Overview And Jargon Buster

Question 1

Payment Scheme

Answer 1

“Actor who provides the centralized payments infrastructure and operating rules”

• Provides and manages the technical infrastructure
• Manages the set of rules that ecosystem participants must follow

Question 2

Card Acceptance

Answer 2

The process of taking payments by card

Question 3

Merchant’s PSP (Gateway)

Answer 3

“Enable a merchant to accept card payments through the provision of technology”

• They can supply physical technology (card terminal providers)
• Or virtual facilities (e-commerce payment gateways)

Question 4

Acquiring PSP (Acquiring Bank)

Answer 4

“Those that enable a merchant to connect to a payment scheme.”

“The merchant will connect to the acquiring PSP through their Merchant PSP’s technology (gateway, card terminal)”

Merchant PSP & Acquiring PSP can be the same entity (as it is the case with Adyen)

Question 5

ASPSP

Answer 5

• Account Servicing PSP aka Issuer
• Actor who manages the payer’s payment account
• Could be a bank or non-bank financial institution that provides payers with cards

Question 6

PISP

Answer 6

• Payment Initiation Service Provider
• A TPP that initiates a payment on behalf of a payer
• This could be a technology provider that supplies payers (cardholders) with a hardware-tied payment facility (Apple Pay) or a software facility (Google wallet, Venmo)

Question 7

TPP

Answer 7

• Third Party PSPs

Question 8

AISP

Answer 8

• Account Information Service Provider
• A TPP that accesses payment account information on behalf of a payer
• An AISP can enable a payer to check their card account (balance, last payment, transaction history etc.)

Question 9

CBPII

Answer 9

• Card Based Payment Instrument Issuer
• A TPP that issues card-based payment instruments (physical or virtual) that can be used to initiate a payment transaction from a payment account

Question 10

The Four Party Model

Answer 10

1. Acquirer
2. Issuer
3. Merchant
4. Cardholder

• Merchant has contract with acquirer
• Acquirer has contract with scheme
• Issuer has contract with scheme
  Cardholders has a contract with Issuer
• Card Scheme enables any qualifying issuer or acquirer to join
• Consumers can choose between different issuers
• Merchants can choose between different acquirers

Question 11

Three Party Model

Answer 11

In this configuration, there is no separation between issuing and acquiring.

• In fact, the three roles of the card scheme, acquirer and issuer and performed by a single entity (American Express)
• The process for transactional payments are services are like those in the Four Party Model
• Scheme has a contract with both merchant and cardholder

Question 12

Two Party Model (Closed Loop)

Answer 12

Merchant is both the Issuer and Acquirer.

• Cardholders for these schemes can only use the card for payments at the issuer, which in this case is the merchant itself

Examples:
- Target REDcard
- Shell Fuel Card

BUT:
- There can also be open loop store cards issued in collaboration with a card scheme
- This is called co-branded card
- Example: Delta SkyMiles

Question 13

PSD2

Answer 13

Second Payment Services Directive

Question 14

EMVCo

Answer 14

EMVCo is a consortium controlled equally by Visa, Mastercard, American Express, UnionPay, and Discover.

• EMVCo is responsible for developing and maintaining EMV card standards