How it works. Which to choose. What the system is for online shops. We’re discussing the subject of internet acquiring “in plain language”.
Acquiring is a derivative of the English verb “to acquire” and means “acquisition”. Its essence is the non-cash payment – someone pays with a plastic card through a terminal and doesn’t withdraw cash. And internet acquiring is a system of payments via the internet. Unlike conventional or mobile, in this type of acquiring an “in-store” terminal is not needed: it’s not only for customers of traditional banks, but also clients of payment and fintech companies and owners of electronic wallets. As you can see, it’s all pretty simple. However, we will explain in some more detail.
Moving along the financial stepping stones
There are several stages in the internet acquiring system. In cases where a client has a bank card and no virtual electronic wallet, the process is as follows: the customer makes a purchase in an online store and enters his card details, for example, number, expiration date, CVV2 / CVC2 code. The store sends the data to the payment aggregator, which sends a request to the acquiring bank: can the transaction be continued? In turn, the acquiring bank makes an authorization request to the international payment system that issued this particular card – MasterCard, VISA, or another.
The payment aggregator is a kind of entry point to different systems and methods of payment, for example, via bank cards, via electronic wallets, terminals. Therefore, objectively, it is better for a client to cooperate with the intermediary-aggregator, instead of running between ten partners himself. The first option is simpler, since the client of an online store has one manager who deals with solving financial problems. It is no coincidence that most of the stores, having connected the internet acquiring service, prefer to work with acquirers through an aggregator.
So, at every stage, including the final one, the following are checked: is there any real customer “available” at all or has some fraudulent entity (or person, or group of persons, organizations) entered the system, does the customer have money on his account, which commissions can be charged, whether certain bonuses are provided for online operations, and the like.
All this is done very quickly. And if everything is clear with the client, and there are no difficulties, then the issuing bank sends a confirmation to the IPS, and the latter gives a positive response to the acquiring bank. Then a certain amount is withdrawn from the client’s account and he becomes the happy owner of the purchased item or service.
We emphasize that in this chain the role of the provider – the aggregator – is extremely important. It is easier for the stores to work through the aggregator, because it keeps a unified record of all financial transactions. When everyone is in the same system and it is known who exactly is responsible for the process, being an intermediary between different systems, it is easier for the client to conduct business.
The choice is always up to the customer
The process of internet acquiring includes, at times, four participants or more. The first is the client of an online store. The second is the issuer, a financial institution where this customer has a personal account. The third is an acquiring bank, with which the seller cooperates. Other participants can include: the aggregator, the payment system that provides interbank communications, and so on.
For some time, more and more stores have been adopting an electronic money settlement system, without being tied to traditional banks. The number of customers who use virtual cards to pay at online stores in order to reduce the risk of fraud is growing quickly.
Aggregator – reliable protection against headaches
If we talk about rates, it is important to understand the following. If an online store wants to accept payments online, then it really needs to connect to an internet acquiring system. This is easier to do either, as we said above, through payment aggregators – intermediaries between you and the bank, or you can make an agreement for working with the bank directly.
Most prefer the former option, since the processes of mutual settlement directly with a bank take longer than work through an aggregator; besides, surprises can occur at any stage in the system of financial operations. And as a result, the client – an online store, which already has enough worries, gets even more headache. The aggregator is a reliable protection against headaches. The client does not need to build relationships with anyone from scratch, it is safer and easier to contact the provider, which already has established connections – in the chain of internet acquiring.
It is also important to understand that the aggregator has its own relationship with the bank, and, logically, it is more profitable for an online store to work through an intermediary. It is important for the client when he only plans to connect an internet acquiring system to find a provider – an intermediary who provides technical support. Usually each aggregator has a history of working with clients, which means accumulated experience. The longer and more productive the aggregator works in the system of intermediary operations – the better their “financial history” is, which allows acquirers to give such a provider lower rates close to the cost price. Acquirers are really interested in maintaining turnover…
In fact, the internet acquiring system for an ordinary user is simple, the main thing is to take the right step and clearly calculate everything in advance.