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Emergent Payments Assignment

Team Name: Samsan

Team Members:

Samhita Bardhan samhitab2017@email.iimcal.ac.in +91-8336947342Sandeep Kumar Pal sandeepkp2017@email.iimcal.ac.in +91-9674632440

mailto:samhitab2017@email.iimcal.ac.inmailto:sandeepkp2017@email.iimcal.ac.inmailto:sandeepkp2017@email.iimcal.ac.inmailto:samhitab2017@email.iimcal.ac.in

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Debit/Credit Card Authorization

Customer

Merchant(Brick-

Mortar/ Online)

Acquirer/ Internet

Merchant Account

Network Provider

Issuer

2

67

5

4

81

3

Card Swipe Transactions

1. Customer swipes debit/credit card at the EDC machine to pay for the purchase.

2. The details get sent to the acquirer.

3. Acquirer sends the customer details to the network provider (Visa/ Master card) for

authorisation.

4. Network provider sends the details to the Issuer bank for authorisation.

5. Based on the account details of the customer, the issuer authorises or declines the

transaction. It sends an authorisation code to the network provider.6. Authorised code is sent to the acquirer.

7. The acquirer authorises the transaction.

8. Merchant concludes the sales and provides the product to the customer

Online Transactions

Step 2,3,6 and 7 do not occur. Instead the process flow would be 1-2-3-4-5-6-7-8

2. Once customer submits the card details, the merchant site launches payment gateway.

3. Payment gateway sends the details to network provider to process the data.

6. Authorization is sent to Payment Gateway.

7. Payment Gateway clears the transaction.

Payment Gateway

Swipe transactions

Online transactions

card network2

3

67

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Settlement Process

5 4

3

2

1

6

Batching and Clearing

1. The sales transactions batch is sent through the networkprovider to request payment from the issuer.

2. The Network Provider distributes each transaction of the

batch to the appropriate issuer.

3. The issuer subtracts itsinterchange feesand transfers the

rest amount to the card brand.

4. Scheme Fees: The card brand deducts its fee and routes

the remaining amount to the acquirer.

Funding

5. Merchant Discount fees: The acquirer charges a nominal fee

called the merchant discount fees and transfers the rest

amount in the Merchant's account.

6. The cardholder is billed for the purchase.

Note: Depending on the Network Provider and various

other factors, the above mentioned fees differ in their

amount.

Card Swipe Transaction OnlineTransaction

1. Payment Gateway requestsPayment Network to clear the

transaction.

2. Network Provider contacts the

Issuer to service the

transaction.

3. The Issuer transfers theamount to the Merchants

Internet Merchant Account.

Note: Transaction fees-Payment

gateway charges as per the TDR

negotiated with the merchant.

2

1

3

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Carrier Billing

Process flow:

1.Customer goes to purchase page of the gameapp and selects Payment by mobile.

2.The app launches Boku.

3.Boku asks the mobile number and then sendsOTP to the number.

4.Customer enter the OTP in the Boku andconfirms.

5.Boku sends the transaction request to mobileoperator to transfer the money to merchantaccount.

6.Mobile operator adds the transaction amountin the customers bill.

Note: Mobile operator charges merchant upto40% as transaction fees.

1

35

4

2

6

Customer

Game App

Platform provider

Mobile operator

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Cross border fees

Cross border fee depends upon the location of the issuer and the acquirer

Goods being sold in customers currency or merchants currency.

Three cases follow:

1. Location of issuer and acquirer different, transaction in merchants

currencyI. merchant will be charged 0.4%.

2. Location of issuer and acquirer different, transaction in customerscurrency

I. merchant will be charged 0.8%.

3. Location of issuer and acquirer same

This is the remedy to escape cross border fee. If the merchant gets amajor portion of its sales from a different country, then he/she can havemerchant account there. This way he/she would be charged no accessfee.