by Alex Ho

(Image source: storyset )

目錄

• Online Payment Ecosystem
• Issuing Bank
• ISO/MSP
• Payment Gateway
• Payment Processor
• Merchant Account
• Card Network
• How does VISA make money?
• Scan to pay
• Payment via NFC
• Apple Pay
• Apple Pay v.s. Google Pay
• Payment in e-commerce
• Top Players in the Market
• PayPal
• Adyen
• Consumer traits in different markets
• References

Online Payment Ecosystem

(Source: Hua Li )

Issuing Bank

• Cardholder opens an account and apply for a credit/debit card at the issuing bank (發卡銀行)

ISO/MSP

• ISO = Independent Sales Organization
• MSP = Member Service Provider
• Merchant register in-store sales with ISO/MSP and opens a merchant account

Payment Gateway

• Payment Gateway can be seen as the online version of POS device which connects the merchant’s website/App and the payment processor
• When cardholder (consumer) makes a transaction at the merchant’s website/App , the Payment gateway accepts, collects, and then sends the payment information to a payment processor

Acquiring Bank (收單銀行)

Payment Processor

Payment Processor transmits the transaction information from consumer’s credit to the acquiring bank and the issuing bank. It’s like a middleman between the banks and the merchant.

• Acquiring payment processor
• Sending the transaction information (from merchant) to the card network.
• Operating the merchant account during settlement
• Issuing payment processor
• After the card verification is done by the card network, payment processor uses customer information to collect the funds from the issuing bank to the merchant account

Merchant Account

• Merchant account under the acquiring bank (收單銀行) is to accept online payment from the customers
• The payment can later be automatically transferred to merchant’s own business bank account.

Card Network

• E.g. VISA, MasterCard
• Card Network verify if
• customer’s card has sufficient funds or credits for this purchase.
• the transaction is not a fraudulent behavior
• Card Network request authorization to the issuing bank to release the funds (for this purchase)

References

Hua Li on LinkedIn: #systemdesign #payments #visa | 26 comments

How do we find opportunities among so many payment companies? What do PayPal Stripe Square do exactly? 👇 The diagram below shows the payments ecosystem... 26 comments on LinkedIn

www.linkedin.com

How does VISA make money?

(below content is from https://blog.bytebytego.com )

1. The cardholder pays the merchant $100 to buy a product.
2. The merchant benefits from the use of the credit card with more sales volume, and needs to compensate the issuer (發卡銀行) and the card network for providing the payment services.
1. The acquiring bank (收單銀行) sets a fee with the merchant, called the merchant discount fee.
3. - > 4. The acquiring bank keeps $0.25 as the acquiring markup (acquirer’s revenue), and the rest of $1.75 is paid to the issuing bank as the interchange fee. The merchant discount fee should cover the interchange fee.

The interchange fee is set by the card network

• because it is less efficient for each issuing bank to negotiate fees with each merchant.

5. The card network (e.g. VISA) sets up the network assessments and fees with each bank. Each bank pays the card network for its services every month.
1. For example, VISA charges a 0.11% assessment plus a $0.0195 usage fee for every swipe.
6. The cardholder pays the issuing bank for its services.

Issuer is compensated because

1. The Issuer pays the merchant even if the cardholder fails to pay the issuer (Issuer covers the risks)
2. The Issuer pays the merchant even before the cardholder pays the issuer
3. The issuer has other operation coats
1. managing customer accounts
2. providing statements
3. fraud detection
4. risk managemnet
5. clearing and settlement

Scan to pay

Payment via NFC

Apple Pay

(by Alex Xu)

Apple Pay v.s. Google Pay

Payment in e-commerce

Top Players in the Market

References

Best payment gateways of 2022

(Image credit: Song_About_Summer / Shutterstoc) The best payment gateways make it simple and easy to take and process credit and debit card payments online. Payment gateways offer the flexibility of being able to take card payments, either online or in-store. The allows quick and easy credit card payment processing, both online and offline.

www.techradar.com

PayPal

Adyen

Consumer traits in different markets

USA

• Most of the consumers own bank accounts and credit cards

Europe

• Most of the consumers own bank accounts
• Credit card penetration rate in Europe is lower than in USA

Developing Markets (e.g. Southeast Asia, South America)

• Majority of people do not own neither bank accounts nor credit cards
• This is where digital wallet and BNPL (buy now pay later) have high potential

References

Global Digital Payment Market to Grow at a Steady rate during 2022-2028 | BlueWeave Consulting

The Asia-Pacific segment accounts to hold the largest share in the market owing to the adoption of mobile payments and digital wallets in APAC which are likely to be higher than in other regions.

finance.yahoo.com

Buy Now Pay Later Market Worth USD 90.51 Billion by 2029 | 21.7% CAGR

Pune, India, Aug. 16, 2022 (GLOBE NEWSWIRE) -- The Buy Now Pay Later Market size was USD 15.91 billion in 2021. The market is projected to grow from USD 22.86 billion in 2022 to USD 90.51 billion in 2029 at a CAGR of 21.7% during the 2022-2029 period.

www.globenewswire.com

Online Payment Market Size, Share | Global Industry Report, 2020-2027

The global online payment market size was valued at USD 3,286.52 billion in 2019 and is projected to reach USD 17,643.35 billion by 2027, exhibiting a CAGR of 23.7% during the forecast period. The increasing digitalization is boosting the payment market.

www.fortunebusinessinsights.com

With 23.7% CAGR, Online Payment Market Size to Reach USD 17,643.35 Billion [2022-2027]

Pune, India, Aug. 08, 2022 (GLOBE NEWSWIRE) -- As Per the Report Published by Fortune Business Insights™ in report, titled, "Online Payment Market Size , Share & COVID-19 Impact Analysis, By Payment, By Industry, and Regional Forecast, 2020-2027."

www.globenewswire.com

Digital Payments - Worldwide | Statista Market Forecast

Worldwide: Total transaction value in the Digital Payments segment is projected to reach US$8.49tn in 2022. The Digital Payments market segment is led by consumer transactions and includes payments for products and services which are made over the Internet as well as mobile payments at point of sale (POS) via smartphone applications and cross-border money transfers made over the internet (digital remittances).

www.statista.com

信用卡清償流程：

1. 特約商店向收單銀行請撥持卡人刷卡消費之商品帳款收單
2. 銀行於先行墊付特約商店帳款後，即透過信用卡組織清算網路向發卡銀行請撥代墊帳款
3. 發卡銀行於撥付收單行代墊帳款，以月為單位結帳後，再發函通知持卡人繳納其於特約商店刷卡消費之帳款。
4. 持卡人繳清消費總額或最低繳款金額後，刷卡消費之帳款即清償完畢。

About me

• Linkedin profile: Alex Ho
• Software Product Manager.
• 10 years of experience as software product manager in these areas: #ecommerce #SaaS #SoutheastAsia #delivery #MarTech #SuperApp #OnlineLearning
• Work experiences in Taipei, Singapore, and Shanghai.
• Currently based in Taipei City, Taiwan.