What is a payment service provider? How to get paid as a business

The right payment service provider (PSP) helps businesses get paid faster, more securely, and across more channels, without adding complexity. Whether you're trading online, invoicing clients, or taking in-person payments, choosing the right PSP can mean stronger cash flow, smoother operations and happier customers. If you’re selling across different channels, in store and online, payments can get complicated fast. And a slow, clunky or unreliable process can drain your cash flow and frustrate your customers.

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What is a payment service provider (PSP) and how does it work?

An online payment service provider (PSP) helps businesses accept digital payments more securely and at scale​​.

In practice, a PSP joins the dots between your business, your customers and the wider banking system, handling the technical side of every transaction – i.e. everything after a customer clicks ‘pay’.

Choosing the right PSP helps you:

• Accept more b2b payment methods — cards, bank transfers, digital wallets and more
• Stay compliant with rules like PCI DSS security standards
• Reduce admin with automated invoicing and payment reconciliation
• Offer flexible options like B2B instalment payments or instant settlement

Payment service provider examples

Some notable payment service providers (PSPs) operating in the UK include:​

• Worldpay: One of the UK's largest PSPs, offering solutions for in-store, online, and mobile payments.
• Stripe: A global PSP known for its developer-friendly APIs and robust online payment processing capabilities.
• PayPal: Widely used for online transactions, providing services for both consumers and businesses.
• GoCardless: Specialises in direct debit and recurring payments, making it ideal for subscription-based businesses.
• Square: Offers point-of-sale systems and online payment solutions, catering to small and medium-sized businesses.
• iwocaPay: Tailored for UK B2B businesses, iwocaPay offers instant bank-to-bank payments and flexible 'Pay Later' options, allowing customers to spread costs over 3 or 12 months while ensuring suppliers are paid upfront.

When should your business use a payment service provider?

You should use a payment service provider when your payment needs require it. When you’re starting out, it can seem simple enough to just offer card payments. But as you grow, payments move from just helping you close deals to helping you grow effectively. That’s where a PSP comes in.

You should seriously consider using a PSP if:

• You sell online, in-person or through invoicing
• You want to add flexible payment terms on invoice options
• You're expanding into new markets with B2B cross border payments
• You want to automate and speed up your payment process

What’s the difference between a payment gateway and a payment service provider?

eCommerce payment gateways and  payment service providers are both essential  parts of the transaction process, but they play distinct roles. 

• A payment gateway is the tech that captures and encrypts your customer’s payment information. It’s the secure front door to the transaction​.
• A payment service provider goes much further. It includes the gateway but also handles the full payment processing journey — fraud checks, bank authorisations, settlement, and compliance.

In short:

Some providers provide both elements in one – for example, iwocaPay builds everything you need into a single streamlined system, making B2B payment processing and settlement faster and more secure with instant bank to bank transfers..

How much does a payment service provider cost and what do you get?

Like any B2B service, there’s a cost to using a PSP. The challenge is to balance the price involved with the benefits for your business to ensure you’re protecting your margins.

As part of their model, PSPs usually charge:

• A percentage fee on each transaction (often 2–3%)
• Sometimes a monthly or setup fee
• Extras like chargeback or cross-border fees

But fees aren’t the whole story. A good PSP should also offer tangible benefits to your business:

• Cut down on your admin
• Speed up your cash flow
• Flexible payments for your customers, like B2B Buy-Now-Pay-Later (B2B BNPL)
• Protect your business with built-in fraud prevention

Costs often depend on the payment method used – some, like credit cards, include extra fees to the parties involved, which cut into your profit. iwocaPay’s Pay Now option helps businesses bypass card processing fees altogether​, using instant bank transfers as a secure payment method.

When you’re choosing, think beyond just the cost. Think about the revenue, time and cash flow a good payment setup can free up.

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How secure and compliant are payment service providers?

Handling customer payments comes with serious responsibility for businesses. Security and compliance are non-negotiable rules for sellers – including protecting customer data, secure communications and correct record keeping for tax purposes.

Top PSPs will:

• Meet PCI DSS standards
• Encrypt all data in transit
• Monitor for fraudulent activity
• Offer full reporting for audits and compliance needs​

How do I know if a PSP is secure and compliant?

Look for clear PCI DSS compliance, transparent security policies, and visible fraud prevention practices. iwocaPay uses bank-grade security to protect every transaction — whether you’re sending a pay link or taking a QR payment.

What features should you look for in a business payment provider?

Not every PSP is built with business growth in mind. Some just move the money.
The best ones help you sell more, faster, and with less stress.

Features that matter:

• Flexible payment terms that can adapt to different customer needs
• Instant settlement to boost cash flow
• A checkout that can scale with your sales — online, invoice or in-person
• Easy integration with your accounting and ecommerce tools

iwocaPay, for example, links payment collection directly into accounting systems like Xero and QuickBooks, keeping everything reconciled automatically​.

What is the best payment service provider for UK businesses?

The best PSP depends on your business needs. Key factors to weigh include cost, ease of integration, payment method options, settlement speed, and security standards. Some businesses prioritise simple card payments, while others need more flexible solutions like instant bank transfers or instalment plans. 

How payment service providers can support B2B BNPL options

In B2B sales, flexibility matters, especially when it comes to trade credit. Offering B2B BNPL options lets customers pay how they want — without forcing you to wait months for your cash.

Some PSPs now make this simple by embedding installment payment options into the checkout flow.
With iwocaPay Pay Later, you can offer customers 3–12 month payment plans​, while you still get paid upfront.

Benefits include:

• Higher average order values
• More repeat business
• Reduced credit risk and admin

For customers who want the freedom to manage their own payment schedules, B2B BNPL helps you match their needs without taking on the credit risk or dealing with the admin of chasing payments.

What happens if your payment provider goes offline?

Given how important payments are for your business, you want to make sure you can count on your provider. Downtime can mean lost sales, frustrated customers, and a dent in your reputation.

Good PSPs plan for the worst:

• Redundant systems and backup servers
• Instant customer support escalation
• Flexible options like sending pay links if the main checkout fails

Is switching payment service providers disruptive?

Switching can cause some short-term disruption, but it’s usually minimal if your new provider makes integration simple. You may need to update your payment systems and settlement processes, but a good PSP will help you move quickly, making the long-term benefits worth it.

Growing with the right PSP

Selecting a payment service provider is about finding a partner that supports your cash flow, improves your customer experience, and grows with your business. The right PSP should remove friction from payments, protect your revenue, and help you access opportunities without adding extra work or costs.

iwocaPay is built specifically to meet the needs of growing UK businesses. Offering both instant bank-to-bank payments and flexible 'Pay Later' terms, it’s designed to make B2B payments faster, simpler and more cash flow-friendly, no matter if you're selling online, invoicing customers or trading in person.

With iwocaPay, you can enjoy:

• Instant settlement through Pay Now, helping cash flow without card fees
• Flexible customer payment options with Pay Later, offering 3 or 12-month instalments
• Built-in security and compliance without the admin burden
• Easy integration across ecommerce, invoicing, and in-person sales channels
• Support for trade credit, without carrying the risk yourself

If you're looking to make your payments work harder, why not get in touch with our team?