Six Profitable BNPL Business Models to Unlock Infinite Value

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/banner.webp" alt="M2P Fintech" title="" width="100%" height="253">Have you ever noticed the numbers on your credit/debit/prepaid card? They have a string of numbers out of which the first six digits are called Bank Identification Number (BIN). The BIN number helps the merchant processor identify the card type, network, and the issuing bank for the transaction’s approval/decline. For instance, a Visa card starts with the number “4.” Master card starts with the number “5” and “2”, Diners starts with the number “3” and so on.They also enable merchants to accept different types of payments like digital and mobile payments.Now with the explosion of payment electronification and many becoming savvy financially, there has been a drastic increase in the number of card users. This, in turn, has led to a shortage of BINs; if we take a rather dim view, it can be observed as depletion of BINs.To stop this from happening, the International Standards Organization (ISO) amended the existing standard of (ISO/IEC 7812–1) Part 1: Numbering system from Six-digit to Eight-digit BIN in 2017. So, card networks such as MasterCard, Discover, American Express, Visa and others have started prepping for the change.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/Artboard-24-copy.webp" alt="M2P Fintech" title="" id="adfawcve6" width="100%" height="253">Visa has been quite active with this change and regularly issuing updates and ready reference guides for this migration. Visa adopted this standard in 2017 and has urged its partners to migrate to the Eight-digit BIN by the end of April 2022.<h2 class="heading-node" id="69d4" style="text-align: justify">Who will be affected by this migration?</h2><ul class="list-node" id="lbi86ft9q"><li>Acquirers</li><li>Issuers</li><li>Processors</li></ul>MerchantsOn completion of April 2022, the card network’s 100,000 BINs will migrate to 10,000,000 BINs. The first Six-Digits will remain the same in this change, and the following two numbers (00,01,02…) will become part of the Eight-Digit BIN. Also, there will be no need to reissue replacement cards to the customers.Here are the key points that sum up this initiative:<ul class="list-node" id="vxdxnev6w"><li>After April 2022, the existing 6-Digit BINs will continue to function, and requests for new BINs will be assigned in 8-Digits.</li><li>6-Digit BINs will be supported, but they won’t be forced to convert to 8-Digit BINs</li><li>PCI guidance and Visa clearly outline that organizations storing the full 8-digit BINs require additional controls may include expanded scope.</li></ul><h2 class="heading-node" id="f71d" style="text-align: justify">Why the sudden urgency about this migration?</h2>While the standard is out for migrating to Eight-Digit BINs, ISO did say that they are maintaining the other issuing BINs in the six-digit sequence until the deadline of April 2022. The mandate also doesn’t require the removal of Six-Digit BINs. Therefore, the concerned parties must continue supporting both Six and Eight Digit BINs.The time taken for the adoption will significantly vary by the stakeholder. So, even though the deadline is still 10 months away, there is a concern regarding the impact of updating the backend systems. Especially those involved with issuer processing, routing, and other activities need to assess the impact and get ready for the changes.Industry watchers were almost sure that this initiative will call for a longer PAN. Still, Visa has decided to implement the same on the existing 16-digit- PAN structure. It has become quite clear that the decision will affect the PCI compliance of the existing truncation and masking rules. Any organization that stores the full BIN and the last four digits of the card will become non-compliant unless the rules are not modified.The decision did not specify any modification, and it requires organizations to handle 8-digit BIN as cardholder data. But organizations that spent massive efforts over the years to lower their PCI compliance load will face an explosion of responsibilities and remediation efforts. It will probably result in actions, expense, and their own timeline of non-compliance.So, card networks have been encouraging its vendors, agents, partners, and other stakeholders to actively assess the impact they would be experiencing across their systems. This assessment would help them to increase their efficacy and avoid any hurdles when handling transactions.<h2 class="heading-node" id="005c" style="text-align: justify">How does this change impact?