A Comprehensive Guide to Payment Service Providers (PSPs) in Singapore

Technology has made it easier than ever to start a payment business, and with cell phones everywhere, reaching clients online has become simple.

That is why Singapore introduced the Payment Services Act (PSA) to keep up with the rapidly changing payments industry. The PSA combines many payment services into a single flexible and comprehensive structure. It protects customers, fosters innovation, and stabilises the financial system. The PSA responds to emerging technologies, such as money transfers and digital payment tokens, while still defending Singapore's financial ecosystem. Parliament authorised it in January 2019 and the PSP went into force in January 2020. It covers a variety of payment services that your company may utilise or provide.

The PS Act regulates seven key types of payment services, including:

• Account issuance services
• Domestic money transfers
• Cross-border money transfers
• Merchant acquisition services
• E-money issuance services
• Digital payment token services
• Money-changing services

At its core, the PSA establishes a unified regulatory framework to handle the convergence of various payment activities through two key schemes:

• Designation Regime: It is managed by the Monetary Authority of Singapore (MAS). This scheme focuses on identifying and regulating critical payment systems that are essential for the country’s financial stability.
• Licensing Regime: This scheme oversees payment service providers (PSPs), ensuring they meet specific standards and obtain the necessary licenses before operating.

With the Payment Services Act (PSA) in place to regulate and support the evolving payments landscape, Payment Service Providers (PSPs) play a crucial role in facilitating these services for businesses across Singapore. 

Now, this brings us to why understanding the meaning of PSP is so important.

So, What Is PSP, or Payment Service Provider?

Payment Service Providers (PSPs) empower startups and small businesses to accept a wide range of payment methods, whether you're selling in-store, online, or via mobile. PSPs enable businesses to accept various payment methods by connecting them to the financial infrastructure, simplifying the process and enhancing operational efficiency and security.

Want to pay with a credit card? An ATM card? Or perhaps through Apple Pay? 

PSPs support all these methods and more, including e-wallets, ACH bank transfers, and various payment apps. 

Payment service providers typically offer quick and easy account approval, low or no monthly fees, and affordable flat-rate processing costs. Plus, PSPs provide integrated point-of-sale (POS) software, card readers, and online checkout solutions, making payment processing smooth and efficient.

With the rapid evolution of e-commerce in Singapore, staying competitive means embracing the latest technologies and trends. Revenue in the e-commerce market in Singapore is projected to hit $6.59 billion in 2023, with expectations to grow to $10.45 billion by 2027. To stay ahead in this booming market, having a Payment Service Provider (PSP) is essential.

Now that you know the meaning of PSP, let's find out how it works. 

But How Does a Payment Service Provider Work?

A Payment Service Provider streamlines your payment process by pooling transactions from multiple businesses, including yours, under one large merchant account. Managing such high transaction volumes gives the PSP the leverage to negotiate lower processing fees with banks. As a result, you get simple, straightforward pricing—often with flat-rate fees and minimal or no monthly charges.

PSPs also take on the financial risks associated with fraud and chargebacks for all their clients. If a fraudulent transaction or a customer dispute arises, the PSP’s bank deducts the amount, and the PSP works with the acquiring bank and you directly to resolve the issue. Because of this, PSPs may enforce stricter rules for high-risk sales and could occasionally place holds or freezes on accounts to protect both you and themselves from significant financial losses.

What Are the Services a Payment Service Provider Offers?

PSP is essential to making your payment process smooth and secure. They handle the technical side of payment transaction processing, ensuring that your customers have a simple and efficient payment experience so that you can focus on running your business.

Here’s what a PSP offers:

• Offers a secure online portal that connects your website or app to their payment system, ensuring your customers' payment details are transmitted safely.
• Manages everything from authorising payments to moving money from your customer's account to yours, taking care of the entire transaction process.
• PSPs employ advanced tools to proactively identify and prevent fraudulent activities, thereby safeguarding you from potential risks such as chargebacks.
• PSPs ensure your payment system meets industry standards, keeping your customer's payment information safe and secure.
• When selling internationally, PSPs allow you to accept payments in different currencies and settle them in your preferred one.
• It provides detailed reports to help you understand your transactions and customer behaviour better so you can make informed decisions.
• PSPs offer transaction reporting features, which help businesses reconcile their transactions more effectively. These features typically include detailed monthly reports, with some providers offering real-time reporting options to enhance transaction management.
• PSPs help with any issues or questions about payment processing.

But how does this help grow your business? Well, let's find out. 

How Can PSP Benefit Your Business?

Here’s how a Payment Service Provider (PSP) can make things easier for you:

1. Instant Approval: You can quickly get approved by issuing bank and start accepting payments immediately with PSPs, thanks to their easy-to-use apps and online tools.
2. Low or No Monthly Fees: PSPs often help you save money on monthly fees compared to traditional merchant accounts, which is especially useful if you’re running a small business and don’t process payments very often.
3. Predictable Flat-Rate Fees: With PSPs, you’ll have clear, flat-rate fees without extra charges for different card types or compliance requirements. This makes it simple to predict and manage your payment processing costs.
4. Streamlined Tools: Many PSPs offer integrated tools for managing sales and your business, like POS systems, online stores, and e-invoices. Additionally, many PSPs offer transaction reporting features, which aid businesses in effectively reconciling their transactions. This means you get everything you need without buying extra software or hardware.
5. No Long-Term Contracts: PSPs don’t lock you into long-term contracts or cancellation fees. You can easily try out different options to find the best fit for your business without any risk.
6. Additional Security: Many payment service providers ensure high levels of security and compliance with standards like PCI DSS, appealing to businesses concerned about safeguarding customer financial data.

