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  5. Why commission happens for each payment – – Card Payment Value Chain

Why commission happens for each payment – – Card Payment Value Chain

There will be a certain commission cost happen for each transaction in shops because there are multi vendors contribute in this value chain for security and real time payment globally.

  • Terminal providers:

Typically manufacture and provide merchant acquirers with hardware and/or software devices used to accept payments. These can come in a range of form factors, with common terminal types including countertop (internet-connectivity enabled via an Ethernet cable) and mobile (internet-connectivity enabled via Wi-Fi or mobile network). In our case, we manage our own proprietary terminal software housed in hardware that we source from a third party supplier.

  • Point of Sale system providers:

Provide a combination of software and hardware solutions to merchants to help manage inventory and record transactions, essentially acting as modern day cash registers. In the Hospitality vertical, these systems are referred to as POS or Business Operating System like Ivida Taptouch.

  • Payment facilitators:

Offer payment services but are sponsored by a merchant acquirer(s) and typically enter into ‘sub-merchant’ agreements with merchants under their ‘master merchant’ account that
they hold with a merchant acquirer(s). There has been a rise in payment facilitators with the increase of online shopping and the emergence of online payment gateways, where providing technologically advanced payment acceptance facilities online was deemed advantageous rather than the merchant acquiring itself. A payment gateway is an online payment acceptance application that accepts card details and transmits the transaction data to a merchant acquirer.

  • Processors:

Typically provide outsourced technical services to merchant acquirers (or issuers) such as transaction switching and routing, data transmission and communications, data storage,
record management, clearing and settlement and authorisation functions. Merchant acquirers and processors are terms sometimes treated synonymously; however, they perform different functions that can be offered by the same entity (as in our case).

  • Risk management providers:

Monitor and assess transactions to verify the legitimacy of these transactions and flag potentially fraudulent activity on behalf of merchant acquirers and issuers. This is sometimes also managed in-house

  • Digital wallet providers:

Enable ‘virtualised’ cards to be hosted digitally (typically on a mobile phone or wearable device such as a ‘smart’ watch) and used by cardholders online or in a ‘card-present’ transaction via Near Field Communication acceptance on a terminal. The providers of digital wallets commonly charge issuers on a per transaction basis in return for hosting their cards. Examples include Apple Pay, Samsung Pay and Google Pay

  • Independent Sales Organisations:

Authorised third parties that represent banks or other participants by promoting and selling their services.

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