</h2>As six-digit BINs are on the decline, it will be challenging to rely on them for authorization, routing, and transaction clearing. The effect might not be immediate but will slowly and surely escalate when Eight-Digit BINs become the norm. Both Merchant and Service providers might face issues in the following scenarios:<ul class="list-node" id="j85h67z8k"><li>Prepaid card’s identity</li><li>Chargeback and Fraud</li><li>Transaction processing</li><li>Merchant services and disputes</li><li>Reporting</li></ul><h2 class="heading-node" id="7198" style="text-align: justify">How to prepare for the change?</h2>Visa has issued directives for both merchants and service providers on how to handle this change. They have explicitly said that the changes are specific and may need to require a timeline extension. So, organizations, service providers, and other stakeholders are encouraged to initiate and pool the resources necessary to prepare for Eight-Digit BINs.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

The BIN Migration|Preparing for 8-Digit BINs

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner1251-6-1.webp" alt="M2P Fintech" title="" id="t5u9jgsxm" width="100%" height="317">The advent of international payments has been long-standing in the financial world, facilitating commerce and trade. Be it sending money back home or international business contracts, today’s rising global commerce can be attributed to the growing volume of international digital <a class="link" href="https://m2pfintech.com/blog/future-of-payments-processing-matched-with-industry-needs/">payments</a>.It is a valuable ally for businesses and individuals who wish to enjoy commerce or transactions across borders. The surge in cross-border B2B payments is exponential since the penetration of the internet. With predictions of 30% growth in the next three years, cross-border e-commerce has taken off to exponential heights in these 2 years.Also, the businesses that offer software as a Service (SaaS) heavily depend on cross-border payments as their demographic is spread across the globe. In recent years, these players have played a monumental part in increasing the volume of cross-border transactions.The advancements in Fintech today empower many businesses and individuals to make instant payments. Businesses can experience stress-free invoicing, tax handling, and recurring billing in a few clicks. They also have access to top-notch support portals to handle any issues that arise out of a transaction.Fintech companies experiment with technologies like <a class="link" href="https://m2pfintech.com/blog/blockchain-and-fintech-use-cases-and-applications/">Blockchain</a> to bring more transparency and Artificial Intelligence for better regulatory compliance.<h2 class="heading-node" id="2511" style="text-align: justify">What are cross border payments?</h2>Cross border payments happen when the payee and the recipient are in different countries. These transactions can be retail, wholesale or recurring in nature. Decades back, the electronic messaging system served as a crucial mode to enable cross border payments.The cross border payments industry now utilizes many payment modes like <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit cards</a>, cross-border <a class="link" href="https://m2pfintech.com/blog/what-is-a-payment-gateway-and-payment-switch-understanding-the-basics-of-payments-architecture/">payment gateways</a>, <a class="link" href="https://m2pfintech.com/blog/tale-of-money-transfers-from-hawala-to-one-click-remittances/">wire transfers</a>, e-wallet, distributed ledger technology, <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs,</a> etc., every day to facilitate international payments.<h3 class="heading-node" id="d1xc42b0j" style="text-align: justify">Cross-border payment methods</h3>In fact, we can classify cross-border payment methods as Past, Present, and Near Future, where every advancement is an incremental leap in payment facilitation and user experience.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com//m2p-website-file/marekting-cms/m2p-blog/2025/05/1-1.webp" alt="Cross border payment" title="" id="py8ljf39p" width="100%" height="253">The Past<h3 class="heading-node" id="8e54" style="text-align: justify">Wire transfer</h3>It is an electronic transfer of money, where the money is ‘wired’ from one account to another. If you are initiating a domestic transfer, it is called a “Bank wire.” In the case of cross-border payment, wire transfer is interchangeably referred to as “Remittances.” It is the oldest method of initiating a cross-border payment.<h3 class="heading-node" id="c67b" style="text-align: justify">How does it work?