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Card Acquirer vs Payments Processor vs PSP: What is the Difference?

October 5, 2020

Accepting payments online may seem to be a straightforward process. In reality, however, there might be different models and scenarios. Card acquirers, payment processors, and payment service providers have their own roles in the payments process. Still, these roles and the difference between them are not always properly explained.

This leads to misconceptions, such as mistaking acquiters for payment processors.

This post aims to shed some light on the issue. We’ll cover these questions:

  • What is a card acquirer?
  • What is a payment processor?
  • What is a payment service provider?
  • What are their roles?
  • How do they fit your business model?

Let’s start with the definitions.

What is a bank card acquirer?

The payment card acquirer is a member of a card organization, such as Visa or Masterсard, that enters into an agreement with a merchant and maintains its account to accept payments. As such, it acts as an intermediary between the merchant and the international payment systems. The card acquirer enables merchants to accept credit, debit, or prepaid card payments To learn more about the acquirer’s role in the payment process, check out this comprehensive guide.

What is a payment processor?

The payment processor is a company or a financial institution that has direct technical access to payment systems and carries out the technical processing of online payments, such as credit, debit or prepaid card payments (Visa, Mastercard, American Express, etc.)

The payment processor executes the transaction

The role of the payment processor is to facilitate and actually execute the transaction.

Check out this post to learn more about the difference between the payment processor and the payment gateway.

PSP

PSP or Payment service provider is an entity that provides payment card services to merchants, based on an agreement with the acquirer. A PSP may also provide access to alternative payment methods, such as Alipay, WeChat, etc., to process other types of transactions.

The PSP provides a service that allows merchants to accept various types of payments

What is the difference between a card acquirer, a PSP and a payment processor?

The difference between a card acquirer, a PSP and a payment processor is that these entities perform different tasks.

A card acquirer maintains the merchant’s account to accept payments for them, whereas a payment processor is only responsible for processing payments; merchants are not dealing directly with the processor during the payment process.

A merchant may choose to work with both the acquirer and a PSP. They may also choose a PSP as the sole party to work with, so that the PSP handles the entire payment process. This way, a merchant would have a single company accepting both card payments and alternative payment methods.

As to ECOMMPAY, it is a Visa and Mastercard Principal Member, a payment solution provider, and a direct acquirer. This means that ECOMMPAY can process online payments via prepaid, debit, and credit cards, and it can also process alternative payment methods.

Conclusion

So what causes the confusion? While these integral parts of the payment process are clearly performing different tasks, sometimes a single company combines several tasks. For example, the same company that processes payments may also provide merchant acquiring services (known as direct acquiring).

Moreover, the same company or financial institution can provide services for accepting both payment cards and alternative payment methods (such as Alipay or WeChat). When choosing a payment partner it is important to keep the big picture in mind and pick a company that can offer a tailored solution to satisfy all your business needs.

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