How payment acquiring works

How payment acquiring works

Receiving money from credit or debit cards in the Internet, i.e. “Internet acquiring” is an operation performed by Processing Company (Payment Processor) as a result the money is transferred to the special “Merchant Account” opened in the bank.

Payment Processor (Transaction Processing Clearinghouse) is a number of servers carrying out the entire procedure of payment clearing. These servers are specially security certified and owned by Payment Processing Company that have a licenses to conduct such activity

Merchant account is a special bank account of the financial organization (bank), in which funds acceptance is allowed without 100 % customer identification, i.e. with only the information about the payment card.

In consequence of the impossibility of customer identification, credit card transactions are associated with a significant risk, so incoming payments are paid by account holders – «Merchants» companies by different rates depending on the level of riskiness of their business. To minimize the risks it is always advisable for «Merchants» to check such payments in a variety of filters for fraud (Fraud-filters). Such services are provided by “Payment processors” and third-party organizations are paid separately.

All payments are processed by the Transaction Processing Clearinghouse, must pass authorization in systems of payment cards, such as VISA or MasterCard. “Regulators” strictly control the implementation of the rules by the banks and in the event of non-compliance make prohibitions for payments between individual banks, and sometimes entire regions. Therefore, not with all credit cards and not in all regions can the payments be made. This information must be considered when choosing a bank to open a merchant account.

The bank, which opened a merchant account, is called bank “Bank acquirer”. The bank, from which account the funds are written-off, is called the “Bank issuer”. The presence of the corresponding “Acquiring license” in the bank is a compulsory condition for opening a merchant account. The procedure of payment is a chain of mutual checks and is called “Clearing”.

Simplified scheme of acquiring is as follows:

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