</h3>Here the payee visits their designated branch and provides the details of the receiver. Those details include the bank account number, name, recipient country’s currency, SWIFT code, IBAN (International Bank Account Number), bank address, amount to be transferred, etc.The currency rate is fixed before the transaction. The details are directly sent to the recipient branch or via an intermediary bank. That’s not all; the payee also has to pay certain charges like service tax, conversion charges, and other applicable charges. Based on the instructions, the recipient bank credits the amount to the recipient’s account within 5 working days or more at times.<h2 class="heading-node" id="dd8c" style="text-align: justify">Payment Service Providers (PSP)</h2>A popular option for immigrants, Payment Service Providers (PSP), effect transactions either in the form of physical cash or online payments.<h3 class="heading-node" id="b848" style="text-align: justify">How does it work?</h3>The sender visits the agency with the current nation’s currency and proper ID proof for physical cash. The recipient can visit the agency at his location and collect the money after dedicating transfer charges to completing the ID verification process. For online transactions, the sender visits the PSPs apps or websites. Within a few clicks, money flies over the nations and reaches the receiver’s bank account directly.<h2 class="heading-node" id="8db4" style="text-align: justify">The Present</h2><h3 class="heading-node" id="affb" style="text-align: justify">Credit cards</h3>It is a reliable mode of payment while traveling abroad. A <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit card</a> eliminates the need to carry cash in hand. They also offer attractive benefits like interest-free loan periods (a month or more), reward points, gift coupons, shopping offers, easy EMI options, travel insurance perks, etc.<h3 class="heading-node" id="0caa" style="text-align: justify">Forex cards</h3>Many banks and financial institutions offer <a class="link" href="https://m2pfintech.com/blog/forex-cards-international-travel-made-effortless/">forex cards</a> explicitly designed for globetrotters. They can make money transfers across multiple countries with a single card. It helps the users avoid currency exchange rate fluctuations by locking in the rates while getting the card.<h3 class="heading-node" id="0b4e" style="text-align: justify">Digital wallets, ewallets &amp; mobile wallets</h3><ul class="list-node" id="th56mo1sb"><li>These are virtual wallets that can store money and customer information (credit card/debit card number, date, bank details, etc.).</li><li>eWallets are used like <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid cards</a> where we can store our money.</li><li>Digital Wallets are used to store card numbers, account numbers, expiry dates, IFSC codes, etc. This confidential information resides in the cloud.</li><li>Digital wallets can be used on desktops, whereas mobile wallets can be used on mobile devices.</li></ul><h3 class="heading-node" id="f39a" style="text-align: justify">MasterCard Send</h3>Initiated by the global network provider, MasterCard Send allows both businesses/ individuals to make real-time cross-border payments to the recipient’s debit card number. It does not rely on the bank’s ACH system, so there is no need for a routing or account number to send the money across.<h3 class="heading-node" id="a125" style="text-align: justify">Visa Direct</h3>Visa Direct offers push payments to individuals/businesses across the globe. The business/user can tap into Visa’s global network and send payments in real-time or by a maximum time limit of 24 hours.<h3 class="heading-node" id="c742" style="text-align: justify">SWIFT GPI</h3>SWIFT GPI or Global Payment Initiative aims for transparent and faster cross-border payments. It breaks down all the costs involved, and the payee can keep tabs on where the payment is at any given time. While the older methods of cross-border payments are traditionally mysterious, SWIFT GPI unveils the mystery and significantly increases the speed.<h2 class="heading-node" id="80ee" style="text-align: justify">The Near Future</h2><h3 class="heading-node" id="05b1" style="text-align: justify">Open Banking APIs</h3>Open Banking<a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/"> Application Programming Interface (APIs)</a> aims to simplify the complicated procedures of cross-border payments. As it democratizes access to customer and their data, it becomes easier for fintechs and other financial institutions to build products that address their target demographic version of cross-border payment app.<h3 class="heading-node" id="f3c8" style="text-align: justify">Decentralized Ledger Technology (DLT)</h3>A term made popular by Blockchain tech, DLT can be applied to cross-border payments’ three most challenging aspects. They are backend processes, compliance, and as a means of payment. DLT can speed up the backend process while offering transparency at every step of the transaction. It can also reduce compliance-related costs and can introduce an entirely new method of payment.