What should small businesses look for in a payment provider?

Working with a payment service provider (PSP) allows businesses to access modern and secure payment capabilities without the technical, financial, and regulatory overhead of doing it alone.

For small and medium-sized enterprises (SMEs), this support is vital. Often without dedicated finance teams, working with a PSP allows SMEs to simplify payment processing, enhance security, and offer more payment options to customers, all while saving time, reducing costs, and focusing on their core business.

That being said, not every PSP is equal, and their offerings can vary. SMEs should carefully evaluate these key factors to determine the right provider for their needs.

Some PSPs charge one-off onboarding fees or underwriting costs for compliance checks. These upfront expenses can strain early-stage businesses, so be sure to confirm what’s required before you commit.

Many providers charge regular account maintenance fees, regardless of transaction volume. While a flat cost may help some businesses plan more effectively, actual fee structures and terms can vary significantly between providers and may change over time.

If your transaction volume doesn’t meet a provider’s minimum threshold, you may be charged a shortfall or inactivity fee. This can hit SMEs hardest during seasonal lulls or slower trading periods.

Every transaction typically comes with a fee – a percentage of the sale and sometimes a fixed amount. These directly reduce your net revenue, and high rates may force you to raise prices or absorb the loss, either of which can limit growth and competitiveness.

SMEs often need fast access to funds to handle expenses like payroll or emergency repairs. Some PSPs charge for instant payouts rather than offering a standard (and often slower) transfer window. Make sure you understand the timing and cost of accessing your money.

If you’re selling internationally – or plan to – check for additional fees on cross-border or multi-currency transactions. These can eat into profits and make overseas expansion more costly than necessary. Cross-border payments may be subject to foreign exchange regulations, tax rules (like VAT), and regional financial compliance obligations, so it’s worth confirming your PSP can support compliance in each relevant jurisdiction.

When a customer disputes a payment and receives a refund, you're not only out of pocket for the transaction and potentially the product – you may also have to pay a chargeback fee. Even if you win the dispute, most providers still charge this fee, affecting both your cash flow and profitability. While chargebacks are often driven by consumer protection regulations, a good PSP can support merchants through the dispute process and help reduce preventable chargebacks

Some contracts include penalties for ending the agreement early. If your needs change or you’re not satisfied with the service, this fee can make switching providers expensive – so always read the small print before signing.

Offering the right payment methods has a direct impact on conversions and customer satisfaction, so it’s important for SMEs to align with their customers’ preferred payment options. Not every PSP will offer their full payment method suite to smaller merchants, so check ahead of time which ones you can utilise, and whether there are additional costs associated with these.

As an SME, you’re unlikely to have a large development or technical team on hand (if at all!). Speak with prospective PSPs and get informed about the integration process: what is required, what integration options are available, and how much support does the PSP provide? For example, if your business uses existing e-commerce platforms, check whether they are compatible with the PSP’s platform.

Find out how long the onboarding and integration process takes, as well as what technical effort from your end is required for setup. Some PSPs offer a hands-on approach, leaving minimal work for you with a quick setup time. Others may require more input from your business. A full-stack PSP like Ecommpay may offer a more integrated solution, which can reduce setup complexity for some businesses, and improve efficiencies.

Not only is it vital to ensure your business is compliant with all relevant regulations, but security and compliance are critical factors that directly affect customer trust. For SMEs that don’t have a large in-house compliance/legal team, it’s important that your PSP offers key security and compliance features to keep your business and its customers safe.

Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards designed to ensure that any business handling cardholder data does so safely and securely. Non-compliance can result in fines and legal penalties.

Handling sensitive payment data securely can reduce exposure to data breaches and costly consequences. Choosing a PCI DSS-compliant PSP significantly reduces your compliance burden, but it’s still important to ensure your own systems and practices meet relevant PCI requirements.

In addition to PCI DSS, it’s important to confirm your PSP complies with data privacy regulations like GDPR. These govern how customer data is collected, processed, and stored.

Tokenization protects sensitive payment data, such as credit card numbers, while in transit and when stored, by replacing the data with unique tokens that have no exploitable value. These tokens can only be decrypted by authorised parties, such as the PSP.

Tokenization aligns with PCI DSS, and acts as another barrier against fraud and theft. Even if the tokenized data is accessed during a breach, it is useless to the attacker.

Fraudulent transactions can lead to chargebacks, losses, and reputational damage, all of which can have a large impact on any business, but especially SMEs. Therefore, the more advanced a PSP's fraud detection and prevention suite, the better.

Many PSPs offer real-time blocking of suspicious transactions using AI, machine learning, and behavioural analytics, stopping fraudsters before they can impact your business. Strong Customer Authentication (SCA) is a verification method that requires a combination of a password, a phone or other smart device, or biometrics, adding a significant barrier for unauthorised transactions. SCA is essential for doing business in Europe (under the EU’s PSD2 regulation), as well as other regions that adopt similar mandates.

A PSP with robust fraud prevention tools enables SMEs to grow confidently, with a reduced risk of fraud-related setbacks.

Managing an SME follows an ongoing learning process, and having strong payment analytics can enable better decision-making, allowing you to streamline operations. SMEs should look for a PSP with strong, user-friendly reporting capabilities.

Tools that show daily revenue, pending payouts, and any refunds or chargebacks can help you anticipate incoming funds and manage expenses confidently. Knowing exactly how much money is coming in and when helps avoid unexpected shortfalls or overdrafts.

Finding a PSP that handles fraud and risk on your behalf is vital, but having visibility of these metrics is just as important. If you have access to reports on unusual activity alerts, chargeback trends, and decline reasons, you can adjust your strategy accordingly. You can also take preventative action where necessary, before these red flags become costly.

Understanding your customers’ behaviour is key to improving their experience. Ensure the PSP can provide reports on any geographical trends, abandoned transactions, and your customers’ favoured payment methods. As an SME, every customer counts, so it’s essential to provide them with the best experience possible to increase conversion and retention.

This dynamic interface provides live data on your business’s payment activity, such as transaction monitoring, revenue tracking, payout insights, and fraud and chargeback alerts. Custom filters allow you to apply filters to the data, including date range, payment method, or customer segment. Real-time dashboards are key for any SME, providing instant access to rising decline rates and suspicious activity, as well as improved cash flow visibility.

Where do you see your SME in the future? No matter how big or small your goals are, you should choose a PSP that can evolve with your business. When your business is ready to expand, whether that’s handling more volume, adding new functionalities, or entering new markets, a scalable PSP allows for smooth, cost-effective growth without the hassle and costs associated with changing providers.

Here are some features to look out for when assessing the scalability of a PSP:

Even the perfect PSP can encounter errors, so it’s important that its customer support is rated highly. For instance, if you encounter an integration issue outside of working hours, just before a new product launch, can you be confident that the PSP will resolve this issue in time? Look for a provider that offers real human support with as much availability as possible (24/7 is ideal!).

A PSP’s reputation isn’t just about image; it’s a reflection of real-world performance, trustworthiness, and business ethics. Even if a provider’s platform and features seem perfect for your business, never neglect to investigate its reputation, as a poorly rated provider could introduce serious risks further down the line.

How to check a prospective PSP’s reputation:

The right PSP isn’t just a payment provider; it’s a partner that becomes a core part of your business’s financial infrastructure. For SMEs that may not have large, specialist teams behind them, it’s more important than ever to ensure your chosen PSP can provide support in these areas.