What does payment service provider mean?
A third party that facilitates and helps merchants in the accepting of payments, also known as a Merchant Services Provider or PSP. In online shopping, the PSP will provide various methods of payment including direct debit, bank transfer, real-time bank transfers using online banking, and credit card. Basically they bring everything together to allow a merchant to accept credit cards, and do so in a seamless fashion that makes the entire process transparent to customers and stress-free for merchants.
A PSP can connect to multiple acquiring banks as well as payment and card networks. By enlisting the services of a PSP, the merchant becomes less dependent on financial institutions to manage transactions, since the PSP can managing bank accounts as well as relationships with the external network.