EXCLUSIVE: “The 5 Challenges Facing PSPs (and How to Solve Them) – Sarah Koch, Aevi in ‘The Fintech Magazine’

Aevi, a payments orchestrator that specialises in in-store payments, is helping PSPs and their merchants bridge the cross-channel divide, as Sarah Koch explainedIt’s no secret that many non-bank payments services providers (PSPs) are finding it harder to stay competitive in a fast-changing and increasingly crowded landscape. But specialist in-person payment orchestrator Aevi puts it more bluntly. It believes ‘the extinction clock is ticking, unless they pivot fast’.

Sarah Koch, Aevi’s Director of Marketing and Communications, says PSPs face five major challenges: shrinking margins; regulatory pressures; increasing competition from Big Tech; rising merchant expectations; and security concerns.“In the last few years, we saw that PSPs can no longer rely on their role as a middleman. Gone are the days when you can just process payments,” says Koch.



“On the one hand, we’re seeing compressed margins. Just transferring money doesn’t do it anymore. PSPs really need to differentiate to survive.

“We also see big players entering the market, the Big Techs like Apple, who want to integrate directly with merchants, meaning PSPs will potentially be cut out. And then merchants’ expectations are rising. They want more than just payments, they want to deliver an ultimate consumer experience at the point of sale, not only in-store, not only online, but holistically.

And if a PSP cannot offer this approach, the merchant will go to another supplier. There are also compliance challenges. With PSD3 in Europe, for example, coming to the market and other regulations.

And, last but not least, security is also a big concern. As the payment landscape evolves, so does the cyber threat landscape, so PSPs really need to work on their strategy for fraud detection and fraud risk management.”A shakedown by merchants is already happening, according to a survey by UK open banking platform Go Cardless.

By the end of 2023, it found that half of the businesses it polled used three or more PSPs for their transaction needs, while one in 10 firms used at least five providers. But with cost reductions being cited as a key priority, two-thirds of the companies said they were looking to reduce the number of PSPs they use and 34 per cent were planning to do so over the following 12 months.So what lifelines can payment orchestrators like Aevi throw to embattled PSPs?The answer is a Cloud-based platform that offers a one-stop shop of deeply integrated financial services such as payment accounts, account-to-account transfers, card issuing and revenue-based financing that not only streamlines workflows for merchants, ISVs and financial institutions but can also enhance risk management across the payments value chain.

The latter was identified by market analysts McKinsey last year as being one of the key challenges facing PSPs and merchants, when the cyber threat landscape is evolving as fast as the payment industry itself and just one data breach can destroy customer trust and cause irreversible damage.McKinsey highlighted four areas that companies can focus on to gain a competitive edge: strengthening risk processes to maintain regulatory compliance; fighting fraud while enhancing customers’ experience; building operational resilience to prevent failures; and improving credit and collection processes to address a new normality.“The payments industry is being confronted with high levels of risk, intensifying regulatory scrutiny, and significant changes in global standards, especially in key markets such as Europe, the United Kingdom, and the United States,” the McKinsey report warned.

“Just transferring money doesn’t do it anymore. PSPs need to differentiate to survive”“In this context, players in the payments value chain should not just react but proactively spearhead new risk management strategies. At Aevi, we’ve built a platform that really helps PSPs to thrive in that emerging landscape,” says Koch.

“A Cloud-based orchestration platform that does more than just payment processing.”The platform offers real-time compliance tools that help companies stay ahead of changing regulations with built-in monitoring and reporting. Its data-privacy-by-design model ensures they meet global standards like the General Data Protection Regulation that impacts all businesses trading in and with Europe and the UK, while handling sensitive customer data with confidence.

And its solutions are designed to integrate easily into existing systems, making compliance less disruptive and more efficient.Like McKinsey, Aevi sees compliance as capable of offering a strategic advantage by helping businesses build trust, reduce risks, and drive innovation, leveraging tools like real-time monitoring and automated reporting so organisations stay ahead of evolving regulations.Unifying in-store and onlineThe company has a strong track record in payments innovation.

In 2015 it created the world’s first smartPOS and it is now a leading provider of softPOS technology, which allows phones or tablets to be used as roaming POS devices. Designed initially to help micro merchants, softPOS is increasingly being taken up by larger enterprises.Aevi now stands at the crossroads of an old payments ecosystem that featured multiple standalone providers in the payments chain, and a new order, which is characterised by partnerships providing deeply integrated experiences in-store and online, often simultaneously for the same merchant.

Late in 2024, Aevi entered a strategic partnership with e-commerce payment orchestration platform Paydock to deliver an omnichannel payment orchestration offering for financial institutions, merchants and ISVs. It enables businesses to centralise their online and in-store payments through a single reporting interface, bridging the gap between digital and physical payments but still allowing them to process through multiple acquirers. Earlier this year, Aevi also announced a new collaboration with IXOPAY, an enterprise-grade payment orchestration platform, to help merchants unify their global payment systems by connecting card-present and card-not-present solutions.

That’s important, because more than a quarter of UK merchants don’t offer the digital shopping features that customers want, according to PYMNTS’ 2024 Global Digital Shopping Index. It coined the phrase ‘click and mortar’ to describe customers’ cross-channel online and in-store shopping journeys and found the portion of UK shoppers adopting click-and-mortar habits had risen by 29 per cent since 2020.By the time the 2025 report was published earlier this year, still only 61 per cent of merchants were offering cross-channel experiences, though.

A collaboration in 2024 with SilverFlow, a Cloud platform for global card processing, has allowed Aevi to bring data from all those transactions, online and off, to different players in the market.“Data is a really crucial component in today’s payment landscape,” says Koch. “With Aevi’s in-person payment orchestration platform, plus SilverFlow’s Cloud-based processing, we can give merchants access to real-time data and, more importantly, also cross-channel data, so they can see in their portals what are their peak transaction times, for example.

Then they can make decisions on staffing, inventory and operations to deliver the best merchant experience for the consumer.”Koch says giving merchants flexibility by offering a range of online and in-store payment options is crucial as customers demand ever more choice.“In-store consumers seek the flexibility and choice that they can find online, where they can simply select different payment methods, from PayPal to BNPL to credit card transactions.

This is what we also want to bring to the in-store experience. By offering a smartPOS, a softPOS, or a traditional device, we can deliver a tailored merchant experience, but being flexible in payment processing is even more crucial. We can route to different payment rails to offer the best cost for merchants, and in the end, the best payment journey for the consumer.

” This article was published in The Fintech Magazine Issue 34, Page 22-23The post EXCLUSIVE: “The 5 Challenges Facing PSPs (and How to Solve Them) – Sarah Koch, Aevi in ‘The Fintech Magazine’ appeared first on FF News | Fintech Finance..