FCA priorities put PSP controls higher in merchant procurement

The UK Financial Conduct Authority’s payment priorities are changing how merchants assess payment service providers, according to Alpa Jotangia, head of compliance at Ecommpay. In an opinion published by Finextra, Jotangia said PSP selection is expanding beyond price, market coverage, authorisation performance, payment methods and checkout conversion to include evidence that providers can support growth without adding regulatory or operational risk.

Jotangia identified safeguarding, Consumer Duty, financial crime controls, operational resilience and governance as the FCA areas now shaping procurement discussions. She argued that merchants still need commercial performance from payment partners, but that trust and control standards are becoming part of the buying scorecard.

Payment service providers sit between merchants, customers, acquirers and other payment infrastructure. They help process transactions, route payments and support settlement. If controls are weak, Jotangia said the consequences can extend beyond payments into delayed settlement, poor customer outcomes, regulatory disruption, reputational damage and obstacles to entering new markets.

Compliance moves into the commercial process

Jotangia said the central procurement question for merchants is moving toward whether a provider can be relied on as a platform for growth. She described that as both a compliance issue and a commercial issue, because payments now affect revenue, customer experience and international expansion.

According to Jotangia, merchants do not transfer their own compliance obligations by appointing a PSP. They remain responsible for their own oversight, customer outcomes and regulatory duties. A stronger provider, in her view, should make that oversight clearer by giving merchants usable evidence about its controls and operating model.

That changes the sequencing of due diligence. Questions that may previously have sat with legal, risk or compliance teams late in a procurement process are moving earlier into commercial evaluation, Jotangia wrote.

She said merchants should ask providers for evidence on issues including:

• how customer money is protected;
• how incidents are handled and reported;
• how third-party dependencies are monitored;
• how regulatory change is tracked and implemented;
• how Consumer Duty is built into products, processes and decision-making.

New payment models add pressure

Jotangia also linked the procurement shift to emerging payment technologies. Open banking, stablecoins, tokenisation and agentic AI payments create commercial opportunities, she wrote, while also raising harder questions about accountability, data use, operational resilience, customer understanding and financial crime exposure.

Her argument reflects a broader change in how merchants view payments. Payment operations are increasingly discussed as a way to support revenue, reduce waste, improve conversion and help expansion into new markets. Jotangia said those benefits depend on whether the provider can sustain performance under pressure and demonstrate the governance behind its claims.

She cautioned that competitive pricing or performance promises may carry less weight if a provider cannot show robust safeguarding, governance and financial crime controls. For merchants, the practical implication is that procurement teams may need to compare providers on documented control standards alongside commercial terms.

Finextra published the piece as external opinion by Jotangia. The platform said external content is provided without editing and represents the views of the author.

This story draws on original reporting from Finextra Research.