How Can Payment Service Providers Optimize Payments?

January 6, 2026

Payment Service Providers (PSPs) provide value added services for Merchants. They use integrations and embedded functionality to make various aspects of payments quick and easy. The traditional model of needing a fleet of developers and specialized knowledge to set up infrastructure and tools is being phased out. Merchants now turn to PSPs for everything from dispute services and tools to payment optimization and gateways—PSPs make modern payments possible.

For ISOs, integrations and relationships with the right PSPs can decrease Merchant churn and boost revenue. Let’s unwrap the PSP relationship a bit more and discuss their impact for Merchants.

How do PSPs Optimize Payments?

This simple question has many nuances, with a simple generalization—PSPs optimize certain aspects of a Merchant’s payments ecosystem. Merchants can use specific gateways to improve payloads, mitigation tools to reduce risk, decline salvage services to improve payment yields, analytics tools for more granular insights, and even Point of Sale (POS) terminals. Examples can include:

A Merchant’s declines are rising, so they turn to a third-party analytics tool (a PSP) for insights on why
A Merchant wants to recapture lost revenue due to chargebacks, so they pick up a tool to generate representments (another PSP)
A Merchant is breeching compliance, so they are referred to a chargeback mitigation service (that service is a PSP)
A Merchant needs a fast solution for hooking their Processor up to their ecommerce solution. Well, there’s a list of Gateways (more PSPs) to streamline the process

Merchants are Bloated by Too Many PSPs

The hard truth of the legacy Merchant approach to PSP integration is that it does not work. Merchants are forced to enroll in services they barely understand. None of the systems aggregate data into a holistic picture and the Merchant ends up juggling interfaces that are completely different for every task.

3 Ways That Integrations Can Generate Opportunity for ISOs

The question for ISOs is…why are you outsourcing these margin opportunities directly to third parties?

We know that ISOs can take a higher percentage when processing high-risk Merchant transactions as compared to low-risk Merchant transactions. Increasing profits then comes from enrolling more high-risk Merchants (increasing the top of the funnel) and keeping them healthier and happier for longer (growing Merchant life-time value). In addition, offering value-added services directly to your Merchants can be a phenomenal way of increasing margins and strengthening your relationship with them.

There are three ways that the right partnerships can make-or-break the bottom-line for an ISO.

First, PSPs have their own network of integrations. You look at any gateway or payment software and they will have specific partnerships. Having the right PSP relationships can make the ISO more attractive to Merchants.

Secondly, PSPs have their own brand recognition. That’s a powerful asset to leverage. Occasionally a Merchant seeks out a specific PSP, which can drive the decision of which ISO to work with.

Lastly, PSPs make the Merchant’s life easier when the ISO becomes a one-stop shop for the Merchant. They alleviate the need for technical teams to build functionality from scratch, figure out the analytics, or hard-code APIs. A lot of PSPs are clean and easy to use for any Merchant.

The Rise of Integrated Payments

Integrated payments mean processing functionality is built directly into an existing software. It’s cheaper, simplified, and faster to adopt a single software with all the necessary features, with options to integrate additional add-ons, than to string together a handful of tools with overlapping functionality.

For ISOs, integrating PSPs into a holistic solution for Merchants means that your Merchants won’t feel overwhelmed and distracted from what they do best… SELL! It means a specific solution can be tailored around your specific industry, which keeps Merchants healthier and happier. And it means that ISOs can increase margin on enrolled Merchants.

Slyce360 Gives You New Revenue Generating Opportunities

Slyce360 enables data-driven decisions. Merchants get tools to understand and address rising payment problems, monitor compliance thresholds, and optimize representments.

That means happier and healthier Merchants.

That means less churn.

Learn more about Slyce360 today!