If your company sells online—or plans to—sooner or later you’ll hear three terms that are often confused: acquiring, payment gateway, and PSP (Payment Service Provider). They all relate to card payments and digital transactions, but they don’t mean the same thing, they don’t solve the same problems, and they don’t provide the same level of control.
This pillar guide is designed for B2B audiences (finance teams, product managers, operations, e-commerce, and technical teams) who want to understand the payments ecosystem and make better decisions when integrating or optimising payments.
At NextGen Payment, we help businesses build payment infrastructures that are reliable, scalable and compliant—so let’s break down the key differences.
Quick Summary: Acquiring vs Gateway vs PSP (in 30 seconds)
Acquiring (Acquirer): the financial service that enables you to accept card payments and receive funds.
Payment Gateway: the technology layer that connects your checkout to the acquiring/processing network and handles security (tokenisation, 3DS, etc.).
PSP (Payment Service Provider): an all-in-one provider that bundles acquiring + gateway + extra services under one integration.
Important: You can use these services separately or combined, depending on your volume, markets, risk profile, and optimisation goals.
Why These Terms Are Often Confused
Many payment providers sell a “complete payment solution,” which makes everything look like a single service. But in reality, payments are a stack made of multiple layers:
Acquiring = financial layer
Gateway = technology layer
PSP = packaged service layer
Understanding the difference helps you answer key questions like:
Why are my approvals low?
Why are fees high?
Why is expansion to new countries so complex?
Why do chargebacks hurt more than expected?
1) What Is Acquiring?
Definition
Acquiring is the service that allows a business (merchant) to accept card payments and get paid.
An acquirer is the financial institution or acquiring processor that:
onboards the merchant (underwriting)
assigns a Merchant ID (MID)
connects the merchant to card networks (Visa, Mastercard, etc.)
handles settlement (getting funds to your business)
Without acquiring, you can’t truly accept card payments—even if your checkout looks functional.
What Does an Acquirer Actually Do?
Acquiring typically includes:
Merchant onboarding & underwriting
Risk management (including reserves)
Authorisation routing to networks and issuers
Clearing & settlement
Chargeback and dispute management
Reporting (depends on the provider)
Key Acquiring Terms You Should Know
MID (Merchant ID): your unique identifier within the card network ecosystem
MCC (Merchant Category Code): your business category; affects pricing and risk
Settlement: the process of funds being paid out to you
Rolling reserve: withheld funds used as risk protection
Chargeback: dispute initiated by the cardholder
When Does Direct Acquiring Make Sense?
Direct acquiring is often best when you:
have high transaction volume
want to negotiate MDR and pricing
need control over settlement timing
operate in multiple European countries
want better visibility into decline reasons and issuer behaviour
2) What Is a Payment Gateway?
Definition
A payment gateway is the technology layer that securely connects your website/app checkout to the acquirer or PSP.
Its role is to:
capture payment data securely
encrypt and tokenise card data
run authentication flows like 3DS
route the transaction to the correct processor
return an approval/decline response
Think of the gateway as the “technical bridge” between your checkout and the payments infrastructure.
What Does a Modern Payment Gateway Include?
A modern gateway can include advanced features such as:
Tokenisation (replace card data with tokens)
Vault (secure storage of payment credentials)
3DS / SCA support (critical in Europe under PSD2)
Smart routing (route transactions to improve approval rates)
Retry logic (intelligent retries on soft declines)
Network token support
Real-time monitoring and logs
Gateway vs Checkout: Not the Same Thing
These terms are often mixed up:
Checkout: what the customer sees (UI/UX)
Gateway: what processes the transaction behind the scenes
A gateway may provide checkout tools, but they are different layers.
3) What Is a PSP (Payment Service Provider)?
Definition
A PSP is a provider that offers a complete payment solution through one contract and one integration. It usually bundles:
gateway services
acquiring access (directly or via partners)
alternative payment methods
dashboards and reporting
refunds and reconciliation
sometimes fraud tools
PSPs are designed to reduce complexity and speed up launch.
What Can a PSP Offer?
Depending on the provider, a PSP can include:
card payments
APMs (Alternative Payment Methods)
wallets (Apple Pay / Google Pay)
bank transfers
subscriptions and recurring billing
marketplace features (split payments)
fraud prevention tools
reconciliation and reporting
PSP Pros and Cons
Pros
fast time-to-market
reduced operational complexity
single integration + unified support
ideal for early-stage scaling
Cons
less control over routing and optimisation
potential provider lock-in
limited visibility into issuer declines
less flexibility for multi-country performance tuning
pricing can be less competitive at scale
4) How They Work Together in a Real Payment Flow
Here’s a simplified flow:
Customer enters card details and clicks pay
The gateway tokenises and secures the data
The transaction is routed to the acquirer
The acquirer sends it through Visa/Mastercard to the issuer bank
The issuer approves or declines
The result returns to the checkout
Later, the acquirer settles funds to the merchant
Where does the PSP fit?
A PSP typically sits in the middle and handles multiple layers for you. You integrate once, and the PSP manages gateway + acquiring connections.
5) Common Integration Models (What Businesses Actually Use)
Model A — PSP Only (All-in-One)
Best for: SMEs, startups, MVPs, and early scaling.
✔ Fast implementation ✖ Less control
Model B — Gateway + Direct Acquiring
Best for: high-volume merchants, large retailers, fintechs.
✔ Full control + lower costs at scale ✖ More complexity and operations
Model C — Orchestration (Multi-PSP + Multi-Acquirer)
Best for: enterprises and international businesses.
✔ Resilience + best approvals by market ✖ Requires strong strategy and governance
6) Which Option Is Best for Your Business?
E-commerce & Retail (high volume)
focus: approval rate + cost optimisation
best approach: gateway + multi-acquirer or advanced PSP model
SaaS & Subscriptions
focus: tokenisation, recurring billing, dunning
key: strong vault + recurring payment flows
Marketplaces
focus: split payments + compliance
key: PSP or modular stack with KYC/AML capabilities
International expansion across Europe
focus: local payment methods + compliance + currency
best approach: orchestration and multiple acquiring options
7) Why Understanding Acquiring vs Gateway vs PSP Matters (Business Impact)
a) Cost structure and margins
The way your stack is built affects:
MDR
scheme fees
FX fees
per-transaction fees
chargeback costs
b) Approval rates and conversion
Better routing and setup can mean:
fewer false declines
higher conversion
more revenue without extra marketing spend
c) European compliance
Europe requires strict compliance with:
PSD2
SCA
3DS2
country-level and issuer-level rules
8) Key Questions to Ask Before Choosing a Provider
If you’re evaluating a PSP
Do you offer local acquiring in each country?
Which APMs are available per market?
How much decline visibility do we get?
Can we port tokens if we switch providers?
How do you manage SCA and 3DS?
If you’re evaluating a gateway
Do you support multi-acquirer routing?
Do you provide smart routing and failover?
Is tokenisation and vault included?
What is your SLA and support model?
If you’re evaluating direct acquiring
Can we negotiate MDR by volume?
What reserves apply to our vertical?
What are settlement terms and timelines?
How are disputes and chargebacks handled?
Conclusion: The Right Way to Think About the Payment Stack
To summarise:
Acquiring enables card acceptance and settlement.
Gateway connects and secures the transaction flow.
PSP bundles services into one integration.
For B2B companies, the key is not asking “which provider is best,” but:
Which payment stack model best matches our volume, markets, risk profile and growth plans?
Want to optimise your payments stack?
At NextGen Payment, we help merchants and fintechs build scalable payment infrastructures—whether you’re launching in one market or expanding across Europe with multi-acquirer strategies.
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