The Role of Issuer Processors in the Payments Ecosystem

Do you know what happens when during the time you swipe your or debit card and your payments transaction get approved or declined? Who are the parties involved in this whole process? Have you heard of an ever growing modern card issuing space in fintech? Please join us to listen to Ashik Uzzaman, Engineering Manager at Marqeta, who will run us through a brief talk on this exciting world of issuer processors and their part in the payments ecosystem.

Transcript

1. The Role of Issuer Processors in the Payments Ecosystem Ashik Uzzaman Engineering Manager, Marqeta 20th June 2020
2. Abstract Do you know what happens when during the time you swipe your or debit card and your payments transaction get approved or declined? Who are the parties involved in this whole process? Have you heard of an ever growing modern card issuing space in fintech? Please join us to listen to Ashik Uzzaman, Engineering Manager at Marqeta, who will run us through a brief talk on this exciting world of issuer processors and their part in the payments ecosystem. LinkedIn: https://www.linkedin.com/in/ashikuzzaman/ Blog: https://ashikuzzaman.wordpress.com/
3. Payments Card Types Payment cards can be categorized based on timing of funding - before, during or after the transaction. • Charge Card • Credit Card • Signature Debit Card • PIN Debit Card • ATM Card • Prepaid Card
4. What Happens When You Swipe A Card? Customers comes to drink coffee at a merchant store, ready to pay using a debit or credit card. 1.Merchant Authorization request comes to Acquirer Processor like Chase Paymentech or Wells Fargo, powered by Acquirer Bank. 3.Acquirer Processor Backed by Issuing Banks, Issuer Processors issue cards and authorize (approve/reject) transactions for those cards that they issued. 5.Issuer Processor 2.Payment Facilitator Card is swiped in a payment terminal or POS often powered by payment facilitators (Payfac) like Square or Toast. 4.Card Network Card networks receive the payment requests from acquirer processors and forward to issuer processors. They also give BIN ranges to Issuing banks to issue cards. Card Holder 6.Settlements Issuer Processors send periodic files to ACH network for settlements of money movement amongst banks and involved parties.
5. What Card Issuer Processors Do • Issue cards to cardholders • Manage activation and deactivation of cards • Manage operations including payment authorization and clearing • Choose and manage the ATM and debit card networks, revenues, expenses • Manage card risk - fraud risk, credit risk • Manage overdraft • Manage card rewards
6. Some Issuer Processors in USA • Marqeta • Stripe • Galileo • VISA DPS • First Data Corp. • TSYS • Vantiv • MasterCard Payment Transaction Services • FIS • Fiserv
7. Marqeta Founder: Jason Gardner (CEO) Launched: 2010 Headquarter: Oakland, California Funding: $525 million Valuation: $4.3 billion Industry: Fintech/Payments, Issuer Processor Marqeta’s open API platform enables the world's innovators to instantly issue & process cards with more control, flexibility & scale.
8. Benefits of JIT Funding Payment Authorization Decisioning - You approve or deny each transaction in real-time based on your business logic. Match incoming orders to the authorization request. Or if your borrowers qualify for another loan, you or Marqeta can approve the transactions. Add your own rules, your own API decision engine, and your own data to mitigate risk to your business. Fund Transactions in Real Time - Each card maintains a $0 balance even as the card is being swiped. When the card is swiped, Marqeta passes funding in the exact amount of the transaction through the card and then immediately deducts the funds from the program reserve. Reduce the risk of fraud as funds from program reserve are deducted at approval. Better Cash Flow Management - Along with greater control, you get better cash flow management. The cards carry a $0 balance until the time of transaction, when you authorize the release of funds or we authorize on your behalf from your reserve account. Eliminate the need to guess at the amount you would need to pass through a card.
9. ISO 8583 ISO 8583 defines a message format and a communication flow so that different systems can exchange these transaction requests and responses. The vast majority of transactions made at ATMs use ISO 8583 at some point in the communication chain, as do transactions made when a customer uses a card to make a payment in a store.
10. JPOS JPOS is a free and open source library/framework that provides a high-performance bridge between card messages generated at the point of sale or ATM terminals and internal systems along the entire financial messaging network. jPOS is an enabling technology that can be used to handle all card processing from messaging, to processing, through reporting. It can be used to implement financial interchanges based on the ISO 8583 standard.
11. Questions? Thank You