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In today's fragmented payment landscape, finding the right service provider to fulfill your specific business requirements can be challenging. What to take into account, and what are the typical criteria to be included when finding the optimal payment service provider (PSP)? In this article, we'll delve into the ingredients of a successful PSP tendering process to select the best partner for your business.

Payment service provider (PSP) tendering is the process by which organizations or businesses solicit bids from various PSPs to select the most suitable partner for their payment processing needs. After the bids are solicited, PSPs submit proposals detailing how they meet these requirements, including information about their services, technology, pricing structures, and any additional value-added features.

The organization asking for the bids evaluates the proposals based on criteria, such as cost-effectiveness, reliability, scalability, and compatibility with existing systems. After thorough review and comparison, the organization finally selects the payment service provider that best aligns with its needs and objectives, entering into a contractual agreement to begin processing payments.

More on payments: 10 ways to optimize your checkout and payment experience in practice

Steps to be included into the PSP tendering process

1. Gathering requirements

• Business requirements
• End user needs
• Finance requirements
• High level tech & architecture requirements
• Needs from operations & customer support

1. Gathering current financial data per sales channel, country & payment method
2. Selecting Payment Service Providers who will participate in the process
3. Formalizing the the Tender materials and sending those to vendors
4. Initial material reviews & vendor meetings
5. Evaluating the candidates
6. Negotiations and further rounds with selected vendors
7. Contract negotiations with the selected PSP
8. Next steps include project implementation, etc.

Ingredients for a solid offer

By understanding the typical criteria for evaluating payment service providers, businesses can make informed decisions that align with their specific needs and objectives.

Security and compliance: Security is paramount when it comes to handling financial transactions. A reputable PSP should adhere to the highest standards of security protocols, such as PCI DSS compliance, encryption technologies, and fraud prevention measures. Additionally, they should comply with relevant regulations, such as Payment Services Directive Two (PSD2) in Europe.

Transaction fees and pricing structure: Cost-effectiveness is a significant consideration for businesses, especially for startups and small enterprises. When evaluating PSPs, it’s essential to analyze their fee structures, including transaction fees, monthly subscriptions, setup fees, and any additional charges. A transparent pricing model with no hidden fees provides clarity and helps businesses forecast their expenses more accurately.

Payment methods and geographic coverage: The ideal PSP should offer a wide range of payment methods to cater to diverse customer preferences. Whether it’s credit/debit cards, mobile wallets, bank transfers, or other payment methods like PayPal or Alipay, versatility is key. Moreover, businesses with global ambitions should prioritize PSPs that support transactions in multiple currencies and provide seamless cross-border payment capabilities.

Integration and flexibility: Integration ease with existing systems, such as e-commerce platforms or point-of-sale (POS) systems, is crucial for a smooth payment processing experience. Hence, A PSP with robust APIs, plugins, and SDKs simplifies integration. It also allows for customization according to the business’s specific requirements. Additionally, scalability is vital to accommodate future growth and adapt to evolving market trends.

Customer support and service level agreements (SLAs): In the event of technical issues or disputes, responsive customer support can make all the difference. Evaluate the PSP’s support channels, including phone, email, and live chat, and inquire about their SLAs for issue resolution and downtime. A reliable support team that is available 24/7 ensures peace of mind and minimizes disruptions to business operations.

Reporting and analytics: Access to comprehensive reporting and analytics tools empowers businesses to gain insights into their payment transactions, track performance metrics, and identify opportunities for optimization. Look for PSPs that offer real-time reporting dashboards, transaction reconciliation features, and customizable analytics to facilitate informed decision-making.

Reputation and reliability: Reputation speaks volumes in the world of payment processing. Conduct thorough research on the PSP’s track record, customer reviews, and industry reputation. Service providers with a proven track record of reliability, stability, and financial soundness inspire trust and confidence in their services.

Scalability and future-proofing: As businesses evolve and expand, their payment processing needs will evolve as well. Choose a PSP that can scale alongside your business growth and adapt to emerging technologies and market trends. Assess their roadmap for innovation, partnerships, and upgrades to ensure long-term viability and relevance.

Read more: A turnkey solution for PSP tendering

The right payment service provider is an enabler for your business

When you’re planning to have an optimal payment service, you need to take numerous requirements from your business, customers, markets and offering into account. It’s a good idea to rely on existing experience to have all of this covered. You may do PSP tendering maybe once in five to ten years. We’re involved in these processes on a monthly basis and have ongoing discussion with all the significant PSPs. We will help you to find the best fit payment service provider.

In recent PSP tendering projects we have been able to:

• Support merchant business requirements with a single PSP integration
• Reduce payment processing fees by up to 50% with transparent pricing and cost effective payment methods
• Automate payment processing from checkout to reconciliation end-to-end
• Improve customer experience with vast variety of payment methods and enhanced checkout user experience

The outcome of a successful payment service provider tendering process results in a reliable, cost-effective, secure, and compliant solution that meets the needs of both the organization and its customers. If this sounds like something that you are looking for – check out our turnkey PSP Tendering package.

AUTHORS:

Mikko Vahter

Advisory & Payments, Qvik

Sami Nurmi

Senior Consultant, Payment Solutions, Qvik