The Hidden Costs of a Single PSP Dependency

Many eCommerce merchants start with a single payment service provider (PSP) like Stripe, PayPal, or Shopify Payments, and for good reason. It’s simple, fast to implement, and gets revenue flowing without any upfront underwriting. But as your business grows, this single-provider dependency becomes more than just a technical decision; it becomes a risk decision.

The hidden costs of using only one PSP are rarely visible until it's too late: unexpected outages, lost revenue, payment declines, inflexible fees, and even account freezes. The more reliant you become on one provider, the more fragile your entire revenue stream becomes.

In today’s eCommerce landscape, PSP diversification isn't just smart, it's essential. Let’s explore what single-provider dependency really costs your business and how to solve it before it limits your growth.

What Is a PSP, and Why Do Merchants Depend on One?

A payment service provider (PSP) handles the processing of customer payments through credit cards, digital wallets, or alternative methods. They manage the infrastructure, security, and compliance, making it easy for merchants to start accepting payments.

The convenience of a one-PSP setup is hard to ignore. It reduces complexity and works well at the start. Merchants are able to easily track fees, processing volumes, reserve balances, and more, all in one centralized location with one provider. But over time, the lack of flexibility, limited processing volume, and approval rates become a bottleneck, and ultimately a liability.

The Risks Hiding Beneath a Single PSP Setup

While most merchants think their payment processor “just works,” the real dangers of relying solely on one provider are often hidden in the background. Here are the most common issues:

1. Volume Limitations

Getting approved with Stripe, PayPal, or Shopify Payments with little underwriting and information requested is great, until you scale too quickly and potentially holds your funds for review for 180 days or longer. When merchants are getting started, these providers work great. But when you plan on growing your business or scaling quickly, these providers do not play nice and pose a risk to your cash flow and operations.

2. Higher Fees with No Negotiation Leverage

With no competition, your PSP has no incentive to offer better rates. You’re often locked into standard pricing tiers or flat rate pricing models, even if your volume justifies lower fees. Diversifying and working with multiple PSPs gives you leverage to negotiate.

3. Limited Global Payment Options

A single PSP may not support all regions, currencies, or local payment methods. If you're scaling internationally, this leads to lower conversion rates and increased payment failures from unsupported customers. This can also lead to increased interchange fees on cross-border transactions.

4. No Flexibility in Decline Recovery

If a transaction fails with your primary PSP, that’s often the end of the line. Without a secondary option, and without smart retry or routing logic, transactions that would normally be recovered are lost permanently.

5. Account Freezes and Held Funds

If your account is flagged for high chargebacks, compliance issues, or sudden volume spikes, a PSP can freeze your funds to review your account or shut you down entirely. With no backup, your business could be offline for days or even weeks. This is common with processors who do little to no underwriting during the onboarding process. Ecommerce merchants who scale quickly or fluctuate in volume from month to month should consider working with a high-risk payment processor that has a higher appetite for this type of volume.

The Hidden Financial Impact

These risks translate directly into revenue loss. Consider this:

• Using a single PSP vs Multiple PSPs could mean higher approval rates and a difference of 10-15% or more in top-line revenue
  
  
  

• A reduction in approval rate due to failed retries or poor routing could mean tens of thousands lost per year.
  
  
  

• Processing $1M monthly at a Flat Rate instead of a negotiated Interchange Plus rate? Your processor could be taking more than they need on certain transactions, costing you additional tens of thousands. Request Interchange Plus pricing for the most transparent pricing.
  
  

Most merchants don’t notice these losses until they add up, or until a crisis forces them to act. By then, switching providers or setting up redundancy is a more complex task.

The Solution: Payment Redundancy and Intelligent Routing

The answer isn’t to abandon your current PSP, it’s to build resilience around it. That means introducing redundancy with multiple processors and a smart layer to manage them. With the right infrastructure, you can:

• Failover instantly when your primary PSP goes down or fails to accept a transaction
  
  
  

• Route transactions dynamically based on performance, geography, or volume
  
  
  

• Reduce fees by shifting volume across providers with better terms
  
  
  

• Recover failed transactions with smart retries and subscription dunning for recurring transactions
  
  
  

• Maintain uninterrupted checkout no matter what’s happening behind the scenes
  
  
  

This setup not only reduces risk, but it also actively improves performance and revenue.

How Lasso Solves PSP Dependency for Modern Brands

Lasso is purpose-built to give merchants full control over their payment ecosystem. Instead of locking you into a single processor, Lasso acts as a layer between your store and multiple PSPs, creating flexibility, visibility, and continuity.

With Lasso, you get:

• Multi-PSP integrations managed from a single dashboard
  
  
  

• Real-time routing logic that adapts to availability and transaction behavior
  
  
  

• Smart retry features to recover soft declines
  
  
  

• Processor performance analytics, including approval rates, decline reasons, and transaction volume
  
  
  

• Custom checkout experiences that aren’t tied to any one provider’s design limitations
  
  
  

You continue using Stripe, PayPal, or your preferred processor, but with the power to scale, switch, or failover at will. And because Lasso tracks everything using first-party data, your performance insights remain accurate, even in privacy-restricted environments.

Final Thoughts

Relying on a single PSP might feel efficient today, but it leaves your revenue vulnerable tomorrow. The hidden costs of this dependency, outages, fees, failures, and blind spots, compound over time and can severely limit your growth.

Forward-thinking brands build resilience into their payment strategy. With platforms like Lasso, you’re not just accepting payments, you’re controlling them. You gain the tools to reduce risk, increase revenue, and scale with confidence, no matter which processors you choose.

If you're serious about protecting your revenue and future-proofing your eCommerce stack, it's time to move beyond a single-PSP mindset.