPs work with a variety of acquirers, fees are lowered as a result of competition for business.

Fees are also lowered as PSPs are integrated with many different payment options.  If merchants work directly with an acquirer, then they have to integrate with and pay separate fees to each payment method/solution that they choose to work with, which can become quite expensive.

3. Third-party application process

Merchants that prefer to have their own dedicated merchant accounts will enjoy a more efficient approval process when applying through a PSP. As applying for a merchant account takes 3-4 weeks, PSPs can remove the responsibility from the company by applying for them on their behalf, freeing up the company to focus on their core business. PSPs are also experts in merchant account services and can assist merchants by ensuring that they have submitted all of the necessary paperwork in the correct way to avoid delays.

4. Aggregated merchant account

Some PSPs offer merchants an expedited way of getting their e-commerce business up and running. These PSPs set up their own merchant accounts with the acquirers and then open sub-accounts under their main account for each of their merchant clients. Once a PSPs merchant account has been approved by the acquirer, it is their responsibility to perform due diligence on any merchants requesting their services. As such, the approval process for new merchants is significantly faster than when working with the acquirer directly, even though they are still required to undergo a due diligence process with the PSP.

5. Lower risk

PSPs have risk departments whose sole purpose is to protect their merchants and, by extension, the PSPs themselves. They have developed an expertise that smaller e-commerce companies are usually unable to match. Risk management services are crucial in protecting merchants from instances of fraud, and PSPs have the capability to recognize discrepancies and potential fraud instances by a variety of methods. These all combine to prevent chargebacks and minimize the possibility of fraud.

By contrast, the majority of acquirers have very limited resources dedicated to protecting merchants.

Also, keep in mind that all companies that process and store credit card data are required to be PCI compliant (and get re-certified on a regular basis).  Working directly with a PCI-compliant PSP relieves the company of this responsibility, if merchants utilize the PSP’s hosted payment page.

You can read more about hosted payment page benefits, in this blog post.

6. Simple integration

Most PSPs are already integrated with a variety of payment methods and offer multiple processing and settlement currencies. By working with a PSP, merchants can more easily offer their customers the option of payment by credit card, debit card, PayPal, M-Pesa, Tigo, and more, without the need to integrate with each payment method, individually.  By working with a PSP, the merchant must perform only one integration in order to accept payments from many different payment methods, and thus a wider audience.

7. Ability to process and settle in multiple currencies

PSPs streamline the process and make it much easier for merchants to process and settle in multiple currencies, enabling cross-border sales and globalization of the merchant’s company. Not only that but some PSPs offer the option for merchants to receive their settlement from the acquirer earlier than one month in arrears, which is virtually impossible when working directly with the acquirer.

While working directly with an acquirer or choosing to work with a PSP are both valid options that will help merchants grow their business, it is clear that the benefits of working with a PSP far surpass those of working directly with the acquirer. Risk management, time management and lower fees all combine to make PSPs like 3G Direct Pay the preferred choice for merchants. When selecting a method of payment processing, merchants must examine the different options and choose that which will help them process payments efficiently, quickly and safely.

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