Everything you need to know about Internet acquiring

Have you ever wondered what it takes to process a single payment transaction?

 Demand for crypto acquiring, a service that allows e-merchants to accept credit and debit card payments, has never been greater.

From the buyer's point of view, the process of paying for goods and services online does not look complicated. You select the product you like, enter your credit card information, and in a few seconds the purchase will be completed. However, from the point of view of the merchant and payment service provider, this is a complex mechanism that requires quite a lot of time and effort to set up. Add that if you plan to sell crypto instead of goods and services, things get even more complicated.

Whether you're a budding online merchant setting up an online store or a customer who wants to know how the acquisition magic happens, we decided to demystify the online acquiring process and share some interesting insights.

Internet acquiring: basics

When it comes to providing acquiring services, there are many players involved. Firstly we have clientr, who received a credit card from a bank (let's call it issuing bank). That customer then goes online and decides to buy something in a store. The store works with acquiring bank. This may be the same bank that the buyer uses, or a different one; this is not necessary. And this bank provides the store with a payment solution that makes the entire online shopping transaction possible.

So when you pay for things online, the store sends your card details to the acquiring bank. The bank, in turn, transmits this information Visa or Mastercard, and then they give it to the issuing bank to make sure the card is legitimate and there are enough funds in the balance.

If everything is in order, the purchase is completed. But since the customer has to wait for his order to be shipped, cash settlements between banks are also not immediate. The issuing bank will only send the funds to the acquiring bank the next day if they are both located in, say, the EU. In the US, it may take another day for funds to arrive. The acquiring bank will then refund the amount to the store according to their agreement.

This is just a brief introduction to how internet acquiring works, but the devil is in the details.

Internet Acquiring: Features

Every financial service has a sophisticated foundation to prevent fraud and create a highly efficient and secure environment for customers, merchants and banks.

Below you will find some of the most important aspects of the internet acquiring model.

MCC

The Merchant Category Code or MCC is the code that an email user receives during the registration process. If you look at your credit card history, you'll immediately see it is the category of the store you purchased from. Whether it's entertainment, food, travel, cosmetics or financial services, every merchant has a code that defines it.

This indicator has several goals:

1. It determines the reward (cashback) that the buyer receives for using the card.
2. It specifies whether transaction data should be reported to the Internal Revenue Service.
3. It states what percentage the merchant must pay the credit card processor.

By the way, financial services are one of the most expensive categories, and sometimes processors charge additional fees, considering these transactions as expensive as cash withdrawals.

Luna algorithm

The Luhn algorithm is a mathematical formula that helps quickly determine whether a customer has provided valid credit card information. Errors are common when entering credit card information, and Lun's algorithm was designed to avoid them and speed up payment processing.

bin

In case you haven't heard of it, a Bank Identification Number (BIN) is made up of the first six numbers of your credit or debit card. And these numbers contain all the important information about the card, including its brand (Visa or Mastercard), type (debit, credit), level (platinum, gold, regular, etc.), as well as the country of the issuing bank. In addition to providing important information to merchants, containers help prevent theft and other security breaches.

3-D Secure

The 3-D Secure protocol is an additional layer of security designed to protect credit and debit card transactions. In practice, it works like this: When making a purchase, the buyer must verify his identity by entering a one-time code sent by the card issuer to his phone via SMS.

This is an effective tool that protects all participants in the acquiring process and helps reduce the number of chargebacks. However, it is important that both issuing and acquiring banks support 3-D Secure. Otherwise, it would be much more difficult to resolve the situation if fraud actually occurs. Most banks support this feature, and 3-D Secure has become mandatory in some countries.