Choosing the right payment service provider is a critical step for any growing e-commerce company. After all, your PSP is what places profitable transactions at the bottom of your sales funnel. Choosing the right provider, however, can be a time-consuming process. From requests for proposals and multiple rounds of interviews to the significant time the other party will need to vet you, you are going to be putting a lot of effort into the search for your new provider.

Being intentional about your selection process decreases the chance that the needs of your e-commerce startup outgrow your PSP. If you don’t do your due diligence at the beginning, you will look back and wish you had thought of scalability, extra payment features and fraud protection before you signed on the dotted line.

Why are payment service providers so important?

They provide you the technology to help you scale quickly when your business finds the right audience. Having the right PSP in your corner can make all the difference.

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Weigh Scalability Against Speed

When evaluating the potential of a PSP, you must balance scalability — the ability to handle growth — with speed. Ensure that increased capacity does not come at the expense of rapid performance. This can pose a challenge because some of the bigger PSPs can take months to configure their products. Many smaller PSPs can get going in a matter of weeks, but they might not be able to scale with your company as it grows.

Be intentional about asking vendors the right questions, such as how they handle spikes in transaction volume, how their cost structure adapts to growth and whether they are able to adapt to international expansion by processing foreign currencies and complying with international regulations. Also, investigate their uptime and availability guarantees to avoid sales-damaging downtimes.

The baseline for PSP uptime is 99.9 percent (also referred to as three nines) however, some PSPs strive for 99.99 percent (four nines), and the most competitive and reliable providers offer 99.999 percent (five nines). Talk to a few of the vendor’s clients if you can, and get their feedback on the items that are most important to you. Ask what they like best and least about the PSP.

Consider the time to market and the features that your partner offers. A broad range of features that go beyond Visa and Mastercard processing into alternative payment methods and reporting procedures are a good indication that they’ll be able to scale. Look at their features and ask yourself, “When we start doing millions of dollars in transactions, will these features be enough to keep that process seamless for our customers?”


Don’t Skimp on the Features

The next thing on your checklist should be to make sure the PSP offers all of the necessary features you’re after, including the following.


Alternative payments

Visa, MasterCard and AMEX are just the baseline these days. Customers want a wide variety of alternative payment options like Apple Pay, Google Pay, Amazon Pay and more. And when they’re making a purchase from your startup, they want the process to be simple and seamless. That’s why you should look for a PSP that will make a wide variety of purchases a breeze and can keep up with the shifting landscape of payment options.



A pileup of chargebacks — chargers returned to the customer after they dispute the transaction — can quickly become a payment partner’s Achilles heel, and you don’t want to be the one dealing with the chargebacks and the blowback from it. Find out how your business would look up information through your PSP, and iron out how you would work together to issue refunds, partial refunds and shipping. Thoroughly review the PSP’s client interface to see how you can look up an order, what actions are available for that order, how it manages chargebacks, and more. 

Excessive chargebacks can result in thorough audits from the PSP on your business, penalties and fines from the payment networks, and, in extreme cases, the complete loss of your payment account. Merchants need to have a plan to review all orders for fraud risk. Some of these will be common to the industry while others will be customized to your company. For example, which transaction threshold would you want to be flagged? Choose which party will be responsible for manually reviewing flagged transactions (it may be both of you).


Fraud prevention

Many PSPs offer fraud tools, but depending on how big of a risk chargebacks are for your business, you should consider specialized fraud vendors who can manage the risk on your behalf, including indemnifying your business for chargebacks. Start your search by using databases of PSPs like those run by the Merchant Risk Council and the Payment Card Industry Security Standards Council, where you can find lists of PSPs that specialize in fraud prevention and are committed to protecting sensitive data and reducing fraud. You can find a registry of all compliant vendors on Visa’s Global Registry of Service Providers that lists all service providers that are compliant with the PCI Data Security Standard.


Authorization Optimization

When you take a Visa card from a customer, your PSP will send the transaction to the bank for authorization. If the bank declines the payment, your PSP should report the decline to you and give you the option to resend the order data. This allows the bank to reconsider accepting the transaction.



Verify that your potential PSP offers reporting tools that will allow you to quickly and easily monitor sales. If things are stuck, you should have alerts in real time to see the transaction flow. Find out which reports you will need on a daily or weekly basis and how your PSP will provide them to your team. At a high level, this would include the total number of sales, sales revenue, authorizations, settlements and declines. 

A deeper dive into the data should enable the merchant to look at chargebacks, authorization rates by network and card issuer, a breakdown of fees you are paying and ideally customer and product-specific reporting. The reports you’ll need to rely on will depend on your business, but you should ask for an outline of them in advance so you know the kind of data you’ll be working with.

If you have any further questions, now is the time to ask them, and if one of those questions is, “Which questions should I be asking?” visit the PCI SSC’s Merchant Resources page.

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Clicking the Purchase Button on Your PSP

Throughout the process of choosing a PSP, put your customers at the center of every decision you make. The scalability of your partner only matters if there are customers to keep up with. The fraud protection of your services only matters if there are customers to protect. Think of it as not just finding the right provider for your business but also finding the right provider for the people who rely on your business.

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