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How to start a payment processing company Part 2. What is the best business model?
Aug. 4, 2025, 3:41 p.m.
How to start a payment processing company?
There are two basic models of online payment acceptance services.
1. The Processing Company (PSP) Model
Under the first model, you deal with purely technical issues of Internet payments, but you don’t touch your merchants’ money. This is left to acquiring banks or payment systems.
Key services include:
- Opening a merchant account at the acquiring bank
- Providing a secure payment page
- Arranging a single integration with various payment systems
- Protecting your online merchant from fraud
- Consulting your merchants and their buyers
In fact, the payment service provider that uses such a business model is a purely processing company (the generally accepted term is PSP, Payment Service Provider).
Advantages of being a PSP:
A processing company does not require any license to help business accept payments. It is enough to comply with security standards like PCI DSS. However, you are more dependent on acquiring banks and partners for things like merchant account opening times and commission structures.
2. The Payment Aggregator (IPSP) Model
The second model is an extension of the first. Besides all technical issues, you assume responsibility for payouts to your merchants. You accept payments on their behalf into your own accounts and then distribute the funds.
The payment service provider who chooses this business model is called a payment aggregator (also called IPSP, Internet Payment Service Provider).
Advantages of being an Aggregator:
Being a payment aggregator means having more freedom and flexibility. For example, you can:
- Offer same-day account activation and payment acceptance.
- Set flexible payout patterns for merchants.
- Assign individual maintenance fees and control pricing.
The Cost of Freedom:
This model requires a financial license (e.g., PI license) from a regulator, which can take 6-18 months and significant financial expense (authorized capital, insurance deposits).
A Note on PCI DSS Certification
If you plan to provide services to accept card payments via the Internet, either as a processing company or as a payment aggregator, your company will have to undergo PCI DSS certification annually. This is not an easy process, but it can be avoided if you rent a certified platform.
Our Recommendation for New Companies
Taking into account the complexity, cost and duration of becoming a payment aggregator, we recommend new payment companies to start with providing purely processing services.
Try working as a PSP (Payment Service Provider/processing company) for a while, and then, if the business develops rapidly and requires more possibilities, proceed to the payment aggregator business model (IPSP).
Getting a payment organization license is always easier for an established processing company that has reached certain success, than for an absolute newbie who does not have any history of service providing.
Previous: Part 1. What means of payment to work with (integrate).
Next: Part 3. How to choose software to provide online payment acceptance services.
Respectfully, eComCharge Team
eComCharge develops and delivers the PCI DSS Level 1 certified White Label Payment Platform beGateway for Payment Service Providers and Acquirers.
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