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2021/05/2-1.webp" alt="M2P Fintech" title="" width="100%" height="253"><h3 class="heading-node" id="yj7z6hw5g" style="text-align: justify">How do cross-border payments work?</h3>Cross-border payment is a complex mechanism that involves many players. It carries many fees right from currency conversion to the respective country’s tax and other service charges. Both domestic and overseas entities work together to accomplish the transfer.For example, when a software purchase transaction is initiated, the “correspondent bank” requests the money from the “respondent bank.” Here both the correspondent and the respondent bank will have their colleague bank across the globe. So, the funds will leave the buyer’s bank and reach that bank’s counterpart present in the merchant country, ready for remittance. Then the remittance is transferred to the merchant’s bank for settlement. So, in short, banks work with other players like payment service providers; to transfer the money while navigating currency conversions, different tax regimes, transaction fees, etc. Further, slowing down the process.One of the most popular banks for forex settlements is the CLS bank. Founded in 2002, explicitly for mitigating risk and settlement of Forex transactions, CLS works with 18 currencies in cross-border payments. Even though it has been instrumental in making forex payments easier, it does have some drawbacks. With new emerging currencies gaining global transaction volume, CLS is limited by 18 currencies and is yet to catch up with technological advancements of member countries’ payment infrastructure.To create a seamless flow for the cross-border payments, some changes must be incorporated quickly to ensure better penetration across the value chains:<ul class="list-node" id="cp59ifqob"><li>Applications of Real-Time Payments will offer much-needed transparency. The parties involved can track the transaction status anytime. For example, this is what SWIFT GPI is trying to achieve. It has the potential to be replicated in other payment methods.</li><li>The time factor taken to complete a cross-border payment should be brought to days from weeks. Small and Medium Businesses (SMBs) should have better access to these payments as cash flow is the backbone of their operations. Unpredictable delays and complex transactions will hamper its growth.</li><li>Today’s customers, both retail and corporate, are looking forward to solutions that adapt to their evolving needs. They also favor the platforms where the solutions are embedded for all access.</li><li>Customers today prefer a choice of methods and security when initiating transactions. A flexible ecosystem where transaction history, audit, and reconciliation can give valuable insight and a seamless experience.</li><li>Integrations are a much-needed factor to bring about global interoperability and linking fragmented value chains. No matter the transaction origin, the experience of the transaction must be seamless for the merchant.</li><li>Typically, the stakeholders in this transaction flow more often follow the same regulations. They can be bifurcated into ‘front end’ and ‘back end’ stakeholders. The Front-end players are the Tech companies who look at the ‘data’ aspect of the transaction and can have lighter compliance standards. The onus should lie in compliance with balance-sheet exposure, counterparty exposure, and liquidity for the backend players.</li></ul><h2 class="heading-node" id="3198" style="text-align: justify">How is fintech disrupting cross-border payments?</h2>With Blockchain taking the lead in the fintech space, digital currencies can be used in cross-border payments instead of national currencies limited by geography. As digital currencies are built with technology, it provides a bread crumb trail for the transaction trace and reduces the need for intermediaries. Also, the DLT applications of Blockchain can provide transparency and security at the core. Along with these innovations, Fintech also offers the following benefits:<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2021/05/3-1-1.webp" alt="M2P Fintech" title="" width="100%" height="253"><ul class="list-node" id="4nv0g5ncq"><li>Constant enhancement: Fintech giants are leveraging the latest technologies like Blockchain to make cross-border payments completely transparent and tamper-proof. They concentrate more on the user experience and focus on making complex processes swift and convenient.