Payments processing

What is acquiring?

Acquiring is the activity of a financial organization (bank or payment provider) in the processing of bank credit or debit cards, which is a sequence of procedures for checking the data entered by the cardholder, debiting funds from his account and crediting funds to the merchant account of the payee organization. Also called merchant acquiring.

What is internet acquiring?

Internet acquiring is the implementation by the Payment Processing Clearing House of a sequence of cash transactions similar to merchant acquiring, but without identifying the signature of the cardholder and, as a result, with the possibility of canceling the payment "on demand" of the owner.

Acquiring: tariffs and factors influencing them

There are two types of acquiring: trading acquiring using POS-terminals, when the card is physically present, and its owner puts a signature on the check (payment marker “Card present”), and Internet acquiring when the card is missing and it is impossible to establish a face making payment (marker "Card not present"). The presence of a card marker in electronic banking transactions is an essential element that determines what kind of acquiring, tariffs, processing rules and opportunities for appeal and cancellation are made.

To protect cardholders from fraud, the “Card not present” payment processing procedure introduced the possibility of a simplified payment cancellation (Chargeback). In many cases, for this, it is enough for the Cardholder to call his bank and say that the goods were not delivered or the service was not provided properly.

To minimize the cases of “chargebacks”, VISA, MasterCard and other card regulators imposed strict sanctions on Merchants, which provide poor-quality services, in the form of fines for each case of payment cancellation. And the traders themselves were divided into classes of activity depending on the level of risk of the “chargeback”. Tariff grids have been created that define the basic commission depending on the “Merchant class”. The maximum allowable chargeback levels were also determined - for example, for VISA credit cards this is ~ 2%, and for MasterCard ~ 1%. Moreover, the regulators set a limit on these percentages not for the trading enterprises themselves, but for banks.

In addition, VISA and MasterCard divided the planet into special zones - acquiring cards of European residents in American processing will cost the recipient more than paying through a European processing or bank. This commission is called the "Interchange rate". It is believed that it was created to “skim the cream” from online businesses that minimize costs through various offshore schemes.

Internet acquiring and the issue of canceling payments

A strict restriction on the percentage of “chargebacks” led to the appearance of two types of payment processings specializing in reducing their number:

The first type is organizations that reduce the number of chargebacks by legal means. Such companies create call-centers for technical support, conduct site audits, logistics and business reorganization consulting. This type of processor is interesting when exceeding the maximum level of “chargebacks” is within 1%.

The second type is firms specializing in working with shadow businesses with high turnover and a return level of more than 4%. Working in tandem with banks, they arrange “carousels” of fake legal entities and, using delays in processing complaints, manage to withdraw money from accounts before the regulator prohibits transactions and blocks the held insurance interest “hold”. This is “black” acquiring, tariffs in such organizations, of course, are much higher.