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Digital Merchant Acquiring Futuristic Digital Payment Solution Table of Contents WHITE PAPER Digital Merchant Acquiring futuristic digital payment solution Table of Contents Executive summary How a traditional process poses problems Smart solution and business flow Benefits EVRY’s offerings Introducing a rapid evolution to payments Adoption of QR codes for transactions Simpler way to transfer funds Card Interchange Network v/s Digital Interchange Network Traditional landscape and digital landscape Conclusion About EVRY and EVRY’s BFS offerings DIGITAL MERCHANT ACQUIRING - WHITE PAPER Executive Summary Over the past few decades, plastic money has been facilitating Merchant Acquirer business between merchants and customers. The collaboration between card organizations and terminal operators is enabling transaction acquiring to develop into a prominent business among the financial institutions acting as merchant banks (acquirers) and customer banks (issuers). Card In this equation, to exchange the card information among various holder financial stakeholders, issuers and acquirers have to share reasona- ble revenue with card organizations in conducting this business. Card organizations charge a certain percentage of amount for every transaction. These factors have made card organizations a monopolized segment today. Issuer Card network In addition to these overheads, neither the acquirer nor the merchant is benefiting, owing to huge maintenance costs within With an aim to generate measurable business impact, Digital the transaction processing landscape. It further leads to delayed Acquiring using digital QR code interchange network can make financial settlements with merchants. All these factors result in high a substantial difference. It can reduce the number of stakeholders transaction fees for merchants. in the business chain, which in-turn generates big revenue. The digital acquiring solution also features new techniques that help The present day’s digital world brings across various smart transa- in achieving direct business transaction between merchants ction acquiring solutions like NFC payments, fingerprint payments, and customers. Also, the digital QR code interchange network mobile payments, etc. Moreover, these smart solutions are contributes towards saving the environment by reducing the use of challenged in addressing revenue sharing among various financial plastic in cards. stakeholders. How does a traditional merchant Smart Solution acquiring process pose problems Revenue sharing: Acquirers have to share revenues with card organizations and terminal The digital issuing bank provides customers with a QR code scanner mobile app linked to operators, resulting in losses in the process. customers’ bank accounts on behalf of the digital interchange networks. Maintenance: Acquirers are required to maintain a high cost landscape and physically Digital merchant uses smartphone with a dynamic QR code generator mobile app pro- connect with all the card organizations through its technical landscape. vided by the acquirer to authorize as well as transfer funds to the merchant. Delays in settlement process: Amount due to the merchants will be settled only after two The digital acquiring bank processes these QR code payments through the digital inter- days or more, followed by the transaction. change network on behalf of a merchant, in association with issuing banks. Merchant overhead charges: The fee charged from merchants is usually more. Business Flow Scan barcode / Validate master Push money to QR code barcode merchant Retrieve User App product information Merchant App Scan barcode / Generate master Enter amount related QR code barcode details DIGITAL MERCHANT ACQUIRING - WHITE PAPER Benefits No revenue sharing: Acquirers need not share profits with card organizations nor share the revenue with terminal operators. Low maintenance: Acquirers need not maintain high cost landscape. They can maintain the existing core banking landscape. Reducing dependencies: There is no requirement for acquirers to communicate with card organization networks through its technical landscape. No investment: Merchants need not invest in terminal operators. Instead, they can use their own multipurpose mobile phone. Faster settlement: The amount due to the merchants from customers will be transferred immediately. Low overhead costs: Merchants will be charged with lesser fee. Freedom: Merchants can carry out business with any issuing bank customer. EVRY’s Offerings - Digital Merchant Acquiring (Using Digital Interchange Network) We extend our support to banks in: • Building their own mobile bank QR code generator / scanner applications. • Generating QR code by using ISO/IEC 18004 standards & digital tokenization concept. • Using digital interchange network to ensure QR code