Who can use a payment service provider?

Indeed, any entity making online payments requires the services of a PSP (Payment Service Provider) to regulate the acceptance of payments made on its platform. A payment service provider is an approved company in charge of offering electronic payment services to a merchant.

In today’s world of e-commerce sites, many players can benefit from the services of a payment service provider. Who are they? E-commerce solutions, marketplace solutions or integrator partners. Here’s how it works.

The role of a payment service provider is to provide merchants with turnkey solutions, enabling them to accept payments. To guarantee the security of transactions and ensure the receipt of funds into accounts, the PSP is subject to numerous regulations. The latter must be approved as an “Établissement de Monnaie Électronique” by theACPR (Banque de Franque), and is also subject to certain mandatory European PSD2 security standards, notably PCI-DSS certification. In the online payment ecosystem, several players can benefit from the PSP hat:

• Traditional bank
• Independent payment institution (such as CentralPay)
• Online payment wallet (Paypal, Paylib…)

The payment solutions provided by the PSP are pre-integrated gateways that can be easily integrated on a merchant platform. The aim is to enable sellers to enrich their payment methods (credit cards, transfers, direct debits, electronic wallets, deposits, etc.), payment facilities (one-click, instalments, deferred payment, etc.) and currencies offered, to adapt to the products or services sold, and to consumers’ abilities and lifestyles. Today, the payment service provider is able to offer its services to a wide range of online retailers.

In France, 32% of companies have a website, but only 6% use it for online sales (2020 study – Direction Générale du Trésor on the digitization of French companies). Lack of payment skills was the main reason given by the VSE and SME managers surveyed.

Faced with this situation, the payment service provider has a dual role to play. First of all, it offers its services to any company with an e-commerce solution, by proposing its catalog of payment methods and facilities. But the PSP also acts as an intermediary between the customer and the merchant, facilitating the transparent acceptance of customer payments. It also acts as an intermediary between the e-retailer and the bank.

For a company, online payment is a guarantee of security and efficiency.  It offers numerous advantages :

• Collect payments 24 hours a day, without human intervention.
• Secure transactions, thanks to the 3D Secure security system. The aim of this security protocol is to prevent fraud, by verifying identity at the time of a transaction (biometric data or code), thus ensuring that the card is actually being used by its holder.
• Facilitate accounting management, by sending real-time information that saves time and reduces the risk of errors (invoices, email notifications on payment status, etc.).
• Create a modern, professional image by integrating and customizing payment forms within the site.
• Support marketing strategy, to adapt to the specific needs of certain customers (payment in x installments, multi-participant payment, etc.).
• Phone orders : the lack of digitization of payment means that the sale cannot be concluded directly by phone, leading to further manual steps and the possibility of losing the sale (e.g. : the customer changes his mind in the meantime).

Marketplaces are a specific type of e-commerce site. These are platforms that bring merchants and consumers together. These multi-seller sites use their audience to sell products or services to a large number of potential buyers.

In this model, the payment service provider has several roles. When new merchants join the platform, he is responsible for checking their identity (KYC / KYB), then opening an account for each merchant. What’s more, the PSP will collect the funds on the third-party account and then redistribute them to the merchants involved in the sales. Thanks to this system, the merchant has no additional security costs to take into account, as they are covered by the PSP. The aim is to guarantee PCI-DSS compliance for the marketplace solution’s merchant accounts, to ensure the protection of buyers’ and sellers’ funds.

Over the past few years, this win-win sales model has become a real success, which has caught the eye of the regulator. So, since January 2018, PSD2 (European Payment Services Directive No. 2) has introduced new rules to prevent abuses. Indeed, marketplaces are now required to acquire the status of ” d’Agents en services de paiement ” and no longer just that of sales agent, in order to be able to orchestrate the financial flows of their platform. Unless they obtain this license, they can no longer hold funds on behalf of third parties, as was previously the case. This is where the payment provider plays a crucial role. These payment institutions, regulated by the
ACPR
(Banque de France), are able to provide payment services under their own responsibility.

With its ” Marketplace ” solution, CentralPay is approved by the ACPR to help platforms prepare their ” d’Agents en services de paiement ” file.

By definition, a payment service provider provides a partner with turnkey solutions, enabling it to accept payments. It is therefore possible for a PSP to work with an integrator, such as a software publisher. In fact, its aim is to integrate payment modules into its solution, which can then be used by its customers. This technical partnership enables the company to add a payment offering, without inheriting the regulatory constraints of a platform. For a software publisher, the advantages are numerous :

• Create or increase added value by enriching its catalog with innovative technological payment solutions
• Simply open accounts for each solution user (in partnership with the PSP’s compliance department)
• Enable customers to benefit from a payment solution accessible from their own technical environment, and give each merchant access to all its services via the API or DashBoard.

With this in mind, payment providers can integrate their payment bricks into numerous software applications :

• CMS (Content Management System), i.e. turnkey e-commerce modules : Magento, Shopify, Prestashop…
• Business solutions, i.e. management software and third-party solutions (ERP, accounting tools, collection solutions, etc.)
• POS solutions (electronic payment terminals, cash registers, etc.)
• Web agencies

The payment service provider does not replace the publisher/customer relationship. It simply provides a DashBoard integrator that enables users to supervise and make the necessary technical settings directly on their behalf.

At CentralPay, we support you in digitizing or optimizing your payment processes, to help you imagine the purchasing paths of tomorrow. Want to know more? 
Contact us at
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