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What is a merchant account?

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The Acquirer / Merchant account provider

Looking from the point of purchase, the acquirer plays the critical role of holding the merchant account and receiving payments from a customer’s bank. This comes with its own range of fees and terms, however, is typically defined by the specific features and rates desired by merchants. Different PSPs will often base their rates on merchant transaction volume, although merchants can negotiate bespoke agreements with their PSPs. Since the bigger margins are made by the acquirers this is typically where partnership deals are done, something that isn’t really possible with incumbent, legacy players.

Another deciding factor is the service for seasonal or other cyclical business models. Merchants might experience challenges communicating with larger PSPs, whereas a smaller PSP would be able to provide more specialized solutions.

Saving Money with your PSP

The trick to saving money with your PSP is to understand your needs and adjust accordingly. A large number of merchants simply don’t know what options are out there, so they stay with large players, not knowing the opportunities offered by smaller competitors. Outside of simple education, actively communicating with PSPs will shine a light on options that aren’t on their listed pages. A simple conversation could save you money every year.

As the payments industry modernizes, we see some PSPs offering both acquiring and gateway services. This provides the advantage of centralized services for merchants, although, this can mean less flexibility than choosing two distinct service providers.

When choosing a PSP, a merchant should know what they want to prioritize, be that customization/integration, rates or centralization. Merchants might see the perceived cost of overall services increase with the inclusion of gateway options. In reality, it eliminates the cost for an external gateway service and can in fact save money!
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