The B2B Card Payment Transaction Terminology
The nomenclature of payment processing can be confusing as there are several words for each key player and some functions can be performed by more than one organization. For example there are even instances (like Bank of America, Barclays and Wells Fargo) where the financial institution is both the issuer and the acquirer.
A card payment transaction begins when a cardholder enters his card information online/over the phone or swipes his card at a merchant’s business. The card information is sent to a payment processor (or via an e-commerce payment gateway) where the processor requests authenticity validation for the transaction information from the issuer of the card. The issuing bank or financial institute then approves or denies the use of the card and informs the processor. The processor then sends the answer back to the merchant who can complete the transaction. The issuing bank clears the order so that funds are transferred to the acquiring bank, where the merchant holds his merchant bank account.
Cardholder: An individual (acting on his own behalf or for a company/entity) who makes payments using his credit card at a merchant’s business.
Merchant: A company that accepts credit card payments for goods or services.
Payment Processor: This organization is contracted with the acquirer to process card transactions. The processor sends the payment transaction information from the merchant to the issuing bank (the bank that issued the customer’s credit card) for transaction authorization then relays the information back to the merchant and acquiring bank.
Payment Gateway: (if not combined with the processor). This is technology that transmits e-commerce and card-not-present payment information between the merchant, issuing and acquiring banks.
Issuing Bank/Institution: The issuer is an institution that issues credit and debit cards to individuals, businesses or entities subject to usage conditions laid out in a contract. Most cards are issued by financial institutions or corporate entities that offer credit and issue cards on behalf of banks whose name appears on the cards. The issuing bank or institution is responsible for transactions made using its cards and acts as a middleman between the customer and card network. They are responsible for debiting funds from the cardholder’s account when a purchase is made.
Acquiring Bank: The acquirer is a bank, financial institute or large company that maintains merchant bank accounts allowing businesses to accept card payments and other electronic payments. The acquirer assumes the risk and guarantees payment to the merchant while passing the transaction information on to the card issuer to complete payment. In order to operate as an acquirer in SEPA countries a bank or financial institute must meet the requirements of the EU’s Payment Service Directive (PSD).
Top Payment Processors/B2B Merchant Account Providers for Online Businesses in Europe.
These financial organizations can provide you with a full service and a range of products for processing card payments made to your online business. These payment processors act as a middle-man between the merchant and the issuing banks/credit card networks. They cover the complete payment process from initiation to receiving the funds in your bank account.
Perhaps the best known and most widely used of the top payment processors; PayPal’s payment gateway processes billions of transactions annually. Their services and technology are state-of-the-art; they have stringent fraud protection features; comprehensive support services and most importantly PayPal is easy to use and ideal for small or new businesses. PayPal can be integrated with all major online shopping carts and e-commerce platforms. However PayPal charges hefty fees which can be too expensive for small e-businesses. Merchant fees can be around 3.5% to receive funds and an additional 2.5% if the funds need to be converted into a different currency.
Amazon Payments is one of the leading payment gateways for small e-businesses. They hold more than 330 million customer accounts with over 65% of payments being made from mobile smart devices. The advantages of Amazon Payments include the fact that it is easy to use, easily installed on e-commerce websites and they support mobile payments and banking.
With 2Checkout you can get a demo of how it works before installing it. 2Checkout operates in 15 languages and offers 87 currency options making it the payment provider with the highest global reach. The API is easy to incorporate directly onto your site and offers an all-in-one monetization platform. The design of this payment processor is specifically geared towards growing your business so that you can choose only the services you need and add additional ones as your business grows.