PSP Revenue Diversification Strategies Beyond Processing

PSP revenue diversification strategies add income beyond processing fees by charging merchants for software, value-added services (VAS), data products, risk tools and support. The strongest portfolio is not the one with the most services: it is the one eligible merchants adopt, that earns positive contribution after delivery and partner costs, and that runs safely on the payment terminals already in the field. The fee pool is worth the effort: McKinsey estimates that fee income made up 54 percent of global payments revenue in 2025.

Key takeaways

• Processing alone is a narrowing base. McKinsey projects global payments revenue growth to moderate to about 4 percent a year from 2025 to 2030.
• VAS income can sit apart from volume. Global Payments says its fees for specific value-added services "may be unrelated to the number or value of transactions".
• Profit is not automatic. Judge every service on contribution after partner share, delivery, support and risk costs.
• Retention has to be proven. Use matched cohorts before you claim that a service reduces churn.

How we put this guide together

This guide to PSP revenue diversification strategies draws on public company filings, McKinsey's payments research, the Payment Systems Regulator (PSR), the PCI Security Standards Council (PCI SSC), EMVCo and the Information Commissioner's Office (ICO), all checked on 10 October 2026. Zeal sells value-added services to payment service providers (PSPs), so we have a commercial interest in this topic, and we say so wherever Zeal appears. Listed companies report on different bases, so we compare definitions rather than rank providers.

Why PSP revenue diversification strategies matter now

Payments is still a growing revenue pool, but growth is slowing. McKinsey's 2026 Global Payments Report says global payments revenue grew from $1.7 trillion in 2020 to $2.6 trillion in 2025, and projects growth of about 4 percent a year to reach $3.2 trillion by 2030. In 2025, fee income contributed 54 percent of that revenue and net interest income 46 percent.

Listed providers already treat software and VAS as a distinct kind of income. Global Payments' FY2025 Form 10-K says it earns "software subscription and licensing fees, as well as other fees for specific value-added services, which may be unrelated to the number or value of transactions". Shift4's 10-K says it generates subscription revenue from licensing software, business intelligence tools and payment device management, and Fiserv's Q2 2026 results presentation reports Clover "VAS penetration of 25% vs 24% a year ago". In-person payments are still growing at scale: Adyen reported in-person payment volumes of €311 billion for 2025, up 34%. Merchants are already buying, too: in McKinsey's survey, 70 percent of small businesses used at least one value-added service from their payments provider.

Key terms in the PSP business model

Table 1. Definitions used in this guide.

Our benchmark of Adyen, Shift4 and Lightspeed shows why these measures cannot be compared across companies without normalisation.

Value-added services for payment service providers: what to charge for

Terminal-resident software can turn an existing device estate into a distribution channel for merchant services, provided the exact terminal, payment application, acquirer route and terminal management system (TMS) support the deployment. Risk and compliance services add a second family of revenue that does not depend on the terminal at all.

Table 2. Value-added services PSPs can charge for, with common billing models.

As one example of the first row, Zeal's Premium plan is provided through the payment provider on a revenue share or an annual licence across nominated terminals. A hardware-agnostic SDK can reduce the need to replace devices, but it does not make every terminal compatible: production hardware, operating system, payment application, TMS, certification and commercial permissions all still decide what can be switched on.

Monetising payment terminal data without losing trust

The data-to-insight pipeline starts with a reliable hierarchy of merchant, location, MID, TID, terminal and transaction. Basic MID reporting can then become timely visibility of activity, transaction trends, terminal status and selected merchant-health signals. With the right contracts, permissions and identity methods, a merchant tool may analyse frequency, recency and spend for recognised customers, and package them with campaign tools and alerts. The billable product is a governed decision workflow, not unrestricted raw payment data.

A payment credential is not a person. EMVCo explains that an EMV payment token can be constrained to a specific merchant, device or payment scenario, so a card credential is an imperfect universal identifier, especially across mobile wallets. The ICO's pseudonymisation guidance, under review after the Data (Use and Access) Act, says pseudonymised data is personal data in the hands of someone who holds the additional information, and its legitimate interests guidance says legitimate interests can support direct marketing only where PECR does not require consent. Keep estate analytics separate from personal data and marketing activation.

