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We looked at what the acquiring fee consists of, as well as how fraud filters affect the conversion
Probably, each of us has long appreciated the speed and convenience of cashless payments. I just brought my smartphone to the terminal, scanned my fingerprint - and the payment went through. But in reality, for this process to go smoothly, there needs to be smooth coordination among the various key players in the payment network.
One of them is the acquiring bank. It is a financial institution responsible for processing credit and debit card payments on behalf of the merchant. Every time we pay with a card, it is the acquiring bank that authorizes or rejects transactions based on the data received from the issuing bank that issued the card to us. If the payment is accepted, the funds will be transferred to the merchant's account.
Let's consider the diagram in more detail. When making a digital payment, information is transmitted from the buyer's card to the processing center of the acquiring bank. It sends data to the payment system that owns the card. The next step is to check the information - search for matches in the history of blocking or seizing an account. The decision based on the results of the check - refusal or approval of the transaction - is sent to the issuing bank.
There, the balance on the card is analyzed, its sufficiency for making a purchase. Further, the data goes to the acquiring bank and to the terminal. The funds are then withdrawn from the account and transferred to the seller's account. Although the payment is made within seconds, the funds will be credited to the merchant only after a few days. This is, of course, a simplified description, but it helps to understand what processes occur when a customer applies a card or smartphone to a POS terminal.
What affects the size of the commission
A company that intends to accept non-cash payments through a POS terminal signs a merchant acquiring agreement with a bank (such a bank is called an acquirer). Usually the connection service itself is free. Moreover, some banks allow you to rent POS terminals for free. For its part, the bank earns on commissions. This is the percentage of the purchase price that the merchant pays to the acquirer. Acquiring commission includes interchanging, acquiring bank fee, payment system commission. It differs not only between banks, but also between countries. So, in the EU countries it averages 0.9-1.9%, in the USA - 1.5%, in Ukraine - 1.6-2%.
So, the size of the commission is determined
Internet acquiring
One of the types of acquiring is Internet acquiring. This is a technology that allows you to accept payment with a bank card on the Internet. Its main difference from the trading one is the absence of terminals for reading cards. Internet acquiring takes place according to the following scheme: after the buyer enters his bank card details, the seller sends them to the payment aggregator, which sends an authorization request to the acquiring bank. He, in turn, redirects it to the payment system that issued the card. Next, the payment system sends a request to the issuing bank, which must conduct fraud monitoring. The essence of the latter is to reveal something unusual or suspicious in a payment in order to prevent fraud. When connected with 3D Secure technology, the buyer must enter the password that was sent to him via SMS. In case of successful verification, then the same steps occur as in the case of merchant acquiring.
It is extremely important for an online merchant to stop fraudulent payments, otherwise they will be disconnected from the payment system. On the other hand, with protectors such as 3D Secure, an online store can minimize costs. On the other hand, when you enable a large arsenal of anti-fraud filters, the percentage of accepted payments (conversion) can significantly decrease.
So, transactions in which the country of the issuing bank, the origin of the seller's website and the country from which the payment is sent do not coincide can be recognized as suspicious. Thus, the anti-fraud system may not miss an absolutely adequate payment. To prevent this, the anti-fraudulent system should be configured individually for the merchant, taking into account the specifics of his clients, their geography, etc. - in such a way as to simultaneously increase safety and not lose profits.
Probably, each of us has long appreciated the speed and convenience of cashless payments. I just brought my smartphone to the terminal, scanned my fingerprint - and the payment went through. But in reality, for this process to go smoothly, there needs to be smooth coordination among the various key players in the payment network.
One of them is the acquiring bank. It is a financial institution responsible for processing credit and debit card payments on behalf of the merchant. Every time we pay with a card, it is the acquiring bank that authorizes or rejects transactions based on the data received from the issuing bank that issued the card to us. If the payment is accepted, the funds will be transferred to the merchant's account.
Let's consider the diagram in more detail. When making a digital payment, information is transmitted from the buyer's card to the processing center of the acquiring bank. It sends data to the payment system that owns the card. The next step is to check the information - search for matches in the history of blocking or seizing an account. The decision based on the results of the check - refusal or approval of the transaction - is sent to the issuing bank.
There, the balance on the card is analyzed, its sufficiency for making a purchase. Further, the data goes to the acquiring bank and to the terminal. The funds are then withdrawn from the account and transferred to the seller's account. Although the payment is made within seconds, the funds will be credited to the merchant only after a few days. This is, of course, a simplified description, but it helps to understand what processes occur when a customer applies a card or smartphone to a POS terminal.
What affects the size of the commission
A company that intends to accept non-cash payments through a POS terminal signs a merchant acquiring agreement with a bank (such a bank is called an acquirer). Usually the connection service itself is free. Moreover, some banks allow you to rent POS terminals for free. For its part, the bank earns on commissions. This is the percentage of the purchase price that the merchant pays to the acquirer. Acquiring commission includes interchanging, acquiring bank fee, payment system commission. It differs not only between banks, but also between countries. So, in the EU countries it averages 0.9-1.9%, in the USA - 1.5%, in Ukraine - 1.6-2%.
So, the size of the commission is determined
- the merchant's turnover - the larger it is, the lower the commission;
- its location - in elite areas the commission may be higher;
- the type of business of a merchant. For example, if a company sells household appliances, then it pays a higher commission than a fast food establishment. The logic is that in the first case, the probability of returning the goods is higher;
- the mutual location of the acquiring bank and the issuing bank - the one that serves the merchant and the one that serves the buyer. If they are located within the same country, then the commission is less than for cross-border transactions;
- the type of plastic card used by the client. The higher the status, the higher the fee. In addition, the rate is generally higher for credit cards;
- payment system commission. It can be fixed or depend on the number of transactions carried out over a certain period;
- interchange rate (payment to the issuing bank from the acquiring bank). It accounts for 80% of the total amount of commission for acquiring. Interchanges are installed by payment systems);
the type of transaction is an online payment or through a terminal (in the first case, the fee is higher); - by the commission of the acquiring bank (the cost of the operation and the profit of the financial institution).
Internet acquiring
One of the types of acquiring is Internet acquiring. This is a technology that allows you to accept payment with a bank card on the Internet. Its main difference from the trading one is the absence of terminals for reading cards. Internet acquiring takes place according to the following scheme: after the buyer enters his bank card details, the seller sends them to the payment aggregator, which sends an authorization request to the acquiring bank. He, in turn, redirects it to the payment system that issued the card. Next, the payment system sends a request to the issuing bank, which must conduct fraud monitoring. The essence of the latter is to reveal something unusual or suspicious in a payment in order to prevent fraud. When connected with 3D Secure technology, the buyer must enter the password that was sent to him via SMS. In case of successful verification, then the same steps occur as in the case of merchant acquiring.
It is extremely important for an online merchant to stop fraudulent payments, otherwise they will be disconnected from the payment system. On the other hand, with protectors such as 3D Secure, an online store can minimize costs. On the other hand, when you enable a large arsenal of anti-fraud filters, the percentage of accepted payments (conversion) can significantly decrease.
So, transactions in which the country of the issuing bank, the origin of the seller's website and the country from which the payment is sent do not coincide can be recognized as suspicious. Thus, the anti-fraud system may not miss an absolutely adequate payment. To prevent this, the anti-fraudulent system should be configured individually for the merchant, taking into account the specifics of his clients, their geography, etc. - in such a way as to simultaneously increase safety and not lose profits.
