Who, what and why do you need to know?
Every time you accept a credit card for payment, it sets off a lengthy chain of events. Seven different players and entities touch the payment. Multiple transmissions travel across a myriad of systems, all of which generate fees to you, the merchant. A little knowledge about how it all works will go a long way toward controlling costs. A little more knowledge will help you get the most value out of the payment ecosystem and partnerships.
Let’s first discuss the players. Understanding their roles will enable you to provide customers with the convenience of paying with credit or debit cards while optimizing this important business building tool.
The seven entities involved in each transaction are: The Customer, the Merchant, the Issuer, the Merchant Provider, the Payment Gateway, the Processor, and last but not least, the Interchange Network.
The Customer and Merchant are straightforward enough. The Merchant Provider is an important ally that represents your interests as a key interface with the Interchange Networks. The Payment Gateway is a secure conduit for transmitting the card data from the moment it is swiped, keyed, dipped or tapped for authorization, right on through to the Processor. Processors pass payment requests through the Interchange Network, who then forwards them to the corresponding Issuers. The Issuers debit the cardholders’ accounts and send the funds back through the Processor to the appropriate Merchant Provider.
Is your head spinning yet? It may all seem very complicated because it can be. Which is why we are putting the finishing touches on our eBook that explains the entire process in simple terms. Stay tuned for the formal launch of our eBook or get some quick insights from our FAQ page.
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