Should you use multiple payment service providers?

Taking payments from customers is more than just a one-and-done exercise. To remain competitive, you’ve got to keep your eyes peeled for ways to improve the customer experience while keeping a lid on fraud.

Sometimes there are gaps in what your current payment service provider can offer. Perhaps they cannot take payments in certain countries your business is expanding into.

Still, phasing out the old payments company and onboarding a new one may already bring on a headache. We’ve got good news: you don’t have to choose. You can have both. You may even see revenues revive thanks to three or more PSP partnerships.

You could install an acquirer-agnostic payment gateway that directs payments to the most appropriate acquiring institution. This could help reduce customers' false declines at checkout (when payments fail from a preventable error).

There are dozens of possible benefits to your business to be realized through adopting multiple PSPs. In this article, we’ll look at the costs and benefits of doing so from several angles.

Why to consider adding another payment service provider

Adding another PSP to your business means adding another horse to the race: now you can see which performs better for your digital commerce. That means you could test whether payments go through faster with processor A versus B.

Why should this be the case? Payment processors all work in roughly the same way as each other, don’t they? You may be surprised to hear there are essential differences in the quality of tools and services between providers.

Variations in payment service providers may include the following:

Greater payment capabilities, such as creating cards for employee expenses‍
Better relationships with card schemes (such as Visa, Mastercard, Diners Club)
More robust knowledge of local payment regulations and card scheme requirements
Superior payment routing technology that uses enormous data sets and machine learning to improve continuously
Improved payment security methods such as 3DS and tokenized payments‍
Additional reporting tools and custom analytics
Higher-quality fraud prevention measures and risk assessment engines

Learn more: Payment Methods - Direct integration vs PSP

Benefits of using multiple payment service providers

The two main benefits of adding more PSPs to your business are:

Routing transactions to the most effective processor
Reducing costs

The first benefit could be the most critical in upping successful payments. Employing multiple PSPs can help achieve a better acceptance rate – namely, the proportion of attempted payments which end in funds added to your business.

How? Checkout.com uses sophisticated algorithms to calculate the chances of a payment succeeding based on how the data is encoded, the security measures that could be applied, and the routing options available.

That means you could cut your payment processing costs by directing transactions down the least expensive path. Not all PSPs offer this flexibility; some vendors prefer to limit your payment management options to ensure they keep their own profit margins healthy.

Here’s a summary of the other significant benefits you could realize by adopting multiple PSPs:

Cost savings. Choose between leveraging better processing rates from each PSP or routing transaction volumes through more costly processors.
Better customer experience. Offer more payment methods to your customers, such as APMs and buy now, pay later (BNPL), to increase customer satisfaction and repeat custom
Cross-border payments. PSPs need a separate license to take payment in different countries, so partnering with multiple providers enables international selling
More revenue capture. Reduce cart abandonment because customers have a wider range of payment options
Resilience. Guard against revenue loss due to a processor outage or a decision to block your transactions due to concerns about your line of business.
Reduce declined payments. Allows you to measure acceptance rate (AR) between different PSPs and dial-up investment into the one that delivers the best for your business
Broader perspective. Receive strategic support from account managers across several PSPs. That gives you access to a broader pool of payments expertise and a second or third opinion on your paytech setup.
Optimize partnerships. You can “test drive” different PSPs so you get a flavor of which are faster or more reliable in your particular markets. This helps you decide if you really want to use the PSP you originally had or if there are more effective solutions available on the market

Learn more: Building a modular payment infrastructure

Drawbacks to using multiple PSPs

Many companies operate on the basis of “If it ain’t broke, don’t fix it”, which has particular merits. If you’re going to consider adding additional complexity to your revenue operations, you’ll need a good reason to pull the trigger. It’s important to carefully consider whether the time and effort of onboarding multiple payment partners will likely prove profitable.

Here are some potential drawbacks to multiple payment service providers:

Mismatched data. Different PSPs may report data in different ways that are hard to marry together
Complexity. You need to establish new relationships with multiple PSPs which individually require time, effort and negotiation
Time lag. Evaluating new PSPs and integrating them into your sales ecosystem takes time. You should factor in time for testing new payment systems, as well as bug fixes and communicating changes to your customer base
Compliance. Adding a new payment integration could mean your business needs to rise to a new level of PCI compliance.

Who should use multiple PSPs?

Businesses with in-house payments managers and a focus on optimizing payments strategy would benefit from a multi-PSP approach. You’ll gain more transaction data that you can compare and analyze for trends. If you are really set on strengthening profit through payment optimization (whether it be reducing fraud, chargebacks or cart abandonment), then you’d do well to at least investigate multiple PSPs.

Another use case is if you serve B2B and B2C clients that prefer to pay in different ways. Or you’re operating in global markets such as the Middle East, North Africa and Pakistan, and need to localize your payment strategy.

You should be aware of what’s possible if you use a different PSP, such as the granularity of reporting, speed of processing, merchant support or fraud monitoring features.

Below, we’ll look at how to manage multiple payment gateways in more detail.

Learn more: Test and compare PSPs

How to manage multiple payment gateways

The experience of plugging in a new payment gateway varies per provider, and the effort needed depends on your particular goals and existing technical setup.

Typically, you need to implement each new payment gateway into your tech stack one by one. Depending on your checkout experience preferences, resource intensity can vary.

Adding a hosted payment page = lower effort
Integrating via a software development kit (SDK) = low-medium effort
Configuring payment gateway through APIs = variable effort

As a merchant, you’d usually handle any failed transactions manually. If your website doesn’t offer a self-serve method of re-trying a transaction, you might reach out to the individual customer with a phone call or email.

Alternatively, you can set up an orchestration layer as a wrapper for your various payment gateways—more on that in the next section.

Learn more: What is payment orchestration

Benefits of using an orchestration layer

A payment orchestration platform is a helpful control center for payment routing automation. It offers several benefits:

Machine learning directs payments to different PSPs according to use case, costs, performance or locale
Analytics are unified into one dashboard, making data analysis easier
It’s easier to add in new payment processors and payment methods or swap out old ones

For example, if you notice your competitors are offering Apple Pay, it’s much simpler to introduce Apple Pay to your checkout via your orchestration platform than it is to code it from scratch.

Who should use an orchestration layer?

Payment orchestration is ideal for payment leaders who grasp that payment strategy is key to their business’ success. With this technology, payment managers can fine-tune routing rules to achieve faster, more efficient payments that are cost-effective.

Businesses that need a scalable payments system that’s resilient to processor outages and resistant to slow processing speeds are best suited to using an orchestration platform. The adaptable nature of the orchestration technology makes it more flexible than manually integrating individual new payment gateways.

Payment leaders looking to cut transaction processing times, improve payment success rates, and achieve competitive pricing for their business would do well to investigate payment orchestration.