Definition:
Payment Service Providers (PSPs) are third-party companies that facilitate electronic transactions between businesses and consumers. They process payments through credit cards, bank transfers, digital wallets, and other payment methods.

Contextual Explanation:
PSPs play a crucial role in financial ecosystems by offering secure, fast, and compliant payment processing solutions. They must adhere to financial regulations, including AML and KYC requirements.

Why It Matters:
PSPs help businesses expand their reach by enabling seamless and secure transactions. Compliance with regulations ensures trust, reduces fraud, and prevents financial crimes.

Example:
A PSP providing cross-border transactions must comply with both domestic and international AML regulations to prevent money laundering.