The Costs of Payment Service Provider (PSP) Lock-In
Blog post from Basis Theory
Vendor lock-in occurs when a customer becomes dependent on a provider and faces major technical, contractual, or financial barriers to switching, a risk that can be especially significant with full-service payment service providers that store cardholder data on their own systems. Merchants may be unable to transfer stored payment credentials without costly portability fees or may be bound by long-term contracts, limiting their ability to adopt new technology, negotiate pricing, add partners, or bring payment operations in-house. This imbalance can reduce competition and innovation while enabling providers to raise costs or impose unfavorable terms. Suggested safeguards include regularly comparing vendors, negotiating termination and data-portability clauses, and retaining ownership of customer payment data from the outset. The passage presents programmable payment vaults, including Basis Theory, as a way for merchants to connect with multiple providers, manage compliance and payment flows, and preserve control over their data while maintaining the ability to migrate away.
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