Accepting charges through different channels—for instance, online, on mobile devices, and at points of sale—requires a complex setup. A payment service provider (PSP) supports businesses by handling customer transactions.

Businesses in France seeking to expand internationally need to offer local payment methods and take multiple currencies, including potential cryptocurrencies. As demand evolves, it’s important to consider foundational elements when selecting a PSP.

Let’s examine what PSPs do—how payment processing works, the security measures that must be implemented, and the types of pricing models and customer assistance available.

What’s in this article?

• What is a PSP?
  
• What do PSPs do?
  
• How do PSPs work?
  
• Why use this type of payment service
  
• Choosing the right PSP
  

What is a PSP?

A PSP processes electronic payments between businesses and their customers. This includes charges made with credit or debit cards, as well as those made with digital wallets. They enable businesses to accept a wide range of checkout options, ensuring fast and secure transfers.

French PSPs include Worldline, founded in 1972, which has grown into a global industry leader. Other French solutions such as PayZen, developed by Lyra, rank among the country’s top payment providers.

Stripe Payments is a PSP that offers solutions for enterprises looking to expand in France while reducing costs associated with multicurrency charges.

What do PSPs do?

PSPs serve as intermediaries between banks during transactions. They play a key role in electronic payments, whether it’s by card, digital wallet, or a SEPA (Single Euro Payments Area) transfer. Here are the main functionalities that PSPs feature:

• Transaction support: The PSP receives detailed transaction information and securely transmits it to the parties involved, including the customer’s financial institution as well as the business’s, through the card network.

• Encryption and security: PSPs use encryption and tokenization to ensure the secure transmission of financial data. They must comply with the revised Payment Services Directive (PSD2), guaranteeing that banking records are shared in a safe environment.

• Authorization and authentication: The PSP checks with the issuing bank that the client has sufficient funds to cover the transaction. It also verifies the customer’s identity and the validity of the payment method to minimize the risk of fraud.

• Fraud detection and chargeback management: PSPs rely on algorithms and monitoring tools to identify and prevent fraudulent activity. They can also help handle chargebacks and disputes.

• Transfer of funds and payout: After a transaction is approved, the PSP handles the transfer of funds from the issuer to the acquiring institution. The merchant’s account is credited with the charge amount minus any applicable fees.

• Data for reports and analyses: PSP-supported payments generate data that firms can use to analyze transactions, create reports, track sales, spot trends, and simplify operations.

• Support for multiple currencies and payment methods: Many PSPs help businesses expand internationally by backing multiple currencies and local options.

How do PSPs work?

PSPs receive encrypted checkout details through a payment gateway. They communicate with the relevant credit or debit card network and the cardholder’s financial institution to confirm the information. The PSP then sends the approval or denial back to the gateway.

Let’s take a closer look at how payments are processed:

• The customer initiates one: To complete a purchase, the buyer provides the business with their payment information, such as their card details or digital wallet credentials. This info can be transmitted in person through a point-of-sale (POS) terminal or online through an ecommerce website, a mobile app, or a checkout link.

• The transaction data is encrypted: The payment system encrypts the transaction data to ensure it’s transmitted securely to the PSP. Encryption deters fraudulent actors from intercepting and misusing sensitive information.

• The transaction data is transmitted: The business forwards the encrypted data to the PSP, who relays them on to the acquiring bank.

• The acquiring bank sends the data to the issuer: The acquiring bank sends the transaction details to the issuer through the relevant card network (e.g., Carte Bleue, Visa) for authorization.

• Authorization is requested: The issuer reviews the transaction information. It also checks that the customer has sufficient funds to cover the charge. It confirms the authenticity of the payment method and the client’s identity to prevent fraud.

• The issuer responds to the authorization request: If the issuer approves the charge, it sends an authorization code to the acquiring bank through the card network. If the transaction is declined, the issuer sends a message with a refusal code specifying why the payment wasn’t approved.

• The PSP receives the response: The PSP gets the response and communicates it to the business. When the payment is approved, the merchant finalizes the sale; if it’s declined, the buyer chooses another option.

• The transaction is complete: Once the charge is approved, the business delivers the goods or services to the customer. At this point, the transaction is complete.

• Time required for payouts: Merchants usually send a batch of approved transactions to the PSP at the end of the business day. It then forwards this batch to the acquiring bank, which launches the payout process—this could take one to three working days.

This is the standard PSP workflow. Details can vary depending on the payment type and the specific situation.

Why use this type of payment service

The benefits of PSPs boil down to ease and security. By handling communications with banks and card networks, PSPs ensure a secure payment process for customers and businesses.

The advantages they feature include:

• Payment platform: PSPs give you access to a secure platform connecting an ecommerce site to your financial institution for the processing of online charges. It ensures the safety and confidentiality of customer records and authorizes payments after verifying that they are not fraudulent.

• Risk management: PSPs offer a safe environment for handling transactions and simplify compliance.

• Straightforward integration: PSPs typically provide APIs (application programming interfaces) and tooling to facilitate simple integration. These enable businesses to start accepting payments on their website or mobile app quickly and with minimal effort.

• Readiness for international expansion: PSPs facilitate cross-border transactions by supporting multiple currencies and payment methods worldwide. This allows businesses to expand their reach and attract new clients globally.

• Flexibility: PSPs adapt to businesses of all sizes and feature functionalities that grow. This means they can keep using the same PSP as they develop without needing to change or overhaul their setup.

• Customer support: PSPs typically offer dedicated support to address payment-related questions or issues.

Choosing a PSP

When selecting a PSP, consider your business’s current needs and how they might change with growth. PSPs are a key part of the customer experience, making them instrumental to your success. Here are some key factors to take into account:

• Fees and pricing: Pricing can potentially include setup costs as well as per-transaction fees. There could also be a monthly subscription charge. Fees for chargebacks and currency conversion might apply. Select a pricing model that fits your business’s transaction volume and forecasted growth.

• Supported payment methods: The PSP needs to back your customers’ preferred options (credit or debit cards, digital wallets, deferred payment, etc.). For example, American Express cards are commonly accepted in the United States, but fewer merchants in France do so. Offering a wide range of payment methods can promote customer satisfaction and improve conversion rates.

• Security and compliance: Your chosen PSP is required to comply with European Union standards. Assess their fraud detection and prevention tools, as well as their security features—they must support tokenization and encryption.

• International support: If your business operates outside France or plans to broaden worldwide, choose a PSP that has multilingual, around-the-clock assistance.

• Integration and compatibility: Your PSP must integrate easily with your current ecommerce platform, POS system, and business software. Most providers feature user-friendly APIs, plugins, or software development kits (SDKs) that can link with various platforms.

• Ease of use and customer experience: Evaluate both the checkout workflow from the customer perspective and the reporting and transaction management experience from the business standpoint. The interface needs to be intuitive and efficient.

• Customer support: Assess the quality and availability of the PSP’s customer support. It needs to be accessible 24/7 by phone, email, or chat. Read online reviews and testimonials to determine how responsive and helpful their French-language helpdesk is—if you plan to expand internationally, do the same for additional languages.

• Growth and flexibility: Choose a service provider that can grow and offer features such as subscription billing, standard billing, or recurring charges. Consider your payment processing needs for the next five years and make sure your PSP can meet them.

• Terms of the agreement and cancellation policy: Carefully review the terms of the agreement, including any minimum volume requirements, early termination fees, and any other restrictions. Look for a PSP that provides transparent and flexible terms that meet your business’s needs.

Carefully assessing these factors will enable businesses in France to select the most suitable PSP. This ensures a hassle-free and secure checkout experience for their internal teams and customers across all channels.