What Are The Differences Between PSPs and Payment Gateways? - NTT Data Payment Services India (2024)

What Are The Differences Between PSPs and Payment Gateways? - NTT Data Payment Services India (1)

Table of Contents

  • 1 What are PSPs?
  • 2 What are Payment Gateways?
  • 3 What are the Differences Between PSPs and Payment Gateways?
    • 3.1 Conclusion
  • 4 PSPs and Payment Gateways FAQs

This article will answer the question: What are the differences between PSPs and payment gateways? And elaborate these both individually too. This digital era has become a turning point for various industries and their development among their competitors.

The banking sector is one of the industries which has also seen multiple changes and has developed a lot. Unlike before, carrying money in hand is unnecessary as everything is digitally enabled. Various payment service providers are approved by the bank available to choose and these services aid in having a safe and quick transaction.

    What are PSPs?

    The abbreviation of PSP is the payment service provider. PSP acts as a bridge between the customer and the merchant while transacting, as well as transmitting information about each other. It helps to have a smooth and hassle-free transaction.

    To elaborate more clearly for a better understanding, let us take an example. When someone buys a product from a website and makes the payment using a card, the first procedure will be to enter the required details, like the details on the card. Then comes the payment service provider to the action. The PSP transmits the details of the payment initiator, i.e., the buyer and the merchant, who is the receiver. It all starts when the buyer initiates the payment.

    The details will be sent to the payment service provider from which it bridges both. The PSP sends the details to the card network to verify them, then proceeds to transmit them to the bank, where the bank confirms the payment initiator’s account, like the fund sufficiency.

    Once the bank endorses and approves the payment, it sends the information to the card network and the payment service provider. As the final step, the PSP shares the details with the payment initiator and the receiver and, thus, when the payment transaction is successfully done.

    The payment service provider provides a total solution that includes technical transaction processing and money collecting. The payment service provider is responsible for all arrangements with banks and other sources.

    The payment service provider has various online transaction modes, including cards, e-wallets, and e-banking. The PSPs aid by not restricting access with the particular payment mode; instead, gives vast options to choose from for various level payments.

    What are Payment Gateways?

    The payment gateway is the solution that is engaged in any form or technique of transaction. Online payments have become a necessary part of each transaction. As a result, knowing its process is critical. For any transaction a minimum of two parties must be involved.

    The transaction originator is one, while the recipient is another. To understand better, two parties are involved in a transaction: the customer and the seller. When a transaction occurs between two parties, the payment gateway handles the transaction.

    The payment gateway encrypts and collects all required information from the payment initiator about their account details, such as the name of the account holder, CVV, expiry date on the card, and account number if the payment is made with a card, and transmits this information to the receiver’s bank. As a result, the initiator may make payment, and the receiver can get the funds in their bank account without difficulty.

    The payment gateway enables online transactions involving a card or any other method provided by the payment servicing firm and authorized by the bank. Furthermore, payment gateway is engaged when a payment is made using a card or other payment modalities.

    Payment gateway is essential in every online transaction, and there are several sorts of payment gateways from which you can pick one that best fits your business’ needs. It is about the amount of security desired before processing any payment.

    The payment gateway’s two-dimensional security will not include an authentication step. In contrast, the payment gateway’s three-dimensional security requires authentication before proceeding with transactions.

    NTT DATA Payment Services provides its clients with the best payment gateway solutions. NTT DATA Payment Services offers innovative services to various sectors and facilitates payment. Debit cards, credit cards, challan, net banking, NEFT/RTGS, UPI, EMI, Bharat QR, and many more payment gateway options are available through NTT DATA Payment Services, which also offers multi-bank EMI, several payment methods, a rapid retry option, and invoice payment.

    What are the Differences Between PSPs and Payment Gateways?

    A payment service provider (PSP) provides merchandiser accounts to a set of merchandisers and helps the merchandiser with the transaction procedures but does not participate in the merchandiser funding process. A payment gateway is a process that transmits data transfers between a merchandiser and the payment initiator.

    Payment service providers (PSPs)Payment gateway
    How it worksThe merchant can choose a Payment Service Provider (PSP) to handle his online payments, including debit and credit card purchases and other purchases using different payment modes.A payment gateway is a process that acts as an interface between the payment initiator’s bank and the receiver’s bank. Banks use it to transport transaction data from the merchandiser to the acquiring bank.
    OperatesA payment service provider operates behind a transaction by enabling the exchanges.A payment gateway operates directly with customer intercommunication.
    TransmissionWhen the payment is initiated, the process starts from the details sent to PSP→ card network→ bank which issues the card→ Bank verification regarding the balance→ card network→ PSP→ to both the payment initiator and the receiver about the payment.The payment gateway is the process which transmits the details throughout the process and enables a successful payment process.

    Conclusion

    To conclude, a payment service provider (PSP) provides merchant accounts to a set of merchants and aids them with transaction processes but will not be involved in the financing process. A payment gateway is a process that transports data between a receiver and the payment initiator. Thus this article clearly explains and answers the question: What are the Differences Between PSPs and Payment Gateways?

    NTT DATA Payment Services is both a Payment Service Provider and a payment gateway that assists in the secure and fast transaction of payments between the payment initiator and the receiver. It helps merchandisers to keep track of all payments made for future reference or to create invoices. NTT DATA Payment Services India has helped more than six million merchants with an annual transaction value of eight hundred million dollars.

