How do you manage and mitigate the risks of third-party payment service providers and partners?

It all starts with the business strategy. There's no point in seeking a PSP with a cheap rate if it has low approval rates or an unsmooth experience. During my conversations with merchants, I often bring up the reference of physical retail that will approve a transaction in any way, even if it means receiving physical cash. In the digital realm, having only a linear structure that works with one PSP for all payment methods doesn't allow you to expand knowledge and data and treats all consumers the same. It's necessary to have a unified data admin with different providers and ease of plugging and unplugging according to the business strategy; this brings speed and information.

Understanding exactly what you need from a third-party provider is paramount. Define your goals regarding scalability, market expansion, user experience, and compliance needs. Are you looking for payment gateways that support multi-currency transactions, or is your focus more on security features and fraud prevention? This step is about aligning your strategic business objectives with the operational capabilities of potential partners.

It's really important to calculate the costs for payment processing, for both your volume today and in the future. Once your subscriber volume gets into the millions, you'll be processing a lot of transactions and a percent here or there will make a vast difference to your bottom line. For example, if you chose a PSP like Stripe, you may end up paying more than 5% + 20￠ standing charge, for each transaction. It all seems very reasonable and super convenient when you're starting out. You could, (and should) however, use a dedicated Payment Orchestration Platform and pay less than 1% per transaction and no standing fee. For a million customers on a $40 monthly, the difference is about $2M per month in fees.

Unveil the critical process of self-assessment before choosing a Third-Party Payment Service Provider (PSP) or partner. Emphasize the importance of aligning payment methods, currencies, and security requirements with the business's overarching goals. Illustrate how this foundational step sets the stage for a tailored and risk-mitigated partnership. Explore the evolving landscape of payment methods. Discuss the impact of emerging currencies and payment technologies on the selection process. Propose that businesses anticipate future needs, ensuring the chosen PSP can adapt to the dynamic nature of the fintech ecosystem.

Due Diligence: Conduct thorough due diligence before entering into a partnership with a payment service provider (PSP). Assess their financial stability, reputation, and compliance history. Verify their regulatory approvals and licenses.

Require PSP to have robust business continuity and disaster recovery plans in place. Ensure that these plans are regularly tested and updated to address emerging risks. elements that should be included in a comprehensive BCP for a PSP: 1) Risk Assessment; 2)Critical Business Functions; 3) Business Impact Analysis; 4) Communication Plan; 5) Incident Response Plan; 6) Data Backup and Recovery; 7) Alternate Site and Infrastructure; 8) Personnel Roles and Responsibilities; 9)Training and Awareness; 10) Regulatory Compliance; 11) Testing and Maintenance; 12) Review and Reporting; 13) Insurance Coverage.

Os processos de CONHE?A, é importante. Há muita contrata??o que n?o leva em conta diversos fatores que devem ser observados, parceiros com bons pre?os e má reputa??o podem comprometer em diversos níveis seus negócios e principalmente seus clientes. Devesse levantar e buscar a maior quantidade de informa??es importantes e relevantes.

Other things to consider are wether your potential PSP is a Merchant of Record (in which case their name will appear on your customers bank statements in place of yours). Plus you'll have zero control or visibility of your payment orchestration - which I promise you'll want as you scale. Second, check to see if your potential PSP is a payment aggregator. Payment aggregators make it incredibly easy to get setup and start taking payments but it comes with a very serious and hidden risk; they can permanently suspend your ability to process payments if you get close to their (lower than usual) risk thresholds. This can leave you dead in the water.

Shift the focus to due diligence, urging businesses to scrutinize potential PSPs and partners. Illuminate the intricacies of checking credentials, reputation, and compliance standards. Draw attention to the fine print in contracts, uncovering hidden clauses or liabilities that might pose risks. Delve into the concept of Payment Orchestration Platforms. Discuss how businesses can leverage such platforms for optimized transaction costs and increased control over payment orchestration. Highlight the potential financial impact, citing real-world examples of cost differentials.

Do not overlook the payments area of eCommerce; it can get out of control very quickly, posing a financial risk. Therefore, the best approach is to enable a routing structure between PSPs and Anti-fraud, along with a user-friendly unified admin for real-time access and monitoring. With PSPs in communication, the next step is to establish a parameterization flow to achieve maximum optimization among providers.

Security: Implement robust security measures to protect sensitive customer data and financial information. Ensure that your partners adhere to stringent security protocols, such as encryption, tokenization, and regular security audits.

With regards to contingency plans, this is of paramount importance. Things can and do go wrong. Worse still, you may not be immediately aware of a problem. Real time gateway error reporting is a must. One thing you should plan for is a gateway or acquirer processing suspension or technical failure. You absolutely must have smart routing in place that will redirect payments to an available active gateway. Failure to do this can result in failures to acquire new customer, churning renewals and the associated revenue loss.

Guide businesses in the post-sign-up phase, emphasizing the need for robust controls. Navigate the intricacies of roles, responsibilities, and communication channels. Stress the importance of regular audits, reviews, and performance metrics in maintaining a proactive risk management strategy. Propose the integration of AI-driven controls. Discuss how machine learning algorithms can enhance risk monitoring and detection. Advocate for a dynamic control framework that adapts to evolving risks and challenges.

