Here Are The 5 Main Players That Make Up The Fractured, Complex Credit Card-Processing Ecosystem

The credit- and debit-card ecosystem involves a complicated set of players interacting to process every transaction. Understanding how they work together, and the different roles they play, is crucial for any business trying to seize opportunities in the payments space.

In a new explainer, BI Intelligence offers a high-level look at the payments industry — how it functions, and who the key players and trends are. We start by explaining payment-card processing, since the majority of consumer payments and transaction volume flow through this system. From there we take a look at how consumers’ move to mobile devices is changing the way we pay, and how new merchant-side technologies are also disrupting payments.

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Here are how the 5 main types of businesses in payments work together:

  • Acquirers/processors:Acquiring banks, such as Bank of America or Wells Fargo, are members of card networks like MasterCard and Visa, and are responsible for providing merchants with most of the systems they need for accepting card payments. Processors are responsible primarily for data transmission and data security. We lump processors in with acquirers because some acquirers process transactions in-house.
  • Independent sales organisations and merchant service providers: ISOs and MSPs are entities that sell payment-processing services to merchants on behalf of acquirers/processors, but are not banks. There is no significant difference between an ISO and an MSP. MSPs are registered with MasterCard while ISOs are registered with Visa.
  • Issuers: Issuing banks, or issuers, provide consumers and businesses with debit and credit cards connected to checking or credit accounts.
  • Card networks: Card networks like Visa or Discover act as a kind of hub within the card-processing ecosystem and serve two main functions: routing transactions between issuers and acquirers, and setting the rules by which the network of merchants, acquirers/processors, and issuers operates.
  • Gateway providers: E-commerce companies have certain special requirements for running payment-card transactions. Gateways like Stripe act as the portal through which e-commerce merchants connect to acquirers.

In full, the report:

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Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

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