Didyou know

There are seven primary players in the payment process: consumers, merchants, issuing banks, acquiring banks, payment processors, gateway services and card associations.

With so many parties involved in a transaction there are more steps to collect money and complete an order than meets the eye. To understand the money flow you need an understanding of the business processes and steps an order goes through for money and goods to exchange hands. With cash the consumer hands a merchant cash, the merchant performs checks to make sure it is not counterfeit, and calculates the change. With that done the consumer is on their way. If a consumer returns the goods, the merchant simply has to pay the consumer back in cash. There are no third parties in the process — everything occurs between a merchant and consumer. Credit cards, however, introduce new complexities into processing an order.

 

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Credit card payments:The Money Flow

Instead of a transaction occurring between a merchant and consumer, there can be up to seven entities (merchants, consumers, issuing banks, acquiring banks, payment processors, gateway services, card associations) involved in a transaction. As a merchant you have to rely on third parties to make sure the consumer can pay for the transaction, and to authenticate that the consumer is authorized to make the purchase.

Having so many entities involved in a transaction means there are more steps a merchant has to go through to collect their money on a transaction. With credit cards we introduce new complexities into processing an order and require additional steps in the order process, such as authenticating a card and authorizing funds.

To read about the credit card transaction process and each of the steps involved select the links below:

AdditionalResources

  • The Fraud practice llc.

    Offering a neutral, unbiased, source for information related to setting up and maintaining solutions for online payments and fraud prevention.

  • introduction to ecommerce credit card payments.

    Covers the credit card process flow defining each of the "payment players"; reviews payment concepts such as authorizations, settlements, reversals, chargebacks and the credit card association's high risk programs.

  • EMV, chip & Pin is going around the u.s.

    Will the U.S. ever adopt EMV, or are banks and businesses holding out for the next wave of payment technology?

  • Fundamentals for Selecting ecommerce payment options

    The Fundamentals of eCommerce Payment Options online training course provides an introduction to the world of eCommerce payments. The course provides an overview of the main eCommerce payment options that exist today, why businesses use alternative payments, how eCommerce payment options are grouped, as well as providing examples, mind share, market share, and the major players.

  • Introduction to Credit Card Chargebacks.

    Covers the basic information about chargebacks everyone on a risk team needs to know from the manual review staff to the risk manager. Topics covered include basic definitions of chargebacks and other key terminology to the details of the representment process and evidence needed to dispute a chargeback. 

  • Introduction to Ecommerce Fraud Fundamentals.

    Provides participants foundation level knowledge about the theories, best practices and terminology surrounding electronic payment fraud. Presented in a standard format covering the history of eCommerce Fraud, consumer fraud, merchant fraud, fraudster motivation, fraud trends, identity verification and phishing.

  • Ecommerce Fraud Moving from Tools to Solutions.

    This session covers what constitutes a fraud solution and categorizes the many types of third party fraud tools. The course outlines the common terminology of fraud solutions and describes the capabilities needed to implement a fraud solution. 

KeyNotes

  • Alternative Solutions - Specifically for accepting credit cards merchants should look into payment aggregators and credit term providers.
  • Estimated Costs - To accept credit cards you need to have a merchant account. The fees associated with the merchant account are determined by your acquirer. The card associations set base rates for interchange and transactional fees but your acquirer will be the one that sets the rates you will pay above these base rates. Costs will vary based on the credit card association, type, plus other related fees (i.e. cross border).
  • Credit Cardpayments

    • Credit Card Payments How important is it to take credit cards if you are doing business online; what can you expect from accepting credit cards online?
    • Understanding the Players In this section we will discuss each of the major players in terms of what their role is, which other players they associate with or represent and how they make money.
    • Credit Card Money Flow Learn how money is exchanged between the players within a credit card transaction.
    • Chargebacks and Fraud Liability
      In the card-not-present world the merchant is typically the one paying for the fraud. They already paid and lost the goods, all of the overhead costs they spent on the order, and they will still have to pay a charge-back fee.
    • Credit Card Payments 101 Get answers to common questions about deciding to take credit card payments online.
    • Are you overpaying for credit card processing? Don't be fooled by a really low rate, there is more to your "total cost" for credit card processing than just the rate. Dig under the covers, and negotiate on all the fees.

    The Fraud Practice