FinTech & Payments Services

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To understand the payment process, we suggest a working knowledge of the participants and the services they provide along the way.

Also try tracking a hypothetical transaction through the entire payment processing system. In that way you can understand not only what services these participating firms provide, but also how fees are charged for processing a transaction along the way.

The Participants

For a typical ecommerce credit card transaction, a number of participants play key roles in the process. Those players include:

• the customer
• the merchant
• the payment gateway
• the acquiring bank’s process or the credit card interchange
• the customer’s credit card issuer
• the merchant’s acquiring bank. 

Seven participants, in other words, normally interact with each credit card transaction. With all of these companies involved in the process, it takes, amazingly, just 2- 3 seconds on average for a transaction to be approved.

Follow the Money (amounts deducted below are for example only not accurate)

Let’s say you are a £100 credit card purchase. The moment the customer hits the buy button on the ecommerce merchant’s website, you are zooming across cyberspace on a multi-stop journey, during which you will shed, typically a few pounds as companies that you interact with assess varying fees for their service. (Actual fees vary based upon a number of variables, including merchant type, card type and risk factors.)

Your first destination is the payment gateway (0.10p), which routes you to the appropriate processor (0.10p). The processor immediately submits you to what is known as the credit card interchange (0.10p). After you’ve cleared the interchange, your next leg takes you to the issuing bank (£1.90), which verifies the available funds in the customer’s credit card account. Whether you are approved or declined, you now begin the journey back to the customer. However, if you’re approved, you and your authorization results are soon to part after speeding by each stop you made on the way. Your detour is through your merchant account at the acquiring bank (0.65p) to, ultimately, the merchant’s bank account, where you will be deposited; that is, the £97.15 of you that remains.

If you have a requirement for FinTech & Payments related staff contact us to discuss