2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Contactless payments have taken root in the lives of Russians in recent years. The technology allows consumers who do not have paper money to make purchases. Let's take a closer look at the acquiring process and all the participants in this scheme.
Essence
A plastic card is a payment instrument that provides access to finance. After reading the data from it, you can find out information about the owner and the balance of funds in the account. For these purposes, a terminal is used in retail outlets. By entering a pin code, the cardholder gives permission to debit funds to pay for goods. Further, several organizations are included in the payment process.
Members
The issuing bank and the acquiring bank are involved in making payments. Let's take a closer look at the functions of each of them. An acquiring bank is a bank that sets up card acceptance points. For these purposes, the credit institution uses terminals, advises the organization's personnel on the issues of accepting and canceling payments, and setting up the software. But this is not all the functions of the acquiring bank. Credit institution spends:
- authorization and card solvency check;
- processing incoming requests;
- transfers funds to the merchant's account;
- processes the documentation confirming the transaction;
- distributes lists of banned (stolen, expired) cards.
The issuing bank issues and services a payment card, opens an account for the movement of funds. The same institution can be an acquirer and an issuer at the same time. In this case, the POS terminal and the buyer's card will be issued by the same institution. But if the client has a Tinkoff Bank card and withdraws funds through a Sberbank ATM, then the first credit institution is the issuer, and the second is the acquirer. The point of service is called a trade and service enterprise (TSE).
Processing Center
To confirm the transaction, the cardholder must enter a pin code. Immediately after that, the acquiring bank starts the process of checking the code, the functioning of the bank, and the account balance. To obtain this data, a request is sent to the processing center. If any deviations are detected, the transaction is not allowed to the acquiring bank.
The processing center is the foundation on which electronic transactions are built. This is an automated system for processing bank card transfers. Its main task is to provide stores with the ability to accept cashless payments. The processing center also carries out mutual settlements between the issuer and the acquirer, the outlet and the holdercards. In Russia, VISA and MasterCard payments are coordinated by the PayOnline center.
Payment system
The advantage of cashless payments is that they can be used anywhere in the world. But the capabilities of the acquiring bank are limited. One institution technically cannot organize settlements with all outlets or install ATMs everywhere. The communication function is performed by the payment system. Upon request from the processing center, it checks the solvency of the card. If there is enough balance to carry out the transaction and the financial institution is a member of the system, it sends a request for an electronic transaction.
Billing company
Another link that may be present in the chain. A billing company, like a payment system, takes on the function of transferring a transaction to an acquirer, but additionally monitors and manages risks, organizes access to detailed statistics on transactions, and provides settlements with account holders.
Internet Acquiring Bank
The principle of making online payments is similar to the process of buying goods in a store. The only difference is the way information is transmitted. In the first case, the terminal reads the data, and in the second case, the client independently enters them into a special form on the site. The functions of the acquiring bank are performed by a credit institution servicing the organization of transactions. All participants in the cashless settlement system must have reliable communication channels and equipment that ensures a quick verification and transfer process.data.
Commission
Acquiring is not a free service. Several participants in the transaction are responsible for the process of making payments. The payment system provides the interconnection of outlets and credit institutions around the world, for which it receives a commission within 1-1.1% of the payment amount. The same amount is sent to the issuer for the transfer of funds. And, of course, the fees of the acquiring bank. The average market rate is 2-4%. The amount of commission is also affected by the area of activity of the merchant, the turnover of funds on the client's account, the type of connection and the type of device.
Scheme
The most common scheme of work is when a point is directly connected to an acquirer, for example, through a terminal or a special form on a website. In this case, the bank must develop software for accepting payments and monitor the state of communication channels. The store must ensure the transaction, organize server protection, monitor transactions in order to identify potential fraudsters. If the hierarchy of an online store is complex, then programmers will have to deal with the implementation of the system. And these are additional costs.
Risks of the acquiring bank in case of bankruptcy of the merchant
In the event of the bankruptcy of an organization providing its services to people, credit institutions face the risk of returning funds to cardholders. Not all transactions are paid at the time of purchase. For example, tourists, going on a trip, book hotels and plane tickets in advance. In case of bankruptcy of the tour operator, customers will demand a refundfor services paid for but not received.
A striking example of this situation is the collapse of Transaero. The financial institution accepted card payments for delayed tours and air travel, but went bankrupt. According to the rules of international systems in such situations, the problem of returning funds falls on the acquiring bank. According to preliminary data, the losses of participants in transactions may amount to hundreds of millions of rubles. It does not matter how the payment was made: directly at the point of service, via the Internet or billing. In all cases, the acquirer is financially responsible.
Refund
If an acquiring bank server error occurs, the money is returned to the buyer's account. The procedure involves the client contacting the bank, which draws up and transfers the application to the acquirer. The credit institution is obliged to return the money. Another thing is that in the case of the example considered with the bankruptcy of a company, the bank will be able to compensate for losses only in the process of liquidating the organization.
Stricter requirements
In view of the situation with Transaero, bankers intend to revise the terms of service for TPS. Thus, it is proposed to introduce additional guarantees in the form of a pledge or a deposit, confirming the solvency of the client. Among other options, an option is also being considered to increase the term for crediting funds to the TPN account to two weeks. This practice was already in the 2000s. But in modern conditions, such measures will rather lead to the loss of customers.
News
Bank Rossiya has developed its own Internet acquiring of payments for the use of natural gas. Customers of Gazprom Mezhregiongaz can pay for natural gas through the Rossiya Bank website. To do this, go to the page of the credit institution in the online payments section and transfer funds using the personal account number.
Bank Saint Petersburg began accepting cards of the national payment system Mir in its network of ATMs, branches and terminals.
Since April 6, 2016, Russian Standard Bank began servicing chip cards of the Diners Club International (DCI) international system. Transactions are carried out according to the international EMV standard. This ensures a high level of transaction security. The acquiring bank acquired the right to issue exclusive Diners Club cards back in 2011. Since then, the credit institution is the only one in the country that is responsible for the promotion and status of the brand.
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