Overview And Jargon Buster Flashcards
Payment Scheme
“Actor who provides the centralized payments infrastructure and operating rules”
- Provides and manages the technical infrastructure
- Manages the set of rules that ecosystem participants must follow
Card Acceptance
The process of taking payments by card
Merchant’s PSP
“Enable a merchant to accept card payments through the provision of technology”
- They can supply physical technology (card terminal providers)
- Or virtual facilities (e-commerce payment gateways)
Acquiring PSP
“Those that enable a merchant to connect to a payment scheme.”
“The merchant will connect to the acquiring PSP through their Merchant PSP’s technology (gateway, card terminal)”
Merchant PSP & Acquiring PSP can be the same entity (as it is the case with Adyen)
ASPSP
- Account Servicing PSP aka Issuer
- Actor who manages the payer’s payment account
- Could be a bank or non-bank financial institution that provides payers with cards
PISP
- Payment Initiation Service Provider
- A TPP that initiates a payment on behalf of a payer
- This could be a technology provider that supplies payers (cardholders) with a hardware-tied payment facility (Apple Pay) or a software facility (Google wallet, Venmo)
TPP
- Third Party PSPs
AISP
- Account Information Service Provider
- A TPP that accesses payment account information on behalf of a payer
- An AISP can enable a payer to check their card account (balance, last payment, transaction history etc.)
CBPII
- Card Based Payment Instrument Issuer
- A TPP that issues card-based payment instruments (physical or virtual) that can be used to initiate a payment transaction from a payment account
The Four Party Model
- Acquirer
- Issuer
- Merchant
- Cardholder
- Merchant has contract with acquirer
- Acquirer has contract with scheme
- Issuer has contract with scheme
Cardholders has a contract with Issuer - Card Scheme enables any qualifying issuer or acquirer to join
- Consumers can choose between different issuers
- Merchants can choose between different acquirers
Three Party Model
In this configuration, there is no separation between issuing and acquiring.
- In fact, the three roles of the card scheme, acquirer and issuer and performed by a single entity (American Express)
- The process for transactional payments are services are like those in the Four Party Model
- Scheme has a contract with both merchant and cardholder
Two Party Model (Closed Loop)
Merchant is both the Issuer and Acquirer.
- Cardholders for these schemes can only use the card for payments at the issuer, which in this case is the merchant itself
Examples:
- Target REDcard
- Shell Fuel Card
BUT:
- There can also be open loop store cards issued in collaboration with a card scheme
- This is called co-branded card
- Example: Delta SkyMiles