How do PSPs increase merchant retention?

Merchants can leave. In the PSR's card-acquiring market review, 16% of small and medium-sized merchants had switched provider in the previous two years, and the PSR's 2022 remedies added trigger messages that prompt businesses to shop around and an 18-month cap on payment terminal contracts for the 14 directed firms. Shift4 says its merchant agreements are "generally lasting three years on average" and that it retains customers "through high-value tools that enhance their operations and reduce the incentive to switch providers".

Useful software, loyalty, merchant tools and support can strengthen a relationship, but no public evidence we reviewed proves that a given service, or a given number of services, reduces churn. Merchants who buy more services may already be larger or more engaged. Measure retention through comparable cohorts: define logo or location churn, control for merchant size and tenure, and deduct programme cost. Estate data can help you act earlier. Zeal's estate visibility view scores churn risk from volume trends, transaction recency, payment acceptance health and terminal activity, but those are signals to investigate, not proof of imminent churn; our merchant churn cost framework shows how to value each retained merchant.

Terminal-resident software for loyalty programmes: deployment and control

Fragmented loyalty rules, data, terminal versions and commercial ownership can make VAS expensive to support, so settle three boundaries before selling.

Hardware

Hardware-agnostic design reduces dependence on one device family but does not remove qualification. Audit model, operating system, firmware, payment application, peripherals, connectivity and retirement date by cohort. The standards now expect apps on terminals: the PCI SSC's PTS POI v7.0 added a requirement to allow third-party applications.

Software

Use approved TMS or curated distribution for packaging, configuration, version control and rollback. PAX reports that PAXSTORE connected to over 16 million payment terminals at the end of 2025, with centralised terminal management and application distribution; Adyen distributes uploaded apps on a schedule, by profile or by API; and J.P. Morgan's documentation describes a TMS agent that runs alongside its payment application and handles operating system, application and configuration updates.

Flow

Keep VAS around the protected payment application, not inside certified payment functions. In Zeal's reference architecture, a separate VAS layer receives an approved, non-payment reference and the recognition flow excludes the PIN, CVV, full card number, payment cryptograms and payment keys. Tokenisation still does not automatically remove PCI DSS scope: the PCI SSC's tokenisation guidelines keep every component of a tokenisation system in scope, and FAQ 1301 says approved devices do not by themselves guarantee PCI DSS compliance. An app-free journey is not consent-free, so verify identification, receipts, refunds, offline behaviour and failure recovery. Our card-linked loyalty overview shows how recognition, enrolment and rewards fit together.

How to evaluate revenue, gross profit and contribution

Use one contribution framework for every proposed service, with the same billable unit throughout:

• Service revenue = eligible billable units × attach rate × recognised price per unit
• Service gross profit = service revenue − direct cost of service
• Service contribution = service gross profit − partner share − support − payment risk − other attributable costs

A merchant attach rate cannot be multiplied by a terminal price without first converting merchants into eligible terminals.

Table 3. Go or no-go questions for each new service.

A five-step roadmap for launching a VAS portfolio

1. Audit the terminal estate. Map terminal model, operating system, payment application, TMS route, MID and TID hierarchy, ownership and replacement schedule, then segment the eligible base before forecasting revenue.
2. Choose one high-value use case. Start with a single merchant problem, such as loyalty, feedback, estate visibility or chargeback workflow, and score willingness to pay, delivery complexity, regulatory exposure and support load.
3. Select a flexible partner architecture. Hardware-agnostic and acquirer-agnostic design can reduce lock-in, but ask for evidence of compatibility and a clear responsibility matrix for each estate.
4. Build the commercial model. Define the billable unit, price, attach-rate cases, direct costs, revenue share, support and cancellation terms, and train teams to sell merchant outcomes rather than another line on a rate card.
5. Pilot, reconcile and expand. Validate activation, billing, merchant usage, incidents and contribution in a limited cohort, and expand only when the operating evidence supports the case.

