The world of payment processing can be a confusing place to map out—a fact exacerbated by naming conventions. There are card companies, which don’t (generally) issue the cards, that process and facilitate transactions among all the other players. There are processors, which grant services to merchants and would possibly cross money between banks. There are banks that work with merchants, and banks that work with customers by means of issuing credit cards and credit.

Card networks – Card networks Visa, MasterCard, American Express, and Discover sit at the core of the fee industry, facilitating transactions among consumers, merchants, processors, and banks. These companies provide the electronic networks that permit all the players to communicate and procedure transactions. For their trouble, the cost prices to the monetary institutions concerned in transactions primarily based on total transaction quantity (rather than on a per-transaction basis). That’s why some humans liken their features to the payments industry’s tollbooth.

Card Issuers – Card issuers are financial institutions that provide card network payment cards to consumers. So, for example, Capital One might issue a Visa card. These institutions also issue payment to the merchant bank (also called the acquiring bank) on behalf of its customers, the buyers in any given transaction.

Merchant acquirers – In order for merchants to accept payments, they have to work with financial institutions. In the payments world, these institutions are referred to as merchant acquirers. These come in a few different forms: Either payment processors or Independent Sales Organizations.

Processors – Processors are technological systems that work with banks and card networks to help merchants accept and process credit, debit, and prepaid payments. They verify transaction details, ensure funds are available and perform certain anti-fraud measures. Processors may be associated with banks, like Chase or Bank of America, or they can be independent, like First Data and Vantiv (which spun out of American Express and Fifth Third Bank, respectively). They’re distinguished by their technical ability to carry out transactions.

ISOs – Independent Sales Organizations (ISOs) act as intermediaries between merchants and their banks, in reality reselling the offerings of processors. As charge gateways, they make sure the impenetrable transfer of the transaction data. They additionally service provider bank bills and might create the relationship between a service provider and a bank in the first place. For example, Square presents its merchants a merchant acquirer relationship with Chase Paymentech. ISOs also rent point-of-sale terminals to merchants and might also provide clients who have problems with their cards. Because an ISO is not a bank, it does not physically manage merchants’ money and is also not regulated in an equal way. This is part of the reason why plenty of the innovation in the repayments space has been around ISOs.