List of Payment Service Providers in Singapore

Here’s a most popular list of Payment Service Providers in Singapore:

• NETS: Supported by DBS, OCBC, and UOB, NETS lets you accept card payments and direct debits through its eNETS platform. It’s a trusted option for handling electronic payments.
• Apple Pay: Apple Pay accepts customer payments using Apple devices like iPhones. It’s an easy and secure way for them to pay in-store, online, or in apps.
• Aspire: Aspire offers tools to help small businesses manage payments, billings and other financial tasks smoothly.
• Google Pay: Customers can use their Google accounts to pay in-store, online, or in-app purchases on Android and iOS devices.
• Grab: GrabPay allows you to accept payments for Grab rides, food deliveries, and more directly from the app, which is convenient if you’re already using Grab for business.
• DBS Merchant Payment Services: DBS makes it easier to process transactions by allowing merchants alike you to accept payments online or over the phone.
• GTPay: GTPay supports card payments, local methods like Alipay, and international transactions, which is helpful for businesses that deal with global payments.
• PayPal: PayPal is widely used for online payments and lets you to accept payments from customers worldwide.
• WorldPay: WorldPay offers services for credit/debit cards, subscriptions, and multi-currency payments, helping you reach customers worldwide.

Considerations When Choosing a PSP in Singapore

While choosing a Payment Service Provider (PSP) in Singapore, you need to check many factors to ensure it meets your business needs effectively:

• Supported Payment Methods and Currencies: Make sure the PSP supports the payment methods and currencies important for your business in particular. This includes credit cards, e-wallets, and any international currencies your customers and suppliers use.
• Security Features: Choose one with solid fraud detection and management systems to protect your customers and secure transactions. Many PSPs adhere to PCI DSS compliance to protect the customer's financial data from potential breaches.
• Pricing and Fees: Understand the pricing structure, including onboarding fees. Pricing can vary based on currencies, payment methods, and transaction volume, so be clear on all costs before deciding.
• Integration: It's essential to ensure that the PSP you choose integrates seamlessly with your existing systems, like your e-commerce platform or point-of-sale (POS) system. This compatibility will save you time and avoid complications, reassuring you that your operations will run smoothly.
• Customer Support and Reliability: Evaluate the PSP's quality of customer support. Reliable and responsive support is essential for quickly addressing any issues. A dependable PSP minimises downtime and ensures smooth transaction processing.
• Payment Options: Your PSP can help you meet different customer preferences and significantly improve your checkout conversion rates by providing a variety of popular payment methods. PSPs enable businesses to accept electronic payments, including card and bank-based payments. This is a crucial advantage that can boost your business's success.

Common Mistakes to Avoid When Choosing a Payment Service Provider

When selecting a PSP, avoiding its common pitfalls that could impact your business is important. Keep these considerations in mind:

• Understanding the Fine Print on Fees: A lower rate doesn't always mean lower overall costs. Watch for high processing fees or variable rates, especially for popular cards. Ensure transparent, upfront pricing to avoid unexpected charges. 
• Agreeing to Volume Commitments: Consider contracts that tie fees to minimum transaction volumes or limits. You might face higher fees if you exceed limits or are pressured during slow periods. Review contract details thoroughly.
• Choosing Based Only on Rates: Low fees are attractive but don't decide solely on cost. Consider security features, customer support, integration ease, and overall service quality to find the best fit for your business.
• Neglecting Security and Fraud Protection: With rising card fraud, choose a provider with strong security measures. Ensure they comply with PCI DSS standards and offer fraud prevention tools to protect your business and customers.
• Limiting Payment Options: Customers expect a range of payment methods. You might see more abandoned carts if your provider doesn't support multiple options. It would be good if you opt for a PSP that offers a wide variety of payment solutions.
• Overlooking Setup and Support: Setting up payment options can take time and effort. So, choose a provider with easy integration and strong support to avoid downtime and technical issues that could affect sales and your brand's reputation.

Frequently Asked Questions

Common questions about payment providers include the differences between PSPs, payment gateways, payment processors, and merchant accounts. To help you understand, we’ve created a clear table that outlines these differences.

Here's a graphical representation of the process:

Want to Increase Your Sales? Explore Aspire Payment Gateway!

Unlock the full potential of your online payments with Aspire. Our payment gateway is designed to make your checkout process smooth, boosting customer satisfaction and driving more sales.

• More Payment Options: Give your customers the freedom to choose from a wide range of payment methods, including bank transfers, e-wallets, credit cards, and over 26 other options. This flexibility makes it easier for them to complete their purchases.
• Automated Payment Verification: Save time with automated payment processing. All fees and exchange rates are shown upfront, so there are no hidden costs or surprises.
• Easy Integration: Connect effortlessly to popular e-commerce platforms like WooCommerce, Magento, and Odoo. For those who love coding, our API allows for a quick and easy integration. Our onboarding team is here to help you get set up smoothly.
• Flexible Fund Access: Access your funds whenever you need them. Withdrawals are processed within an hour or instantly with our real-time feature. Keep track of every transaction with our modern dashboard and manage your team’s payment gateway access.
• Transparent Pricing: Enjoy straightforward transaction-based pricing with no hidden fees. Our competitive rates help improve your business margins.
• Effortless Accounting Sync: Sync your spending and receipts directly with your accounting software to close your books faster and with fewer errors. Integrate seamlessly with accounting software like Xero, QuickBooks, MYOB, Oracle NetSuite, or Deskera.
• Global Reach: Aspire Payment Gateway supports multiple currencies, enhancing your ability to accept payments from customers around the world.

Ready to streamline your payments and grow your business? Sign up for free and get started with Aspire today!