Didyou know

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

Aside from the consumers, all of the players discussed rely on consumers to make purchases; because they make their money each time the consumer makes a purchase. For each consumer purchase the merchant is trying to make profit from a percentage of money called their margin, which represents the difference between what it cost them to buy and sell the goods and what they sold it for to the consumer.

In that margin the merchant has to pay for all of their overhead, staff, utilities, property, loss, insurance etc.… Profit comes from the margin and the merchant needs that margin to go a long way before they actually make profit, so every penny of it counts.

There is no denying that a merchant makes less profit on an order paid by credit card than by cash. But all merchants understand that having the ability to take credit cards means there are a lot more potential sales that would have never been possible as strictly cash deals. The merchant’s additional costs for credit card transactions come from interchange rates and basis points.


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Credit card paymentsMeet the players

Each of the players in the payment process has a role to fulfill. They are performing these roles to make money. The issuing banks, acquiring banks, associations, and sometimes the payment processors, all get their money from the merchant in terms of basis points or transaction fees paid by the merchant. Basis points are percentage points of a sale a merchant pays on every purchase made with a credit card to the acquiring bank. Merchants negotiate with their acquiring banks, and sometimes the associations, to get the best possible interchange rates and basis points. The key point to understand is all of the players, aside from the consumer, have a vested interest in each consumer purchase.

To read about each of the players simply select their role below:

keep in mind

  • Another key take-away from this section is to really understand that fraud is not defined or felt the same by all players in the payment process. Consumers worry about identity theft and having to rebuild their credit, while merchants worry about losing goods and having to pay fines. Acquiring banks worry about collusive merchants working with fraudsters to defraud the banks. Issuers worry about fraudulent applications, counterfeit cards and stolen cards. Associations worry about how fraud will impact their brand name to consumers, merchants and banks. So when talking, reading or evaluating fraud-prevention techniques remember to check whose perspective you are getting.



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  • 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).
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    • 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 really low rates, 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