The functions and risks of the acquiring Bank

Contactless payments over the last years strongly rooted in the lives of Russians. The technology allows users that have no paper bills, to make purchases. We consider in detail the process of acquiring and all participants of this scheme.

The bottom line

Plastic card – this payment tool that provides access to Finance. Having read the data, you can find information about the owner and the balance in the account. For these purposes, in the trade points using the terminal. By entering the pin code, the card holder gives permission to withdraw funds in payment of goods. Further, in the process of payment is included multiple organizations.

Members

Payments are involved, the issuing Bank and the acquiring Bank. Let us consider in detail the function of each. The acquiring Bank is the Bank executing the setting points of reception of cards. For these purposes the credit institution uses the terminal advises the staff on the reception and payment cancellations and configures the software. But this is not all of the functions of the acquiring Bank. The credit institution shall:

• Authorization and verification of solvency cards;
• Handling of inquiries;
• Carries out the transfer of funds to the merchant account;
• Handles documentation of the transaction;
• Extends the list of prohibited (stolen, expired) cards.

Issuing Bank produces and maintains the payment card, open account for cash flow. The same institution may be the acquirer and the Issuer simultaneously. In this case, POS terminal and loyalty card will be issued by the same institution. But if the client card «Tinkoff credit systems Bank” and he withdraws money through the ATM, the first credit institution is the Issuer, and the second – the acquiring. The service is called merchant-(TSP).

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Processing center

For confirmation of the transaction the cardholder must enter a pin. Immediately after that acquiring Bank starts the process of code verification, the functioning of the Bank balance. To obtain these data in the processing center sent the request. In case of detection of any errors the transaction is not allowed to the acquiring Bank.

The Processing center – this is the Foundation on which are built electronic transactions. This automated system of handling transfers via Bank cards. Its main task — to give the stores the ability to accept cashless payment. The processing center also performs the mutual settlements between the acquirer and Issuer, merchant and the card holder. In Russia coordination of payments on VISA cards and MasterCard does the center PayOnline.

Payment system

The Advantage of cashless payments in that they can be used anywhere in the world. But the possibility of acquiring Bank limited. One Agency technically can't arrange payments with all outlets or installed anywhere ATM. The communication function executes the payment system. Upon request from the processing center, she checks the solvency of the card. If the balance is enough for the operation and the financial institution is a member of the system, it sends a request to execute electronic transactions.

Billing company

Another link which may be present in the chain. The billing company as a payment system, takes the function of transmitting the transaction to the acquirer, but performs additional monitoring and risk management, organizing access to detailed statistics on transactions, provides for payments to account holders.

Bank online acquirer

The Principle of carrying out online payments is similar to the process of buying products in the store. Differs only the way of transmitting information. In the first case, the terminal reads the data, and the second the client alone puts them in a special form on the website. Functions of the acquiring Bank performs the credit institution that supports the organization of transactions. All participants in the electronic payment system should have reliable communication channels and equipment which provides the fast checkout process and data transfer.

Commission

Acquiring is not a free service. The process of making payments is multiple parties involved. Payment system ensures the interaction of outlets and credit institutions around the world, for she gets a Commission in the range of 1-1,1% of the amount of the payment. Still the same is sent to the Issuer for the transfer of funds. And, of course, the fee the acquiring Bank. The average rate is 2-4%. The Commission also affects the scope of activities of TSP, the turnover in the account, the communication type and the device type.

The Circuit

The Most common scheme of work, when the point is connected directly to Aquaero, for example, the terminal or via a special form on the website. In this case, the Bank needs to develop software to accept payments and to monitor the state of communication channels. The shop must ensure that a transaction, to organize the defense of the servers, trackoperations to identify potential cheaters. If the hierarchy of the online store complicated, the implementation of the system will have to deal with programmers. This additional spending.

The Risks of the acquiring Bank in case of bankruptcy of TSP

In case of bankruptcy, organizations that provide services to people, credit institutions, there is a risk of a refund to cardholders. Not all operations are paid at the time of purchase. For example, tourists going to travel, book hotels and plane tickets in advance. In the case of bankruptcy of tour operator customers will demand refunds for paid but not received services.

A Vivid example of such situation is the collapse of «Transaero». The financial institution to accept payment cards for delayed tours and air transportation, but went bankrupt. According to the rules of the international system in such situations, the issue a refund falls on the acquirer. According to preliminary data, losses of participants of transactions can amount to hundreds of millions of rubles. It does not matter exactly how the payment was made directly at the point of service, or billing. In all cases, the financial responsibility of the acquirer.

Refunds

If an error occurs the server of the acquiring Bank, the money is returned at the buyer's expense. The procedure provides for referral of the client to the Bank which prepares and sends a request to the acquiring. A credit institution is obliged to return the money. Another thing is that in the case of the present example, the bankruptcy of the company to compensate for the losses the Bank will be able only in the process of liquidation of the organization.

The Stricter requirements

Due to the situation with the «Transaero» bankers intend to revise the terms of service TPS. Thus, it is proposed to introduce additional safeguards in the form of collateral or Deposit, confirming the solvency of the client. Among other options also considered the option to extend the term of the enrollment at the expense of the TPS up to two weeks. This practice was already in 2000-ies. But under current conditions such measures will lead rather to the loss of customers.

News

The Bank «Russia» has developed its own acquiring Internet payments for use of natural gas. Clients of the company «Gazprom Mezhregiongaz» unable to pay for natural gas through the website of the Bank «Russia». To do this, go to the page of the credit institution in the section online payment and account number to transfer funds.

The Bank “St Petersburg” began to accept the cards of the national payment system “Peace” in its network of ATMs, branches and terminals.

The Bank «Russian Standard» from 6 April 2016 began service chip cards of international system Diners Club International (DCI). Transactions are executed according to the international EMV standard. This provides a high level security operations. The right to issue Diners Club card exclusive from acquiring Bank appeared in 2011. Since then, the only credit institution in the country, which is responsible for the promotion and status of the brand.