There are three terms — payment service provider, payment facilitator and payment aggregator — which we often use as synonyms but in the reality three different concepts exist. So what are the differences between these three merchant services industry players?
A payment service provider or a PSP is a company which supplies merchants with individual merchant accounts and performs for them functions such as merchant underwriting and payment processing. But a PSP does not participate in merchant funding and merchants are funded directly by the acquirer.
The main difference between a PSP and a payment facilitator is that a payment facilitator funds merchants directly. But depending on the size of businesses payment facilitators are working with two scenarios are possible. First, medium and large-size businesses get their own MIDs and they are treated as sub-merchants of the payment facilitator. Second, small business and individuals do not obtain MIDs and a payment aggregator uses a single MID to process payments for all sub-merchants in its portfolio. So payment facilitators are targeted at merchants with high processing volumes; and payment aggregators — at merchants with low processing volumes.
Additional information on this issue can be found in the new publication at #UniPayGateway. What is more, some details about the functions performed by PSPs, payment facilitators and aggregators can be found at #Paylosophy Payment Advice Blog.