Payment service provider
Also known as: PSP, Payment provider
A payment service provider is any authorised firm that provides payment services, including banks, payment institutions and e-money institutions. In everyday merchant talk, PSP often means the company behind a checkout or terminal that takes card payments for you, sometimes as an acquirer.
Last reviewed
Example
A web shop adds a checkout from a payment provider. In daily use that provider is the shop's PSP, though somewhere behind it an acquirer holds the card-scheme licence.
Two people say "PSP" in a meeting and mean different things. One means a regulated entity. The other means the checkout.
In law, the term is broad. The Interchange Fee Regulation defines a payment service provider as "any natural or legal person authorised to provide the payment services listed in the Annex to Directive 2007/64/EC or recognised as an electronic money issuer" (a directive since replaced by the second Payment Services Directive), and adds that it "can be an issuer or an acquirer or both". The UK regulator's glossary points to the same family: a body referred to in Article 1(1) of the second Payment Services Directive. A bank is a payment service provider. So is an e-money institution.
In the merchant's vocabulary the word narrows. It usually means the company that supplies the way to take a payment: a hosted checkout, an app, a terminal service, sometimes extras such as buy now, pay later at checkout. Some of those firms are themselves acquirers. Others are intermediaries that work through one. The regulator's glossary separates the roles. A payment gateway is "software that helps a merchant accept cards through a website". A payment facilitator is a payment service provider that contracts with merchants to provide card-acquiring services, often without a direct contract between the merchant and the acquirer. That is the sub-merchant model.
The useful question is not "who is my PSP?" but "who is my acquirer, and who holds the licence for my payments?".
The label tells you what the firm does for you. The licence tells you what it is.