Contact a Nuvei Support Specialist at 1 should you wish to discuss which credit cards you want to accept. The issuing financial institution extends credit to a cardholder through bankcard accounts. The financial institution issues a credit card and bills the cardholder for purchases against the bankcard account.
A merchant account has a variety of fees, some periodic, others charged on a per-item or percentage basis. The majority of the per-item and percentage fees are passed through the merchant account provider to the credit card issuing bank according to a schedule of rates called interchange fees, which are set by Visa and Mastercard. Each credit card payment qualifies at a certain Interchange rate; Interchange refers to a matrix of discount rates and transaction fees defined by the Card Associations e.
Visa and MasterCard. These fees are paid by the payment processor e. Factors that influence Interchange fees include type of card presented, business type and how the transaction is performed. Payment Processor. Card Associations. They are mediators between issuing banks and merchant's banks in case of any disputes. The Stages of Payment Processing. It consists of the following stages:. The cardholder provides the credit card number to a merchant to pay for purchased goods or services.
Online payment requests are carried out via a payment gateway. On the other hand, brick-and-mortar stores use point-of-sale POS terminals to accept such payment requests. The merchant forwards the payment request to get authorization from their arranged payment processor.
If the buyer pays for goods or services through a digital wallet, such as Google Pay, Apple Pay, or any other similar payment method , the merchant submits the transaction information to the wallet operator. The data is then forwarded to the payment processor. The payment processor delivers the transaction request to the relevant card association, with the issuing bank as the endpoint.
The issuing bank receives the authorization request containing the elements of the credit card used in the transaction, such as the card verification value CVV , the expiration date, and the address verification services AVS.
The issuing bank either rejects or confirms the transfer. The approval or denial notification is sent by the issuing bank to the card association, the merchant bank, and, eventually, the merchant. Settlement and Funding. What is a card association? A card association is a network of banks that process a particular brand of payment cards e. Visa, Mastercard, etc. The card association will either approve or decline the transaction directly e. What is an Issuing Bank? An issuing bank is any bank or financial institution that grants or issues credit or debit cards, through card associations.
What is an Acquiring Bank? An acquiring bank is a bank or financial institution that accepts debit or credit card transactions for a cardholder. The card network connects acquiring banks to issuing banks so that a customer transaction can be verified.
Aside from managing transactions, an acquirer also assumes full risk and responsibility associated with the transactions it processes. Because of this, the acquirer charges various fees for its services.
The acquirer charges fees on behalf of themselves, the card network, and the issuing bank taking into account credit card interchange costs as well. What is a Card Authorization? A card authorization is a request to see whether a card is approved for use to complete a given purchase transaction. An authorization request first emerges when the card holder attempts to purchase a good or service using a debit or credit card.
The next step is for the merchant to fulfill the order placed by the shopper. What is Credit Card Interchange? Credit Card Interchange is the process in which an acquirer or acquiring bank submits approved card transactions on behalf of its merchants. Interchange refers to the clearing and settlement of records between payment system participants. The term can also be used to describe the fees or transfer pricing between issuers and acquirers. Participating acquirers and issuers pay or receive interchange each time a credit or debit card is used.
For example, banks pay interchange for card-based transactions. In the interest of efficiency, merchants usually submit all their approved transaction to their acquiring banks — via their payment processors — at the end of every day, in a batch. Even though the transaction takes seconds, the actual process behind the transaction is intricate. The merchant sends a request to their payment processor for the authorisation of the transaction and then the payment processor carries out essential steps:.
After the process of authorisation, comes the process of settling and funding. The merchants send the authorisation request to the payment processor, which then sends the details to the card association.
The card association is connected with the issuing bank therefore, the issuing banks receive the details of the transactions and further carries out the process which includes:. For businesses that accept credit or debit cards, payment services are an integral part, for the simple reason that they need to receive money which does not come to them traditionally in the form of a paper currency.
While choosing a payment processor, it is important to consider certain things apart from the pricing packages. Some of the things that can be essential while deciding a payment processor are:.
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