by Konstantin Djelebov, Chief Product Officer (Paynetics)
Over the past decade, payment service providers (PSPs) have steadily moved beyond their traditional role as transaction processors. Today, many are on a trajectory that closely resembles that of digital banks — embedding financial services directly into the workflows of merchants, platforms, and consumers.
So, what does it mean to be a PSP in 2025? And what separates the players who merely process from those who really orchestrate?
From Pipes to Platforms: The Quiet Reinvention of PSPs
The traditional value proposition of PSPs was technical and transactional: plug in acquiring capabilities, enable card acceptance, and move on. But as digital tools matured, those basic services started to feel limiting — both for merchants and for PSPs themselves.
Merchants now expect more than card acceptance. They want unified financial flows, instant settlement, access to working capital, and value-added services like FX, loyalty, and real-time analytics. In parallel, platforms — particularly vertical SaaS and marketplaces — see payments not just as a cost center, but as a growth engine. To meet these rising expectations, providers need to do more than facilitate transactions — why not boost stickiness while unlocking new revenue streams?
Embedded Finance Without the Banking License
We live in an era where PSPs can now embed financial functionality — like digital wallets, IBAN accounts, card issuance, cross-border payouts, and even lending — without holding a banking license. This lets them extend their relevance across the full transaction lifecycle, from onboarding to settlement to re-engagement. It also allows them to serve as the financial infrastructure for vertical platforms and marketplaces that do not want to build banking capabilities from scratch.
But this shift requires more than APIs. It demands careful orchestration of compliance, infrastructure, customer experience, and commercial viability. This is where strategic partnerships — namely with regulated infrastructure providers — are making the difference between incremental upgrades and truly transformative value propositions.
Why This Matters Now?
This new PSP model — one that mirrors digital banks in functionality, agility, and reach — is not just a product of fintech hype. It is a direct response to how merchants and platforms now consume financial services:
- They want ownership. White-labeled, embedded, and branded experiences that keep their customers inside their ecosystem.
- They want control. Access to transactional data, user behavior, and smart analytics to inform everything from marketing to lending.
- They want flexibility. Modular services that grow with their business and can be deployed quickly — without navigating regulatory complexity.
For PSPs, this means rethinking their role from passive intermediary to strategic enabler. For merchants, it is a signal that financial services are becoming just as customizable and integrated as the software they use to run their businesses.
The Strategic Role of Enablers
Few PSPs have the regulatory scope or infrastructure to offer this all alone — and they should not have to. A new breed of enablers has emerged: dual-licensed, API & SDK-native, and purpose-built to support PSPs in launching embedded financial products with minimal friction.
These partners operate in the background, handling the complexity — licensing, compliance, tokenization, settlement rails — so PSPs can focus on delivering differentiated, branded experiences to their customers.
If done well, the PSP retains the relationship, the data, and the brand value. The enabler becomes the engine room. And the merchant gets a seamless, integrated financial journey.
A Glimpse Ahead
As the lines between PSPs, fintechs, and digital banks continue to blur, the most valuable players will be those who master the art of embedded orchestration — acting like banks where it matters and innovating like software companies where it counts.
For PSPs looking to scale into this next chapter, success will hinge on choosing the right infrastructure partners — those that combine regulatory reach, embedded finance expertise, and the flexibility to adapt to unique business models.
The financial services market has evolved significantly, with many providers already adapting to the new technological and regulatory landscape. Today’s infrastructure solutions offer licensed financial rails, modular service components, and embedded capabilities that enable payment service providers (PSPs) to accelerate their operations while maintaining high standards of compliance, security, and user experience. From card issuing and IBANs to digital wallets and mobile payment integrations such as Apple Pay and Google Pay, these platforms support PSPs in becoming comprehensive financial service providers.
Because in the future of payments, it is no longer just about processing transactions. It is about designing seamless financial experiences — and becoming the trusted heartbeat of every customer relationship.