</li><li>Ease of use: Virtual wallets allow the users to stay free from making a note of all the passwords, account numbers and worry about their confidentiality. You can feed all your confidential information with a single tap and complete your purchase.</li><li>Convenient:&nbsp;Forex cards are travel allies. It makes our wallets light when we are traveling to different countries handling different currencies. We can simply swipe on the retail outlets or wave it with a contactless card. Like an ATM card, it allows us to withdraw the local cash in any country (fed while receiving). The best part is few banks are waiving the ATM withdrawal fees, cross-currency charges, etc.</li><li>User experience:&nbsp;Cross-border payment gateways help businesses to sell across borders. As they comply with PCI data security standards, customers feel secure while buying from a foreign website. Consumers can purchase by simply typing their email ids and enjoy rapid check-out.</li><li>Marketing mate:&nbsp;Businesses can use the buying patterns of the consumers collected through their wallets and retarget them with attractive offers. Wallets offer rewards to buyers in the name of cashback. This money can be utilized only in their portal and increase the sales of the online platform.</li></ul>Over the past decade, cross-border payments industry innovations are drastic and soaring high, with creative Fintech minds entering the space each day. Cross-border payments are no longer a daunting task consuming more time and effort. And we can expect many more innovations that make cross-border payments a secure and transparent exercise.To know more about cross-border payments, write to us at business@m2pfintech.com<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Cross- Border Payments: A Swift Money Flow Across Borders

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner1251-5-1.webp" alt="M2P Fintech" title="" id="l0awqi5yp" width="100%" height="356">Swiping a credit card for purchases has been a standard practice for decades. All we need to do is swipe the card, and the transaction is complete. If it is an E-commerce transaction, entering the card details and other requisite information does the trick. And the time taken to complete this happening is mere seconds. But there are many steps between the card swipe and receipt of the swipe. All those actions are an intricate part of how credit card processing happens on the inside.<blockquote class="block-node" id="6mo1864fw">Simplifying Wikipedia’s terms: The Credit card is a payment card used by consumers to pay the merchant in exchange for goods or services. It is a promise between the card issuer and the cardholder to abide by a few drafted financial terms &amp; conditions — the cost of the goods + interest rates or late fees.</blockquote>It is a calculative risk taken by many parties involved in the transaction.From transferring the funds securely to collecting the payment from the user later, it revolves under a virtual promise. So that the importance of understanding credit card processing is to avoid any mishaps.<h2 class="heading-node" id="b7b9">What is credit card processing?</h2>Credit Card Processing is the funnel through which the data related to the Consumer Credit Card and purchase are transmitted from their Credit Accounts to Merchant Account. As consumer uses their credit card to buy a product, a virtual process happens swiftly between many financial participants to allow or decline the purchase.The credit card processing framework is a blueprint that serves as a guide for payments to go in the right direction during the transaction, and when they take a toll, it acts as an investigator.<h2 class="heading-node" id="bab3">Stakeholders in credit card processing</h2>The credit card processing network actively processes millions of transactions with the help of rigid network infrastructure and various stakeholders behind each network architecture.Each task is a mini approval request raised and approved in a circular motion by the financial entities involved in the process.Card Holder:&nbsp;The consumer is the credit cardholder.Merchant:&nbsp;The owner of the online selling platform or the offline store where the goods or services are placed for the consumers to buy.Example: Amazon (online store) Costco HyperMarket (offline store)Payment Processor: These are the companies that communicate and relay information from Consumer’s credit card to both Issuing and Acquiring Bank. All this occurs at lightning speed. Payment processors collect, receive, and accept the payment using a combination of hardware and software advancements. They ensure the security and fraud protection measures in the transactions.Card Network: Visa, MasterCard are the dominant examples of the card