1/12/2023 0 Comments Debit credit card processing![]() The consumer’s bank manages the available balance the consumer has at any given moment. What role does the financial institution play in the payment ecosystem?įinancial institutions, also referred to as simply the consumer’s bank, play a crucial role in the processing of payments. A large portion of these fees is what is commonly referenced to as “interchange,” which is the amount card networks give the consumer’s bank for issuing the card. In addition to creating and governing the rules, the card networks set the fees a merchant must pay to accept the network’s cards. Card networks have the authority to penalize a merchant for not following these strict rules by imposing fines or in severe cases prohibiting acceptance of the network’s cards. By facilitating this complex process, acquirers do not have to interact with each consumer’s bank individually.Ĭard networks also create and govern the rules a merchant must follow to accept the network’s cards. What role does the network play in the payment ecosystem?Ĭard networks play an important role in the payment ecosystem by facilitating the entire authorization, settlement and funding process between the merchant’s acquirer and the consumer’s bank. These fees include both the card network’s fees as well as the acquirer’s fees. The merchant’s acquirer will net out any fees associated with the transaction processing prior to funding the merchant’s account. ![]() As part of this clearing process, the card network pulls the funds from the consumer’s bank and passes it back to the merchant’s acquirer for funding to the merchant. The card network then sends the settlement request to the consumer’s bank, which issued the card, for clearing. It is the consumer’s bank that determines whether the authorization request should be approved or denied and passes that decision back through the same process in reverse order.įor approved transactions, the acquirer submits a settlement request to the card network on behalf of the merchant. The card network receives the authorization request and routes it to the consumer’s bank, which issued the card, for approval. The acquirer then sends the authorization request to the card network associated with the card. The merchant passes the card information to the acquirer for authorization of the payment. What role do merchant processors, networks and bank processors play in the payment ecosystem? This is called a pull-payment, since the merchant is effectively pulling the payment out of the consumer’s account.Ĭard networks also create and govern the rules a merchant must follow to accept the network’s cards. Each of these methods transmits the consumer’s card information throughout a complex environment so the merchant can ultimately be funded for the payment. When a consumer pays a merchant for goods and/or services, either online or in-store, the payment is initiated via a swipe, dip, tap, scan or click. What role do merchant acquirers/processors, networks and bank processors play in the payments ecosystem?Ī merchant is the acceptor of payments.
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