Checkout solution vs payment provider: what's the difference?

What is a payment service provider?

A payment service provider, or PSP, lets your store take money online. It connects you to card networks, wallets and bank transfers, processes each transaction and settles the funds to your bank account. Most PSPs also handle fraud screening, refunds, disputes and reporting.

PSPs are regulated. In Sweden, Finansinspektionen supervises both payment institutions and registered payment service providers.

What a PSP doesn't usually decide is how the checkout looks to your shoppers. Many offer a payment form or an API, and you build the rest of the flow around it.

What is a checkout solution?

A checkout solution runs the whole step where a shopper turns a cart into a purchase. It covers which payment methods appear and in what order, pre-filled address details, delivery options, the confirmation page and how the flow works on mobile and desktop.

Its job is to get more of the shoppers who reach this step to finish buying. That's why you judge a checkout solution on conversion, not only on fees.

Why does the difference matter for your store?

Because many lost sales are decided in the checkout experience, not in the processing behind it. The Baymard Institute puts the average documented cart abandonment rate at 70.22%, based on 50 studies (updated September 22, 2025).

In Baymard's survey of US shoppers, common reasons to abandon include extra costs (40%), slow delivery (20%), having to create an account (18%), a flow that's too long or complicated (17%) and too few payment methods (9%). Delivery, the number of steps and the options on offer are all set in your checkout.

Here's how much that can matter. When Adlibris built delivery options into its checkout with Kustom and Ingrid, the share of visitors completing a purchase rose from 55.4% to 61.8% in an A/B test. That's a relative increase of 11.5%.

How do a checkout solution and a payment provider work together?

The checkout collects the order and the shopper's choices, and the payment provider handles the money behind it. A typical online purchase runs like this:

1. The shopper reaches the checkout, often with address details already filled in.
2. They choose a delivery option and a payment method, such as card, Swish or invoice.
3. The payment provider gets the transaction approved by the card network, bank or invoice provider.
4. The shopper lands on the confirmation page.
5. When you capture the order, the funds are settled and paid out to your account.

Some setups split these roles between two companies. Others bundle them, so a single agreement covers the checkout and the payments.

Which setup fits your store?

There are three common setups, and each suits a different kind of store.

• Your platform's own checkout and payments.
  Fits stores that want to start fast and sell in one market. The trade-off is less control over payment methods, design and partners.
• A payment provider plus a checkout you build yourself.
  Suits merchants with developers who want full control of the flow. You own the design, and the work of testing and improving it.
• A checkout solution with payments included.
  Works for merchants who want local payment methods, delivery options and a tested flow without building it, usually under one agreement.

If you sell in one market with a small range, your platform's checkout may be all you need. Once you sell across Sweden, Norway and Finland, local favorites and delivery choices start to matter more.

Where does Kustom fit?

Kustom is a fintech company, and Kustom Checkout is a checkout solution. It gives you payments, built-in shipping and international market setups through a single API, with cards, Klarna, Apple Pay, PayPal and local favorites like Swish.

More than 24,000 businesses worldwide trust Kustom to power their checkout. With pre-filled details, over 90% of your shoppers skip the forms.