Payment Service Provider (PSP)

A payment service provider (PSP) handles the technical processing of online payments: it connects your store with payment methods such as credit cards, PayPal, Klarna or Apple Pay.

The PSP is the interface between your store, the payment networks and the banks. It authorizes payments, handles fraud screening, collects funds and pays them out to you in batches. Well-known providers include Stripe, Adyen, Mollie, PayPal and Klarna, plus Shopify Payments as the integrated option.

Your payment-method mix drives conversion, and it is regional: in the DACH market, for example, customers expect Klarna (invoice, installments and Pay Now), PayPal, Apple Pay and Google Pay alongside credit cards. Missing a market's preferred payment methods is one of the most common causes of checkout abandonment.

Economically, fee structures matter: the per-transaction rate, fixed fees, chargeback costs and, on Shopify, the additional transaction fee charged when you use an external PSP. It is worth calculating whether Shopify Payments or an external provider is cheaper for your volume.

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Related terms

Shopify Payments
Shopify Payments is Shopify's built-in payment service. It processes credit cards, Apple Pay, Klarna and other payment methods directly in the store, without an external payment provider.
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Transaction Fees
Transaction fees are per-order costs. On Shopify, they apply on top of payment fees whenever an external payment provider is used instead of Shopify Payments.
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Checkout
The checkout is the final purchase flow of an online store: every step from cart handover through address entry and payment selection to the order confirmation.
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