What are the risks of using multiple payment service providers?

Each PSP may have its own APIs, protocols, or systems, making integration with your platform or system more complex. Managing multiple integrations can lead to technical challenges and require additional resources.

That’s why a better approach to this case is to have a proper payment orchestration platform instead of just integrating directly with each psp.

While diversification on your payment rails by using multiple PSPs is excellent, it comes with specific issues. The main challenge sits on different settlement times and procedures that complicate your treasury operations. From a compliance perspective, different reporting, AML, or KYC requirements increase your compliance department's workload and the number of third parties you need to keep monitoring.

Handling multiple PSPs may increase operational complexities, such as managing different payment processes, settlement cycles, reconciliation, and reporting. This complexity can lead to errors and inefficiencies.

If you have compliance requirements fulfilled prior to the payment processing then you can mitigate such issue. KYC and aml can be unified for the different payment methods

Having multiple psps handling the cards transactions that are all 3DSecured does not necessarily imply a higher risk than having 1 psp with the same setup.

It might not be possible to find a one payment service provider if merchant operates globally, with different customer groups and multiple sales channels. In addition to payment orchestration platform, one option is to develop internal middleware payment gateway that includes Admin UIs, integrations to PSPs and in addition business logic that is merchant specific.

Working with multiple payment service providers very often becomes a requirement based on diverse merchant needs. For example, in addition to traditional payment methods, a merchant may choose to use the services of another provider for alternate payment methods to expand the choice of payments for their customers. In my opinion, merchants use multiple providers to address availability and latency related challenges. Merchants also may adopt a dual / multi provider strategy to overcome stability, scalability and reliability concerns.

Having a single PSP comes with many advantages such as single integration, consistent user experience, optimized processes, etc. But there are disadvantages as well, such as concentration risk, difficulty in exiting relationship due to deep integration, commercial challenges , etc. One can learn from the strategy that manufacturers around the globe are adopting - 'China + One'. In this context enterprises can work with two PSPs - One core and another backup. That will be a sound long term strategy.

Recon challenges also are to be considered۔ Each entity may have a different format to share the reports۔ Recon is the key to minimize mishaps

One of the important points about the risks of using multiple payment service providers (PSPs) is that it can increase the complexity of accounting and reconciliation. When transactions are processed through multiple PSPs, it can be more difficult to track and reconcile payments, which can lead to errors and delays in processing financial reports. Additionally, businesses may need to create separate accounting records for each PSP, which can increase the workload for accounting staff.