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Payment Service Providers (PSPs) helps a wide array of online services for accepting electronic payments via several payment methods.
This includes credit cards, wire payments such as direct debit, bank transfers, and real-time bank transfers.
A PSP is also able to link up with multiple acquiring banks, card, and payment networks.
PSPs can also fully manage these technical connections and relationships with the external network, in essence taking care of the technical processing of payment methods for online shops.
This process has become extremely streamlined and makes a given merchant less dependent on financial institutions and free from the task of establishing these connections directly, especially on an international scale.
Furthermore, a full-service PSP can offer risk management services for card and bank-based payments, transaction payment matching, reporting, fund remittance and fraud protection in addition to multi-currency functionality and services.
Some PSPs provide services to process other next generation methods including cash payments, cryptocurrencies, prepaid cards or others.
PSPs are very important to the financial services space as well.
Every retail broker needs a payment service provider which delivers to the broker the infrastructure via which it is able to receive payments from its customers.
Typically, the broker also necessitates a relationship with an acquiring bank, a merchant, card and payment networks.
By using a PSP, the broker can avoid having to deal with a multitude of parties in different regions.
Issues Between PSPs and FX Brokers
As a result, there has been an ongoing battle between card payments mainstays such as Visa and Mastercard, which have systematically blocked transfers and made brokerages operations increasingly difficult.
The speed by which this process has taken place has threatened many brokerage operations and continues to be a major pain point in 2020.