Although it is essential for making and receiving payments the issuer processor can be forgotten because it works behind the scenes and is not consumer-facing.
A processor acts as an intermediary between an issuer (usually a bank, fintech, or payment company) and the networks (both card networks and bank networks) in order to provide the system, manage the issuance and authorization of cards, and communicate with settlement entities. This usually involves serving as a mediator between merchants and the card scheme or issuer.
Businesses that do not have large institutions are increasingly outsourcing their issuer processor roles.
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An issuer processor
Authorises transactions. The responsibility of the issuer processing platform is to authorize transactions. It depends on whether the customer has sufficient funds or if there are any evidence that the transaction is fraudulent.
This helps to settle transactions. Funds must move from the issuer towards the merchant. The issuer process is responsible for ensuring that funds are deducted from the correct account.
Secures transactions. The processor checks for fraud and makes sure that the appropriate authentication is in place based on the regulation’s requirements.
Why is an issuer processor important
Recent years have shown us why the right process for issuing securities is so important. One bank that was a challenger has taken their processing in-house after they had to outsource it. The banks’ customers discovered that they couldn’t make payments without resilient infrastructure. Since the problem wasn’t with the merchant, it was an issue for all customers.
There can be many moving parts involved in issuing cards to a business, either physical or virtual. It is necessary for the business to find someone to connect with the card program, get the card numbers, and acquire or use an E-Money licence to make things work. They will also require an issuer processor to connect all the pieces and ensure everything is processed. A card program that isn’t built on faith in the provider won’t be durable.
Why is it important for issuer processors to become more important
It is a huge step for businesses to offer bank-like services. It changes the relationship between their customers and them, and many businesses will be willing to take it one step at time. They will not offer a full range of services but instead, they will start with a small number and grow from there.
By giving customers their own accounts, businesses can offer a better service and differentiate themselves from their competitors by providing a level of convenience and personalization. Although a cryptocurrency exchange can make it easy to purchase and sell new currency, the process of transferring money to and from a bank account to transfer them is difficult. Customers can now access banking services with a virtual credit card. This allows them to convert crypto funds and load them onto their fiat cards and accounts.
But what about all the other applications?
The right processor will be able to offer more services than these basics. A mobile app can provide customers with access to digital wallets that allow them to access virtual cards, multiple currencies and transaction history. Customers can transfer money quickly into and out their accounts via a variety payment methods.
Future payments will become increasingly embedded in everyday technology. An assistant that speaks can help you transfer money to your prepaid account. One quick email can make a payment. The embedded devices will allow for other payments to be made without the customer having to interact with them. For example, picking up a takeaway coffee requires no payment interaction. This future is only possible with the right processor.
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