PSPs and Forex Brokers
How to Choose the Best PSP
You must have a reliable payment service provider (PSP) for your forex brokerage. However, finding the best PSP for your FX firm isn’t always easy.
What is a Payment Service Provider?
PSPs allow you to accept credit card, debit card, and digital wallet (NETELLER, Skrill, etc.) payments in-person and online transactions. PSPs are sometimes called third-party aggregators because they combine all their clients into one merchant account. A merchant account is a bank account that releases payments to your business while waiting to get the money from your client. Providing the merchant account means the PSP accepts fraud and chargeback risks for all of their clients. Assuming this risk means they might charge more than a merchant acquirer. PSPs are popular among small businesses and businesses in a high-risk category because it’s often easier to open an account with them than it is to open a merchant account on your own.
Whether you’re starting a new brokerage or looking to grow a firm that has been in business for years, PSPs can help you succeed by making it easy for clients to make deposits. You should consider several things when choosing which PSP you want to use.
Here are our tips for what to look for in a forex PSP.
Integrates with your software provider
Traders will make deposits using your online client portal or client cabinet, so talk to your software provider about what PSPs you can easily integrate into the system. Many forex back office tools have integrations with providers like Skrill and Neteller built-in. Using payment providers that are pre-integrated with your forex software will make adding a new payment method very easy.
If you have clients in multiple countries, you may need to integrate with more than one payment provider. Some providers are more popular in a region than others, and you will need to work with a provider that accepts the payment methods your target clients use. Your back office software should allow you to integrate with as many PSPs as you want.
Accepts brokers with your type of regulation
Because forex trading is considered a high-risk industry, some PSPs will not accept forex brokers as clients. Other PSPs only accept brokers as clients if they have a license from a regulatory authority. However, some payment service providers are happy to accept unlicensed forex brokers as clients.
If you are opening a new brokerage, you may have difficulty determining which PSPs are likely to accept your business. Ask your forex software provider if they have any recommendations. When software providers integrate their product with PSPs, they become familiar with which ones are most welcoming.
A reliable software provider won’t promise that they can get you approved for a PSP. However, they will be able to offer sound advice and introduce you to individuals who work for payment providers. These personal introductions can make it easier to be approved by a PSP.
Charges reasonable fees
The percentage fee is typically around 3% for online transactions, and the flat fee per transaction often ranges between $0.10 and $0.25. You can pass the cost along to your clients by adding an appropriate additional fee to a transaction depending on the how much it will cost you to submit the transaction.
However, your clients will also be looking for the best prices, and you don’t want to lose clients because your transaction fees are too high. Apply to work with several PSPs so that you can see which provider offers you the best rate.
Avoid chargebacks and friendly fraud
A PSP could cancel your service with them if too many transactions from your brokerage are disputed. You can take several steps to avoid disputed transactions, or chargebacks.
Choosing a PSP is an important decision for your forex brokerage, but it doesn’t have to be difficult. Start by looking at the pre-integrated options in your forex client cabinet and then talk to your software provider to hear their recommendations.
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