A PSP merchant account is a payment processing account offered by a payment service provider. In the financial services industry PSP stands for payment service provider. This kind of Institutions is responsible for offering Credit Card processing ability to merchants. Earlier banks were providing the services directly to merchants and merchants were responsible for the PCI compliance but nowadays banks allow payment service providers to sign an agreement with the merchant and in return the payment service provider gets to keep a percentage of the transaction fee benefit.
When the merchant works directly with the payment service provider or PSP then the PSP is responsible for the PCI compliance as the merchants account risks. Generally merchants use hosted payment page this means that the cardholder’s data is not stored at the merchant server rather it is stored in an encrypted format on the PSP e-infrastructure/server.