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Ever had to wait for a payment gateway to be integrated into your website? Ever felt like you are losing credibility with your clients by not having multiple payment options? or worse still… Have you ever lost actual deposits, payments or clients because you didn’t have coverage in your clients’ jurisdiction?
In this article we will review the potential risks and issues with having to wait for integrations to payment gateways and what we have done at Skale to address this challenge that companies are facing.
What is a PSP?
Firstly let’s clarify what a PSP actually is. A PSP or Payment Service Provider is a software solution that enables businesses to receive payments online from their clients. A PSP will generally provide a software as a service (SAAS) solution and percentage payment model.
Payments can then be received by businesses by opening a merchant account with the PSP. Payments can then be accepted in a variety of ways ranging from credit and debit cards to eWallets, bitcoin, wire transfers and many alternative payment options (APMs).
In order for the PSP to process payments from credit and debit cards the PSP works with acquiring banks (payment processors) to manage the payment transaction processes from start to finish. The PSP is then additionally responsible for the transaction from the moment a client inputs their credit card details, to the moment the funds appear in the merchant’s account.
As a merchant why don’t I just connect directly to the payment processor, surely this should save money? The short answer is that by using a PSP you will be able to save money as the costs to connect to a payment processor is high and also demands high volumes in order to keep active connectivity.
How is a PSP used?
A PSP will generally be used for payments on eCommerce websites, payments for subscriptions and in the finance world, a PSP would be used for clients to deposit funds to their accounts.
In general the connection to a PSP will be as part of an eCommerce check out process, monthly recurring payments for SAAS subscription business or as part of a Client Portal where clients can deposit funds to their accounts.
What is the challenge companies are facing?
As financial institutions are held to higher regulatory requirements, something that is giving financial services a better name, certain PSPs are finding it tough to stay in business. And those payment solutions that your business relies upon are no longer accessible so you need to find new payment solutions to give you what you need.
This frequent problem that financial services companies face means that there is a constant need to be updating and integrating with PSPs. The time that it takes to integrate a new PSP can vary from 1 day of development up to 1 week and with the interaction generally required with the technical team of the PSP the actual implementation time can be anything from 3 days and can stretch to as much as 1 month.
What are the implications
During this integration process a business may be negatively affecting in many ways. Here are a few issues that may arise:
From a marketing perspective having limited depositing options or limited jurisdiction or country coverage may not look good to your clients and prospective clients. Many companies are looking to target a global audience and having payments that cover a large number of countries is key. Other companies that are targeting fewer niche countries will find that in order to do business they may require very specific and niche payment processors. Not having these options will negatively impact your clients or prospective clients from choosing to do business with your company.
If you are looking to acquire new clients that need a new payment processor then there is a risk of losing those clients if there is a long lead time before you can start providing a processing option that is suitable for the client.
If you have a client that requires a specialist processor in order to receive their payments then a long lead time again may lead to losing the client.
In summary having to wait for technical integrations is not good!
What we have in store for the future
At Skale our goal is to provide our customers with the keys to their Ferrari. So we are continually looking for ways to give greater flexibility and customization in our well known and simple to use Skale Back Office.
Next for Skale is to provide a system to integrate with new PSPs within a few hours and not a few days.