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3D Secure Key Term: 3D Secure This is a standard for offering cardholders one more layer of security for online transactions. When card numbers are entered into a website to pay for something, 3D Secure will require the cardholder to enter one more form of authentication, such as a one-time-use PIN or passcode, similar to how two-factor authentication works for websites.
Merchants will typically want to keep their chargeback rates below 1 percent. Once a Merchant gets close to 1 percent or goes over, it needs to work to bring that percentage down or risk losing their ability to accept card-based payments through
Chargeback rate is calculated by taking the total number of chargeback transactions in a month and dividing it by the total number of transactions in a month. Depending
Newer technologies such as the EMV Chip and 3D Secure are giving more tools to Merchants to help prevent chargebacks.
Discover and American Express are closed Card Networks.
like to work in more of a marketplace function. This is why these Card Networks will typically invest in Issuers and Acquirers, but they won’t actually purchase these players.
American Express and Discover typically issue their own cards, are their own bank, and typically provide their own acquiring services.
Issuer is assessed a usage fee for transmitting data through the Card Network’s “rails.”
Software-as-a-Service-type fees charged to the Issuer like fraud services and settlement services.
Acquirers and Issuers are marketing vehicles and distributors for the Card Networks or card brands.
revenue per swipe is significantly higher than Visa and Mastercard.
Visa accounted for 60 percent of all purchase volume in the US for all debit and credit cards. American Express only accounted for 13 percent, and Discover was at 2 percent.
PIN Debit Networks (Single Message)
For debit cards, each Card Network has a secondary network brand for PIN Debit or Automated Teller Machine (ATM).
Durbin Amendment and its requirement that every debit card must have a secondary unaffiliated network.
MoneyPass (32,000 ATMs in the US), and Allpoint (45,000 ATMs in the US) have a network of ATMs throughout the US that are “Free” to end-users if that Issuer offers either of these two networks. Many
These regional banks have less than $10 billion in assets and are able to charge a higher Interchange rate because they are considered exempt from the Interchange rules set forth in the Durbin Amendment and are considered “unregulated.”
Unregulated Versus Regulated Interchange
banks with assets higher than $10 billion may not charge Interchange higher than 21 cents plus 0.05 percent (five Basis Points) x the value of the purchase.
Mufasa could work directly with a Merchant Acquirer, such as Wells Fargo, to get a Merchant Account. If Mufasa doesn’t have a direct relationship with a Merchant Acquirer, such as Wells Fargo, he could go through an Independent Sales Organization (ISO)
An ISO is granted a license to sell Merchant acquiring services from a Merchant Acquirer such as Wells Fargo or Chase Paymentech.
payments facilitator (sometimes referred to as a PF or PayFac) like Square or Toast to open a sub-Merchant account and get the point-of-sale device directly through them.
Fixed Pricing
2.6 percent plus 10 cents regardless of if it was a debit card or credit card.
Managed Fraud
the transaction history at the customer’s bank will always start with an “SQ*.”
which could take at least another day if not more (t+2).
He also won’t have a top limit of dollars he can transact within a year, which opens him up for growth. This is typically $500k for Payments Facilitators under the sub-merchant arrangement.
Faster Funds Settlement
Manage His Own Fraud
point-of-sale manufacturers like Vantiv and First Data,
he doesn’t have the cash flow to allow for “net 30” payment terms.
PSP is an aggregator of payment methods. It allows a website operator to get paid via debit cards, mobile wallets, and financing schemes.
Marqeta is the Program Manager • Marqeta is the Issuer/Processor
This is typically a brand or company that is marketing the card. This is the brand shown on the card in addition to the card network brand.
The program manager is the one who is managing the day-to-day operations of the card program including settlement, fraud management, and maintaining the relationship with the Issuing Bank, card manufacturer, card network, and the cardholder.
Issuer Processor licenses a piece of hardware from the Card Network that it keeps in its data centers.
Mastercard Interface Processor (MIP) for Mastercard and a VisaNet Integrated Processing (VIP) for Visa.
Card Networks typically do not give out too many MIPs or VIPs, which is why the actual number of Issuer Processors is limited.
Issuer Processor Enables Ways for Co-Brand Partners to Integrate with it
Co-Brand Partner, DonutDash, would get documentation from the Issuer Processor, Marqeta, on how to integrate in with its APIs and bake these features into their applications.
capable of offering its Co-Brand Partners like DonutDash the ability to authorize their own transactions,
Just-in-Time (JIT) funding, where the DonutDash cards will always have $0 balance on them.
Acquirer Fee Usually, a flat fee that is paid per transaction to the Merchant Acquirer, Payments Facilitator, or Payment Gateway.
In most cases, this is on a sliding scale, so as transaction volume grows, the percentage of the Interchange Revenue increases.
Co-Brand Partner is offering a credit card, it could take on the burden of calculating interest, underwriting, and collections.
he found that getting a card program up and running could take months, if not close to a year.
decided to build an Issuer Processor from the ground up to allow for these multiple Groupon-like prepaid offers to show up on a single card.
