Merchant Services 101
Understand the complete payment ecosystem from checkout to settlement.
The payment ecosystem
A merchant payment can involve the customer, merchant, checkout or point-of-sale system, payment gateway, processor or payment service provider, acquiring institution, card network and issuing bank. The exact architecture varies by payment method and provider.
Merchant account vs payment account
A traditional merchant account is an account or ledger arrangement used to receive card transaction proceeds through an acquiring relationship. Modern PSPs may abstract this away and provide a unified platform instead.
Gateway, processor and acquirer
The gateway securely passes payment information between the merchant environment and payment infrastructure. Processing handles transaction messaging and related services. The acquirer provides the merchant-side acquiring relationship and settlement arrangements.
Authorisation to settlement
Authorisation asks whether a transaction can be approved. Capture records the transaction for settlement. Clearing and settlement move funds through the relevant payment rails. Timing and terminology differ across rails.
Questions to ask
- Which payment methods do my customers actually use?
- Where are my customers and where do I need to settle?
- What are my total costs, including fixed, percentage, cross-border and FX charges?
- How are refunds, disputes and reserves handled?
- What integrations and reporting will my operations team need?