How to become a payments service provider ?

Introduction

The payments space is about as complex as it gets, and for a business owner, it's easy to get overwhelmed by the regulations and extensive processes involved. If you're considering becoming a payments service provider (PSP), here are some steps you should take before diving in:

Determine your motivations and boundaries

To determine your motivations, consider the following:

●???What is your current level of expertise? Are you a payments expert, or are you just getting started?

●???What do you want to get out of this endeavor? Do you want to work with a team of people as part of an established company, or would working independently be more appealing to you.

●???Do you want total control over your work life, or do you prefer structure and accountability from someone else.

●???How comfortable are you with risk? If it’s a big one, then consider whether starting up on your own makes sense for now or if waiting until later might be better for both parties involved.

Define your target market

●???Define your target market. Before you can begin to plan the services and features of the payment service, it's important to understand the needs of your target market. To do this, you must know who they are and what they're looking for in terms of a payments solution. Do they have specific needs that need addressing? Are they sophisticated users or novice users? What are their financial requirements? These questions will help inform the nature of your service as well as what kind of technology solutions could be used to meet those needs (e.g., if a large part of your target customers are small businesses with limited cash flow, then offering them payment plans might be more valuable than providing them with low-rate loans).

●???Understand competition within financial industry standards: Before you begin designing a payments solution for an existing company or institution, it's helpful to know how other existing companies in similar industries function in terms of their product offerings and how these offerings compare with others on offer from competitors. In order to develop an effective set of products within this context, it's crucial that you fully understand how competing products work so that yours can stand out from among them by delivering unique value propositions that satisfy customer needs most effectively.

Get certified as an ISO

An ISO is an independent organization that has been accredited by the International Organization for Standardization (ISO) to assess and certify the quality of a company's business processes. Becoming an ISO certified payments service provider is beneficial for your small business because it increases trust with customers, makes you more attractive to new clients, and may even help you expand into international markets.

To become an ISO, you must undergo a rigorous process of auditing:

●???Complete self-assessment

●???Engage in internal corrective actions

●???Meet external auditors

Obtain a merchant account and payment processor

●???Merchant Account: A merchant account is an agreement between you and your bank that allows you to accept credit/debit cards, ACH transfers and other forms of electronic payments.

●???Payment Processor: A payment processor is the company that processes your customer's payments, deposits them into your bank account, sends a notification confirming payment has cleared and handles any disputes or refunds. There are many different types of processors out there in today's market (we will discuss these below).

Establish a working process for payments

An effective working process should include the following elements:

●???A plan for handling payments, including best practices for setting up your payment gateway, handling refunds and chargebacks, and responding to customer service issues.

●???A plan for handling disputes and customer complaints. For example, if a customer claims that their order arrived late or damaged, you may need to provide proof of delivery by providing an invoice tracking number or FedEx shipping label as evidence. Or if a customer claims that an item isn't what they ordered, you can send photos of the actual product being delivered as further proof.

Set up a website and online identity

The first step in becoming a payments service provider is to set up a website and an online identity. You need to have a way for people to find you online, contact you, pay you and review your work.

Establish a marketing plan

You should have a marketing plan. It should be part of your business plan and it should be included in the overall strategy for your company. You should also update it regularly and make sure it reflects market research and changes in the competitive landscape.

A good place to start is by establishing a mission statement that defines what you want to accomplish with your payment service provider business, how you’re going to do that, where you want to focus, who you want as customers/clients/partners, etc.,

Then identify all of the channels through which potential customers can hear about your product or service (and therefore buy it). If someone asks me “where can I get some great tomatoes?” I would tell them “I know this awesome farmer upstate who grows them organically!” You need to reach people where they are and engage them where they live online or offline so they will consider using your services over competitors'.

Review and update your procedures on a regular basis

●???Review and update your procedures on a regular basis.

●???Be compliant with regulations.

●???Be secure in your business processes and technology solutions, including data security and privacy protocols, access control policies, vulnerability management, incident response planning and other related initiatives to ensure integrity of information systems;

●???Ensure you are accessible to your target market through a suitable payment channel that keeps pace with customers’ preferences for online payments;

●???Ensure ease-of-use for all stakeholders involved in the payment process — from consumers using their mobile devices at point-of-sale terminals or online shopping websites; to merchants accepting digital payments via mobile wallets/apps or POS terminals (offline); as well as service providers like banks providing card acceptance services;

Do not go into the payments space lightly. You will need to invest in your business, robustly comply with regulations, and be prepared to both ask for help and undergo extensive training.

Do not go into the payments space lightly. You will need to invest in your business, robustly comply with regulations, and be prepared to both ask for help and undergo extensive training.

But don't let that scare you too much—the rewards are definitely worth the effort!

Conclusion

As you can see, becoming a payments service provider is a lot more complicated than just installing the right software. There are many factors to consider, including your target market, regulatory requirements, and potential for growth. The best way to ensure success is by doing your research before jumping into this business model.