Emergent Payments Assignment

Team Name: Samsan

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

Debit/Credit Card Authorization

Payment Gateway

2
8

Customer

Swipe transactions
Online transactions

card network

Merchant(BrickMortar/ Online)

Network Provider

4
3

5
6

Acquirer/ Internet
Merchant Account

Issuer

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.

Settlement Process
Card Swipe Transaction

OnlineTransaction

4
6

1
2

Batching and Clearing

1. The sales transactions batch is sent through the network
provider to request payment from the issuer.
2. The Network Provider distributes each transaction of the
batch to the appropriate issuer.
3. The issuer subtracts its interchange fees and 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.

3
1. Payment Gateway requests
Payment Network to clear the
transaction.
2. Network Provider contacts the
Issuer to service the
transaction.
3. The Issuer transfers the
amount to the Merchants
Internet Merchant Account.
Note: Transaction fees-Payment
gateway charges as per the TDR
negotiated with the merchant.

Carrier Billing
Platform provider
4
5

Mobile operator

Customer

Game App

Process flow:
1.Customer goes to purchase page of the game
app and selects Payment by mobile.
2.The app launches Boku.
3.Boku asks the mobile number and then sends
OTP to the number.
4.Customer enter the OTP in the Boku and
confirms.
5.Boku sends the transaction request to mobile
operator to transfer the money to merchant
account.
6.Mobile operator adds the transaction amount
in the customers bill.
Note: Mobile operator charges merchant upto
40% as transaction fees.

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
currency
I.

2.

Location of issuer and acquirer different, transaction in customers

currency
I.

3.

merchant will be charged 0.4%.

merchant will be charged 0.8%.

Location of issuer and acquirer same

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