network, followed by American Express and Discover. They are virtual payment infrastructure facilitating the communication between merchant and issuer bank. Along with these international players, we have an India-borne network RuPay, launched by NPCI (National Payment Corporation of India).American Express and Discover are also issuers in the credit card industry. Discover also owns and operates Discover Bank. In India, Discover-branded credit cards are seen in collaboration with HDFC Bank and Diners Club International.Issuing Bank:&nbsp;An Issuing Bank (or “Issuer”) is an entity that provides Credit/Debit Cards to customers (VISA, Master, American Express, etc.). It authenticates a customer’s purchase at a store/online site. When a payment is made at a store, funds are transferred from the issuing bank (which authenticates the transaction) to the acquiring bank.Acquiring Bank:&nbsp;An Acquiring Bank (or “acquirer” or “merchant’s bank”) is an entity that maintains the merchant’s bank account. With the help of the acquiring bank, the merchant can process debit and credit card payments, access payment gateways, and receive payments from transacting customers.Any eCommerce entity or a brick-and-mortar store can collect online payments only after signing a contract with an acquiring bank. Once the contract is signed, the merchant can receive online payments, and the acquirer takes care of it on behalf of the merchant.In short, acquirers accept payments while issuers make payments. Also, the Acquirers provide their services to businesses, whereas Issuers offer their services to individuals. Acquirers and Issuers are like two sides of the same coin; though there are subtle differences in how they work, one cannot exist without the other.<h2 class="heading-node" id="92d9">How does credit card processing work?</h2>Credit card processing, which happens in a fraction of seconds, is a complex process in the background. We have tried demystifying the process in 7 simple steps:<img src="https://miro.medium.com/max/1400/1*K9bp4Kbg_HWik1wOxQw9jw.jpeg" alt="Credit Card Processing Flow" title="" width="100%" height="284"><h3 class="heading-node" id="46f4">Consumer confirms purchase</h3>The consumer, who is also the cardholder, confirms the purchase at the POS (Point of Sale) terminal or the checkout webpage of the e-commerce website.<h3 class="heading-node" id="7fec">Consumer submits transaction details</h3>To complete the purchase, the consumer swipes the credit card or submits his card details to begin the payment. The transaction here will follow two flows; if it is a POS transaction, the POS device will read the card information. In the case of e-commerce websites, the consumer enters card details in the payment gateway.<h3 class="heading-node" id="1675">Secured data transmission</h3>There are multiple levels involved in the card data transmission and the purchase amount.<ol class="list-node" id="z0vfnyiw9"><li>Encrypted details sent to Payment Processor-&nbsp;The card reader or the payment gateway passes the transaction information in an encrypted format to the payment processor.</li><li>Payment Processor to Card Network-&nbsp;The payment processor collects and transmits information to the Credit Card Network.</li><li>Card Network to Issuer Bank-&nbsp;The Consumer’s Bank or the Issuing Bank which has issued the Credit Card, receives the information.</li></ol><h3 class="heading-node" id="1ae6">Payment verification by issuing bank</h3>The Consumer’s Bank verifies the availability of sufficient funds for the purchase. It also checks the legitimacy of the purchase. Once all these checks are done, it sends an approved or declined message to the Credit Card Network.<h3 class="heading-node" id="834e">Payment authorization</h3>Authorization response from the Card Network is sent to the Payment Gateway or the Card reader, displaying the response at the Purchase window. Once the authorization is approved, the merchant can deliver goods to Consumer.<h3 class="heading-node" id="665c">Payment processing by acquiring bank</h3>Merchant’s Bank or the Acquiring Bank receives the approved authorizations and credit card payments in a batch from Merchant for settlement. The payments are processed by the Bank on behalf of merchants.<h3 class="heading-node" id="e50a">Payment settlement flow</h3>The merchant bank further raises the Credit Card issuing bank request for batch settlement. The issuing bank, in turn, makes a settlement payment to the merchant bank the following day. Once funds are received by the Merchant Bank; certain amount towards interchange fees, acquirer fee, etc. are deducted before depositing the remaining to the merchant’s account. The settlement process typically takes 2–3 Business days.