If you are following our article series, you know that we have already explored the topics of: first steps of starting your brokerage, platform provider choice, liquidity provider choice and CRM selection. The next vital (yet often overlooked) step to starting your brokerage is the choice of your payment service provider (PSP).
What is a PSP & why do I need one?
In the digital world we live in today, the number of money deposit forms available online is vast. Granting your clients a choice of deposit methods always goes a long way, but integrating each and every one of them separately is not only complex, but also very costly.
The nature of the forex business also implies high transaction volumes and jurisdictional regulations. The failure to consider this may result in deposit issues, dissatisfied clients, and consequently – money loss.
This is where payment providers (PSPs) come into play. Simply put, a PSP is a third party that allows you to accept a wide variety of payments through a single channel. Forex payment providers are specifically designed to handle large transaction volumes and respond to regulation requirements when doing so, not only cutting your costs, but also saving you organizational trouble.
How do I choose the right PSP?
Naturally, there are a variety of factors to consider when choosing a PSP. Starting from the provider’s risk profile, to countries of operation, technical aptitude, number of available currencies, amount of payment channels, transaction costs, holding time, stability and reputation. A reliable PSP can also get you better conversion rates, hence boosting your overall performance.
These companies specialize in facilitating card transactions for industries like gaming and FX/CFD brokerages, which makes them fully equipped to prevent underlying issues, such as chargebacks that can end up causing broker losses.
Something to keep in mind is – there are many PSPs that come to market, and a large majority of them are new. Brokers generally like to choose established and reputable PSPs that service other intermediaries as well, because they have a reason to protect their reputation, as opposed to unknown, “new-born”providers.
All in all, it mainly comes down to reputation. As in the case of liquidity, CRM and platform providers – it’s essential to do your research and make sure your provider of choice offers the transaction speed, comfort of deposit and security for both incoming and outgoing transactions.
How does it all come together?
It’s vital to consider whether your trading platform is compatible with your payment service provider of choice. Some trading platform solutions contain bugs that impede deposits, which can not only cause client frustration, but also prove to be insecure.
cTrader can be flawlessly connected to any PSP, CRM and liquidity provider you have in mind via cTrader’s various APIs, so if you look to start your own brokerage – don’t hesitate to reach out to us today!