One or more payment providers: how do you make the right choice?

(advertorial) Digital payments are becoming indispensable not only online, but also in physical stores. But the complex landscape poses strategic dilemmas for retailers: do they choose one payment service provider (PSP) or several?

What are the pros and cons?

Consumers expect a seamless payment experience. Which options retailers offer for paying and whether there is one or several PSPs, therefore plays an essential role. Whether retailers work with one PSP or with several suppliers is a strategic choice, each with its own pros and cons. What do you need to consider? What is the best choice for each type of company?

Currently, the majority of companies choose to work with different PSPs, according to international research commissioned by PayPal. A survey among 1,503 retailers (with more than ten million euros in turnover) in five European countries (Belgium, Denmark, Ireland, the Netherlands and Sweden) shows that 54 % of respondents currently work with two or more PSPs.

For retailers with international ambitions

Those who opt for multiple payment service providers are primarily active cross-border and opt for flexibility and scalability. 36 % of online retailers who work with multiple PSPs are aiming for international growth in the coming year and want to integrate local payment methods. About half do this to have coverage in different regions and for all types of transactions (and currencies), the research suggests.

This strategy also reduces risks of being too dependent on a single provider. Even if there are problems or disruptions at one of the providers, the retailer can automatically redirect to another payment service. A third of respondents also say that thanks to the different providers, they have more access to innovation: by using the expertise of multiple providers, they can respond to various transaction types and offer a wide range of payment options, from traditional credit cards to digital wallets. In other words, online retailers see the multi-PSP strategy as a smart way to increase their coverage.

For those who like simplicity and customization

Nevertheless, a significant number of companies also rely on a single payment provider. 46 % of companies in the various regions work with a single PSP. Belgium even stands out with 53 %. These are often companies that want to reduce complexity and want more customization. Those who work with a single PSP find that this allows the payment to be better tailored to their own business needs (35 %).

Simplified reporting is another major advantage: with a single channel for reporting, transactions are easier to streamline and track, according to 29 % of retailers. An equal number indicate that a uniform set of protocols facilitates security and compliance. Increased efficiency and lower costs also play a role: in Belgium, where a single payment provider is preferred, more than a quarter find this approach more cost-efficient.

What are your priorities?

In short, different digital payment strategies respond to different priorities. Retailers who work with multiple PSPs prefer flexibility and scalability, while retailers who work with a single provider emphasize a greater simplicity in processing payments and handling transactions.

To learn more about how to choose the right payments strategy to grow business, read PayPal’s latest Payments Infrastructure report, based on research with businesses in Belgium, Netherlands, Ireland, Sweden and Denmark.

All data is taken from Payments Infrastructure Report by PayPal, 2024 as well as a study based on the results of a survey among 1,503 merchants with revenue above 10 million euros, in Belgium, Denmark, Ireland, Netherlands, Sweden (minimum of 300 merchants per country). The survey was conducted between 12 December 2023 and 27 December 2023 by Censuswide.