    PSPs and Payment Gateways FAQs

    1. What is the difference between payment service provider and payment gateway provider?

    The payment service provider works behind the scenes to support the transactions while the gateway acts only as a direct line of communication between customers. By delivering financial information between the gateway and the merchant account, the provider guarantees that all transactions are processed fast and effectively.

    2. Is UPI a payment gateway?

    Yes, UPI (Unified Payments Interface) is a payment gateway that allows for real-time bank-to-bank transfers and payments in India via a website or mobile app.

    3. Is a PSP and a payment processor the same?

    A payment processor acts as an intermediary for an online retailer and card acquirers or banks. A PSP, on the other hand, offers a comprehensive service that includes both technical payment processing and money collecting.

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    What Are The Differences Between PSPs and Payment Gateways? - NTT Data Payment Services India (2024)

    FAQs

    What Are The Differences Between PSPs and Payment Gateways? - NTT Data Payment Services India? ›

    To conclude, a payment service provider (PSP) provides merchant accounts to a set of merchants and aids them with transaction processes but will not be involved in the financing process. A payment gateway is a process that transports data between a receiver and the payment initiator.

    What is the difference between PSP and payment gateway? ›

    Gateways are technical solutions that transfer the merchant's payment information to the bank. PSPs are digital payment intermediaries that act as a bridge between merchants and banks.

    What is the difference between a payment gateway and a payment service provider? ›

    But there's a key difference: payment service providers take care of the entire payment process for you. Rather than managing your payment gateway and merchant account separately, payment service providers offer a full-service solution, taking care of both the payment processing and collecting the funds.

    What is the difference between payment gateway and payment aggregator India? ›

    A payment gateway securely transfers customer payment data from a website or an app to the payment processor. In contrast, a payment aggregator simplifies the payment process by consolidating multiple merchant accounts into a single account, making it easier for businesses to accept payments without individual setups.

    What is the difference between POS and payment gateway? ›

    Whereas POS terminals are designed for in-person transactions, online payment gateways allow for card-not-present (CNP) transactions in which the buyer and seller never meet face to face. Credit card information is entered on the website, in a hosted checkout form, or on a mobile app.

    What is PSP in payment gateway? ›

    What are Payment Service Providers (PSPs)? PSPs (also called Merchant Service Providers) are third-party companies that help business owners accept a wide range of online payment methods, like online banking, credit cards, debit cards, e-wallets, cash cards, and more.

    What is the difference between PayPal and payment gateway? ›

    No, PayPal is not a traditional payment gateway, but it does offer a payment gateway solution (Payflow) as part of its overall payment processing solutions.

    What is the difference between PSP and TSP payments? ›

    PSP is a project management process that defines how to manage a project in a face-to-face environment. TSP is a project management process that defines how to manage a project in a virtual environment. PSP is more formal and structured than TSP. TSP is less formal and structured than PSP.

    Which is the best payment gateway in India? ›

    Best Online Payment Gateways in India 2024
    • PayU.
    • Instamojo.
    • CCAvenue.
    • Bill Desk.
    • JusPay.
    • Airpay.
    • Cashfree Payments.
    • Zaakpay.

    Is a PSP a payment processor? ›

    A payment service provider (PSP) is a third-party company that allows businesses to accept electronic payments, such as credit card and debit card payments. PSPs act as intermediaries between those who make payments, i.e. consumers, and those who accept them, i.e. retailers.

    Is PayPal a payment gateway or payment aggregator? ›

    Is PayPal a payment gateway or a payment processor? When you accept credit card payments with PayPal, things work a little differently. PayPal is what is known as a payment aggregator; it has its own payment gateway called Payflow.

    How many types of payment gateway are there? ›

    How many types of payment gateway exist? There are four types of payment gateways: hosted payment gateway, API-hosted payment gateway, self-hosted payment gateway, and local bank integration gateway.

    Which is the popular payment gateway? ›

    The best payment gateways at a glance
    Best forStandout feature
    PayPalFirst-time usersExtremely simple setup
    StripeAccessible analyticsFlexible, with a wide range of tools and plugins
    Shopify PaymentseCommerce storesAll-in-one eCommerce solution
    SquareSelling online and offlineIncludes a basic website builder
    2 more rows
    Jan 2, 2024

    Is Visa a payment gateway or processor? ›

    Visa, MasterCard, American Express, JCB, etc. - they are card associations. They connect acquiring banks and issuing banks that use the same brand card. Card associations DO NOT act as payment processors.

    Is visa a payment processor or payment gateway? ›

    As a financial intermediary, Visa operates one of the most advanced and extensive payment processing networks. Visa is a card network, but it doesn't issue cards or set interest rates. Instead, it provides the infrastructure for authorized issuers and cardholders to facilitate electronic funds transfers (EFTs).

    What is the difference between a payment gateway and a payment switch? ›

    While Gateways focuses on facilitating transactions between customers and merchants, Switches manage the routing and authorization process between various payment channels. Understanding the nuances between the two is essential for businesses aiming to establish a seamless and secure payment infrastructure.

    Do you need a payment gateway and a payment processor? ›

    Do I need a payment gateway and payment processor? You'll need both a payment gateway and a payment processor if you run an e-commerce business that accepts online payments. It's also important if you want to accept point-of-sale or mobile device payments.

    Is PayPal a PSP? ›

    #1) PayPal – The PSP for Low-volume Payment Processing

    PayPal is one of the most affordable payment systems that offer credit card processing to all business types. The monthly fee for businesses is low (and there is also a free plan). PayPal is the best pick for low-volume transactions with pay-as-you-go terms.

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