PSP

A Payment Service Provider (PSP) sits at the core of how most merchants accept card and digital payments. Understanding what a PSP does — and what it doesn’t — is essential for anyone evaluating payment infrastructure or negotiating processing agreements.

What a PSP Does

A PSP provides the full stack required to process a payment:

1. Payment gateway: The technical interface that encrypts and transmits card data from the checkout to the processing network.
2. Processing: Routing the transaction authorization request to the appropriate card network (Visa, Mastercard) and issuing bank.
3. Acquiring: Maintaining the banking relationships required to settle funds into the merchant’s bank account.
4. Settlement: Disbursing transaction proceeds to the merchant, typically on T+1 or T+2 basis after netting out fees.
5. Fraud and risk management: Screening transactions for fraud signals and managing chargeback exposure.

PSP vs. Acquirer vs. Gateway

These terms are often used interchangeably but refer to distinct functions:

• A payment gateway is purely a technical layer — it routes data but holds no banking relationship.
• An acquirer is a licensed bank or institution that maintains the merchant account and settles funds.
• A PSP typically bundles gateway and acquiring functions (sometimes through bank partnerships), offering merchants a single point of contact.

Full-stack PSPs like Stripe and Adyen handle all three functions. Specialty gateways like Spreedly or Primer connect to multiple PSPs and acquirers without holding funds themselves.

Choosing a PSP for Southeast Asia

The PSP landscape in Southeast Asia is fragmented. No single provider offers optimal coverage across all ten markets. Key considerations:

• Local payment method support: PromptPay, GoPay, GrabPay, DOKU, Maya — local wallets and real-time payment networks often require local PSP partnerships.
• Licensing: Operating as a PSP in markets like Indonesia (Bank Indonesia licensing), Philippines (BSP), and Thailand (BOT) requires local regulatory approval.
• Settlement currency and FX: Most regional PSPs settle in USD; local currency settlement requires additional banking arrangements.
• Acquirer redundancy: Merchants with material SEA volume should maintain at least two acquiring relationships per market for resilience.