What we have learned helping PSPs add VAS since 2019

I co-founded Zeal with Bellal Mohamed in 2019, and I have spent seven years building value-added services that PSPs deploy on their own payment terminals. We built the core technology in 2020 and 2021, when Visa recognised Zeal as an up-and-coming solution, and we tested it in the real world for two years, 2022 and 2023, with Ingenico as a strategic partner; merchant feedback from that testing guided key improvements. Since 2024 we have added Castles and other industry partners. Zeal is an award-winning value-added services provider for payment terminals. In my experience, three practices separate services that scale from pilots that stall:

• We confirm the terminal first. In my experience, supported models vary, so each terminal is checked before anything is switched on.
• We deploy through the PSP's TMS. PSPs deploy the SDK to their own estates, so merchants install nothing.
• We agree data requirements up front. Integration and customer-data requirements are settled before deployment, and Zeal works alongside the existing EPOS and payment processing.

Table 4. The Zeal product set, from Zeal's own product documentation.

The outcome so far: more than 30,000 merchants activated on Zeal across payment providers, seven live UK partners (Adyen, DNA Payments, Elavon, Lloyds Cardnet, NMI, Viva Wallet and Worldpay) and 4 million payment terminals in our partners' signed activation pipeline. We have raised $14 million in total, and the team won Team of the Year at the UK FinTech Awards 2026. Every deployment still has to be confirmed for the exact estate, partner responsibilities and market.

Frequently asked questions

What is the best first revenue stream beyond processing?

There is no universal answer. Start with the merchant problem that has clear willingness to pay and the lowest operational burden for your eligible estate, then compare attach-rate potential, direct cost, implementation risk and support load before choosing a pilot.

Are software and VAS always higher-margin than processing?

No. Subscription revenue can be less exposed to payment volume, but gross profit depends on engineering, licences, data, deployment, support, sales and partner costs. Classify every cost before calling a service high-margin.

How should a PSP calculate VAS attach rate?

Divide activated, billable units by the units genuinely eligible for the service in the same period, and state whether the unit is a merchant, location, MID or terminal. Exclude incompatible or contractually unavailable units.

Can payment terminal data be sold to merchants?

A PSP can package permitted estate and transaction insight into merchant software, but access does not remove contractual, privacy or security obligations. Define data roles, lawful basis, purpose and retention, and sell the decision workflow rather than raw customer data.

Can a PSP charge for chargeback management services and PCI DSS support?

Yes, where contracts and capabilities permit, through subscriptions, case fees or managed-service tiers. Specify what is included, who owns decisions and liability, and never present PCI DSS support as automatic compliance or certification.

Sources

• McKinsey & Company, The 2026 Global Payments Report, 25 September 2026, and As ISVs disrupt payments, can merchant acquirers stay relevant?, 22 September 2022.
• Global Payments, Form 10-K for FY2025; Shift4 Payments, Form 10-K for FY2025; Fiserv, Q2 2026 results presentation, 6 August 2026; Adyen, H2 2025 financial results, 12 February 2026.
• Payment Systems Regulator, Card-acquiring market review: final report, November 2021, and PS22/2 remedies: final decision, 6 October 2022.
• PCI Security Standards Council, PCI DSS, FAQ 1301, PTS POI v7.0 and tokenisation guidelines; EMVCo, EMV Payment Tokenisation.
• Information Commissioner's Office, Pseudonymisation and Legitimate interests (updated 23 March 2026).
• PAX Technology, PAX 2025 annual results, 25 March 2026; Adyen, Android terminals; J.P. Morgan, In-store payments documentation.

About the author

Omar Ebeid is Co-founder and CEO of Zeal, which he founded with Bellal Mohamed in 2019. He holds an MSc in Entrepreneurship from the University of Bath and won the Vice-Chancellor's Award at the University of Surrey. Under his leadership Zeal won Team of the Year at the UK FinTech Awards 2026 and Platinum at the Juniper Research Future Digital Awards 2023, and has raised $14 million in total, including a $10 million pre-Series A round announced on 9 September 2026. Connect with Omar on LinkedIn.