What is a payment service provider?
According to the French government, a payment service provider “is a legal entity providing payment services other than a credit institution or the Banque de France, the Overseas Departments’ Issuing Institute, the Public Treasury, or the Caisse des Dépôts et Consignations.” French payment service providers operate under the supervision of the Prudential Supervision and Resolution Authority (ACPR), an independent body affiliated with the Banque de France.
A payment service provider handles financial transactions between different parties (cardholders, merchants, acquirers, card networks, etc.), while ensuring smooth and secure transactions. In addition to collection and transfers, the payment institution offers account management, anti-fraud, and transaction verification services, for example, to ensure the secure execution of financial transactions.
Who can benefit from a payment service provider?
Whenever a company collects payments, online or in-store, it may benefit from the support of a payment service provider. Let’s analyze the typical profiles:
Companies, for invoice payments
Unlike those that collect upon order, invoice collection can be a challenge for some companies. Since they primarily receive transfers, finance teams are forced to manually monitor their bank accounts, identify customer payments, and reconcile them with the corresponding invoices before posting everything to their ERP. Furthermore, this process affects service performance, as payment statuses are not updated automatically.
Using a payment service provider can greatly simplify the identification and reconciliation of incoming transfers and the automation of accounting tasks related to payments (updates to business software, customizable reminder scenarios, automatic notifications, etc.).
Debt collection professionals
Between monitoring expected payments, setting up customized payment schedules, and manually issuing payment reminders, collection agencies and companies are often forced to maintain time-consuming organizational processes. Support from a payment service provider not only facilitates their payment acceptance, but also their debt tracking.
These professionals are looking for solutions that allow them to:
- Secure customer transactions
- Offer a variety of payment methods (card, transfer, and direct debit)
- Offer flexible payment options (deferred, installment, bank imprint, etc.)
- Manage small receivables as well as larger transaction volumes
- Ensure process compliance, meeting current regulations
E-retailers, for secure online payment
The performance of an e-commerce site, whether B2C or B2B, depends on its ability to effectively manage its various payment channels and methods. To meet these challenges, an online merchant must rely on the expertise of a payment service provider:
- Payment methods (card, transfer, or direct debit) and facilities (wallets, installments, subscriptions, deferred payments, etc.)
- Remote payment channels (online, email/text message, etc.)
- Currencies and local payment methods
- Transaction security and compliance
Marketplaces for online payment collection and transfer
As a point of contact between customers and merchants, marketplaces play a vital role, requiring specific support from a payment service provider at certain stages:
- Onboarding of new merchants (KYC/KYB, opening payment accounts, etc.)
- Customer Collection (payment page, online payment API, payment methods, etc.)
- Automated Payment Transfers (remittances to merchants, commission collection, etc.)
Furthermore, marketplaces are required to maintain a certain level of compliance. Indeed, in France, the collection, segregation, and transfer of third-party accounts are strictly regulated by the Banque de France, via the ACPR.
Financial platforms, to track and manage transactions
Like marketplaces, financial platforms collect and transfer payments on behalf of third parties. Crowdfunding platforms (crowdlending, crowdequity) or any other financial platform need to be supported by a payment provider to ensure the reliability of all financial transactions.
They are looking for partners capable of meeting their operational needs (payment methods, currencies, automation, etc.), their technical challenges (onboarding of project leaders, transaction volume, etc.), as well as regulatory requirements (security, AML/CFT, etc.).
Retailer networks, for prepayment and clearing
Some independent or franchised store networks may need a payment provider for specific cases involving the management of gift cards and prepaid services. Indeed, European regulations impose certain constraints on them in terms of storage, management, and traceability of prepaid values within their acceptor network.
In this context, a payment service provider will enable retailer groups to:
- Manage clearing between different merchants
- Automate the management of prepaid value exchanges
- Guarantee the traceability of funds exchanged within the network
- Ensure compliance with regulatory requirements
Partner integrators, to improve their business solution
To integrate a payment solution into their software/SaaS solution, partner integrators (publishers and developers) need flexible and robust payment APIs, maintained by a payment provider, offering, among other things:
- Complete, clear, and well-constructed documentation
- Responsive technical support
- Stable, reliable, and up-to-date services
- Customization options to meet their specific needs
Choosing the right payment institution
When selecting a payment provider, there are 6 key criteria to consider:
- Security of financial and personal data, which complies with current security standards (PCI DSS, GDPR, etc.)
- Payment methods and facilities offered, based on your customers’ needs (currencies, limits, sectors, etc.) and your challenges (fees, deadlines, etc.)
- Various integration options with your everyday tools (e-commerce site, ERP, invoicing and accounting software, etc.)
- Customization of services to offer a payment experience that suits you (payment pages and links)
- Automation services to facilitate the daily management of your collections (bank reconciliation, scenarios, reminders, notifications, etc.)
- Customer-oriented approach to centralize and optimize all your customer management
