PSP (Payment Service Provider)
A Payment Service Provider aggregates payment processing for merchants, typically holding the direct acquirer relationship itself and onboarding merchants under its own risk appetite, rather than each merchant applying to an acquirer directly. It trades faster onboarding for less negotiating leverage on reserve terms.
A PSP can typically onboard a high-risk merchant in days rather than the 4-8 weeks a direct acquirer relationship takes, but usually caps monthly volume around 50,000-100,000 EUR before requiring a graduation to direct acquiring. Businesses that outgrow a PSP without a plan often face a second onboarding process mid-scale, not a smooth upgrade.
An acquirer is the bank or financial institution that processes card payments on a merchant’s behalf, settling funds from the card networks into the merchant’s account.
A rolling reserve is a percentage of each settlement an acquirer withholds for a set period, typically 90-180 days, to cover potential future chargebacks or refunds before releasing it back to the merchant.
Settlement is the transfer of cleared transaction funds from the card network or payment rail into the merchant’s bank account, net of fees, chargebacks, and any reserve withheld.
Chargeback ratio is the share of transactions disputed by cardholders against total transaction count in a given month.