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12 Aug

Payment Services Provider: Payment Gateways Revealed

Payment Services Provider (PSP) are everywhere and they are here to stay. Driven to expand by the increasing use of the Internet and a world ever-shrinking as the interconnection by markets accelerate across the globe, PSP''s now stand as the foundation to the largest medium of exchange. Pull out a credit card to pay for goods at a local market; or, do the same at a store while in Hong Kong;or, ''click'' on buy on the computer screen to purchase a pair of shoes, a PSP will assure completion of the transaction.

As the demand for ease of transactions grew, several different financial tools responded to meet the challenge. Payment gateway processors fulfilled the need to transact business on the internet. Acquiring banks, those banks that setup merchant accounts supported by card associations, responded to brick-and-mortars. Visa, Mastercard and other card companies belonged to these associations.

Despite their market each requires a payment system. To be an effective system, payment systems require cash substitutes. Cash is too bulky, snail slow and it would require daily mountains of cash transfers to consummate transactions throughout the world. The internet has served to explode the number and types of cash substitutes. Many have become common like debit cards, electronic funds transfers and e-commerce.

What PSP''s did was to join the various payment systems. The above systems possess a payment gateway that supports their medium of exchange - mostly credit cards, debit cards etc. PSP''s expanded the payment gateway using Software as a Service (SaaS) to accept most, if not all, cash substitutes, including online banking, direct debit, bank transfer and more. This is all done through a single gateway.

Building on this change in transacting sales, it allows for the exchange to partially ''sidestep'' the Payment Card Industry Data Security Standards (PCI DSS) while keeping the buyer on the same webpage. The standards are still upheld by the PSP as responsibility continues through the chain of the transaction. Lifting the burden off the vendor makes it a user-friendly concept and more amenable to acceptance as opposed to other services.

Since the expansion serves to centralize the process of transactions, expediting their processing, PCI DSS now assumes an even greater role. Like operating software, there are several versions and presently 3.2 is the current standard. As a proprietary information security standard its mission embraces stemming credit card fraud. That role continues to expand as the cash equivalent types multiply to make the medium of cash for good and service flow smoother and faster.

Contact us, Folio1, for more information on PSP''s and PCI DSS regulations.

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