<h2 class="heading-node" id="ec35">What happens if the card transaction fails to go through?</h2>In case of refunds, payment disputes, or fraud reports, the process begins at the issuer end and then flows to the acquirer. In these cases, too, the issuer will authorize, and the acquirer authenticates. Though the minor details may differ from case to case, the overall process is the same. This activity is also known as the&nbsp;Chargeback process.&nbsp;Here the issuing bank will reverse the transaction in question by withdrawing money from the acquirer and returning it to the cardholder.The merchant can dispute the chargeback through&nbsp;Representment, where the acquirer must gather evidence on the merchant’s behalf to prove the original transaction validity. The issuer will examine the collected facts and offer an outcome supporting either the merchant or the cardholder.<h2 class="heading-node" id="280d">What are credit card processing services?</h2>A credit card processing service handles the data transfer that happens between the card machine and the bank. It processes all kinds of credit card transactions, both offline and online. Also known as&nbsp;Merchant Service&nbsp;Providers, these companies are authorized by card networks such Visa, MasterCard, etc. They help businesses open merchant accounts and manage their daily card transactions for a fee.<h2 class="heading-node" id="3ad2">Credit card processing fees</h2>The whole operation of credit card settlement and processing is notoriously confusing and complex. Still, it’s made easy for a price, and that is your credit card processing fees. This amount is charged to the merchant based on the payment processor he is using.Payment processors like the fintech providers who provide the payment infrastructure in the selling platform are the ones that collect this fee. It is then split among the other active players in the credit card processing framework.Credit card processing fees are broken into<ol class="list-node" id="5i5ncnxcm"><li>Interchange:&nbsp;The commission fee that goes to the issuer bank, non-negotiable.</li><li>Assessments:&nbsp;The commission fee that goes to the card network brand, non-negotiable.</li><li>Markup:&nbsp;The commission fee that goes to the payment processor, negotiable.</li></ol><h2 class="heading-node" id="f95c">Payment processing technologies</h2><img src="https://miro.medium.com/max/1400/1*jEPc3qSRo-kXAHW_35lr0w.jpeg" alt="Payment Processing Technologies" title="" width="100%" height="284">Payments are sensitive everywhere. Lose a tooth nobody cares but lose a penny in the transaction everybody loses their temperance.It is essential to place your business into the next generation of the digital world that demands trust, fast, easy, and scalable fintech solutions. Only when your chosen payment processing technology can act as more than an enhancement can one survive the competition.To process a credit card, settle the credit card funds, and secure the payment process, the fintech industry caters to the technology accordingly. Irrespective of online or offline stores, payment processing, needs to happen few seconds to place an active bet in the competition. And here are some of the technologies<ul class="list-node" id="gt7lqlsep"><li>Mobile POS terminal (mPOS)- It is a device used at stores for retail card transactions</li><li>Payment Gateway- It is the key component of the payment processing system, and it sends the customer information to the acquirer</li><li>Real-Time Payments (RTP)- As the name suggests, RTP payments are initiated and settled almost instantly. Ideally, this technology is available 24*7*365</li><li>Mobile Wallets- It is a virtual wallet that stores an individual’s card details on a mobile device. They are used to make payments without the need for a physical card.</li><li>Blockchain in Payments- It is a promising tech for payment processing. Many companies worldwide are exploring its potential in the same.</li><li>NFC/Contactless Cards- NFC is available in smartphone payment gateways. It allows users to store multiple card data on their mobile, thereby reducing the need to carry cash.</li></ul><h2 class="heading-node" id="3bfc">Conclusion</h2>I know this is a lot to take in. We wish for an easy backend process, too, with fewer complications involved.However, that’s a job for us to worry about while you think only of choosing the right credit card processing system. The only thought you should have is about bringing in a suitable payment processor to make your credit card transactions occur in a fraction of seconds for a lower fee.Want to know more on this? Write to us at business@m2pfintech.com.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

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