authorization between customers, issuing banks, acquiring banks and merchants. • Ensuring DSS compliance in maintaining QR code server information. EVRY can assist banks by introducing digital acquiring and prevent the use of plastic cards. We can help banks increase their revenue • Migration of merchants from old ISO 8583 clearing by avoiding revenue sharing with card organizations, terminals & gateway to ISO 20022 / SWIFT message gateway. terminal operators. EVRY can aid in building a separate technical landscape for processing card payments using ISO 8583 clearing & • Providing strategic solutions & services to handle various settlement gateway. merchant-specific requirements. DIGITAL MERCHANT ACQUIRING - WHITE PAPER Introducing a Rapid Solution for Payments Traditional Card Network Merchant Acquiring Card holders swipe their cards to pay for the services or items purchased. The payment details (transaction) are sent to the acqui- ring bank, which processes plastic card payments on behalf of the merchant. If the card issuer bank is different, then the transaction details are sent to the issuing bank for authorization and approval. Acquirer Cards Payees Eventually, the acquiring bank credits the amount to merchant’s (Merchants, MO/TO & e-Commerce) account. New Smart QR Code Network Digital Merchant Acquiring Digital acquiring bank (or digital acquirer) is a bank or a financial institution that processes QR code-generated payments on behalf of a merchant. “Digital acquirer” is a new term and concept. The innovative process involves generation of QR code payments for Acquirer QR code Payees (Merchants, MO/TO & merchants through an association with issuing banks. e-Commerce) Adoption of QR Codes for Transactions Card Issuers (Issuer banks) In the current scenario, the issuing bank is also known as the credit or debit card company. The issuer acts as the middleman for the customer, card network and the acquiring bank by forming contracts with cardholders for the terms of repayment of transactions. Digital Mobile Application Issuers The digital issuing bank is a financial institution that issues QR code scanner mobile app (bank account-linked) to customers on behalf of the digital interchange networks. The issuing bank is also known as the digital QR code scanner company. The issuer acts as the middleman for the customer, digital interchange network and the digital acquiring bank. This is achieved through forming a contract with the QR code mobile app users for the terms of repayment of transactions. A digital issuer provides customers with a QR code mobile app linked to their bank accounts to transmit this data to digital acquirers for authorization and finally to transfer funds to the acquirer. DIGITAL MERCHANT ACQUIRING - WHITE PAPER Simpler Way to Transfer Funds Merchant Acquiring Equipment Digital Merchant Acquiring Equipment (POS terminal & terminal operators) (Smartphone & mobile app) A merchant is licensed to perform payment activities for Point-of-Sale (POS) A digital merchant, having a smartphone with licensed QR code generator terminals with the help of Payment Terminal Service Provider (PTSP) using mobile app provided by the acquirer, will transmit the data to acquirers for various kinds of POS terminals like flex, tele & integrated terminals and NCR / authorization. Followed by this, the funds are transferred to the merchant. Dankort, Verifone terminals, etc. PTSP allows a merchant to insert, swipe or manually enter the required credit / debit card information to transmit this data to the merchant acquirer for authori- zation and further transfer funds to the merchant. Majority of the card terminals transmit data over a standard telephone line or a wired / wireless Internet connection. Card Interchange Network (card organizations) v/s Digital Interchange Network Card A card organization is a network of issuing Interchange banks and acquiring banks that processes payment Network cards of a specific brand. With the help of issuing bank’s orders, a card organization prepares plastic payment cards. Digital The Digital Interchange Network is a network of digital Interchange issuing banks and digital acquiring banks that process mobile app-generated QR code payments. Network DIGITAL MERCHANT ACQUIRING - WHITE PAPER Acquiring Card Platform / Traditional ISO 8583 Landscape Merchant Terminal operator $ Processor Card holder Acquirer ISO 20022 ISO 8583 Issuer Card network Digital Acquiring Platform code scanner mobile app Issuer QR $ Processor de network ISO 20022 network QR co Merchant Acquirer DIGITAL MERCHANT ACQUIRING - WHITE PAPER Conclusion Rise in customer expectations and several new industry entrants are rapidly transforming the way today’s banking industry operates. Diminishing interaction with customers as well as maintaining long-stan- ding
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