Effectively managing risks from third-party payment providers requires robust controls. Start with thorough due diligence, assessing reputation and compliance. Contracts should clearly outline roles, security standards, and repercussions. Regular audits and security reviews are vital, ensuring alignment with industry benchmarks. Craft a comprehensive incident response plan, including communication protocols. Continuous monitoring and reporting on security measures are essential, with stringent data access controls. Stay abreast of regulations and compliance. For instance, a financial institution partnering with a payment gateway must ensure secure data transmission and conduct regular security audits, adhering to regulatory standards.

Compliance: Ensure your employees and customers and your third-party partners comply with relevant industry regulations and standards, such as the Payment Card Industry Data Security Standard (PCI DSS) or Anti-Money Laundering (AML) regulations. Regularly review their compliance documentation. Employee Training: Train your employees on the importance of security, compliance, and risk management in dealing with third-party partners. Encourage a culture of vigilance and adherence to best practices.

Highlight the importance of education in risk mitigation. Emphasize staff training on sensitive data handling and fraud detection. Illuminate the customer's role in the security process, fostering transparency and a shared responsibility model. Explore the psychology of fraud prevention. Discuss how educating customers builds trust and loyalty. Propose interactive educational tools that empower customers to recognize and report potential fraud.

Educating both staff and customers lays a solid foundation, but it's just the beginning. Layering on due diligence, solid contracts, ongoing risk assessments, vigilant monitoring, compliance management, incident response planning and a commitment to continuous improvement adds depth and strength to our defenses. And you're right, in the world of fintech, where every move counts, having a dedicated PCI DSS team and robust awareness training is like having our own squad of financial superheroes—ready to tackle any challenge that comes our way!

As highlighted in the last two NRFs, personalization will be the key to business success, and the same applies to the payment universe. Consumers are becoming increasingly demanding and will request new transaction methods, saved data, quick confirmation, card-not-present payments, guest options, and one-click solutions from the e-commerce manager. Staying up to date with payment trends opens doors to data insights and cost reduction—two crucial needs in the retail industry.

Navigate the ever-evolving payment landscape, urging businesses to stay technologically current. Advocate for the integration of encryption, biometrics, and 3D Secure to enhance security. Stress the importance of interoperability for seamless integration with PSPs and partners. Dive into the implications of regulatory changes. Discuss how businesses can leverage evolving regulations for enhanced security and compliance. Propose a proactive approach to technology adoption, positioning it as a strategic advantage.

Ongoing Monitoring: Continuously monitor the performance and compliance of your third-party partners. Implement regular audits and assessments to identify any potential issues or deviations from agreed-upon terms. Contingency Planning: Develop contingency plans to address potential disruptions or breaches. These plans should include steps for transitioning to alternative service providers in case of emergencies. Vendor Risk Management: Adopt a robust vendor risk management program that categorizes third-party partners based on their level of risk and ensures that appropriate controls and oversight are in place for each category.

Em uma das minhas experiências mais recentes, enfrentei o desafio de gerenciar os riscos de provedores de servi?os de pagamento terceirizados e parceiros. Para isso, adotei uma abordagem prática e colaborativa. Comecei solicitando e analisando feedbacks de nossos PSPs, equipe e clientes, utilizando essas informa??es para identificar lacunas e oportunidades de melhoria. Essa abordagem ajudou a mitigar riscos e a fortalecer a seguran?a e eficiência das nossas opera??es de pagamento.

Feedback fuels continuous improvement. Engage with customers and staff to understand their experiences and concerns with your payment system. Implement a structured process for gathering feedback, analyzing it, and making necessary adjustments. This feedback and improvement loop will help refine your offerings and enhance user satisfaction.

You also need to have back-up in case something happens. For various reasons, one of your partners can stop the service (without previous notice). It is good practice to have at least 2 providers live for each critical payment service you need.

Legal and Compliance Landscape: Stay abreast of changes in the legal framework surrounding digital payments and fintech. Different markets have different regulations, and compliance is necessary not just for legal reasons but also to build customer trust. Innovative Technologies: Explore emerging technologies like blockchain for secure, transparent transactions or AI for fraud detection and customer service enhancements. Being ahead in technology adoption can provide a competitive edge. Disaster Recovery Plans: Develop robust contingency plans for data breaches or financial losses. This includes insurance, setting aside a reserve fund, and clearly defining crisis management steps.

This article is titled 'How to mitigate the risks of third party payment processors' and in truth, using a third party PSP instead of DIY-ing your own solution is the only sensible choice. It is the least risky, cheapest and most robust option. Level 1 PCI compliance alone is a huge (12 months+ of dedicated, complex work) and expensive undertaking that needs to be continually monitored and annually re-certified. When you partner with a PCI Level 1 PSP your PCI burden is still present but significantly reduced.

Security assessments relies on robust and industry wise recognized standards and processes. Adherence to industry benchmarks like PCI DSS is essential for maintaining compliance and a strong security posture. Partnering with experienced security experts further bolsters your ability to stay up-to-date with evolving threats and security compliance requirements.

Conformidade em meios de pagamento e rela??es de PSP s?o determinantes para a seguran?a do negócio e das pessoas envolvidas. Rela??es PSP muitas vezes s?o entes n?o regulados, mas isso, n?o deve ser um espa?o para libertinagem, há uma alto regula??o dos mercados cambiais, de pagamentos em geral e inclusive de PLD-FTP que devem ser seguidos como melhores práticas.