Although the issuer processor is an essential part of receiving and making payments, it can be overlooked as it works in background and is not accessible to consumers.
An issuer processor is a person who connects an issuer, usually a bank or fintech, directly with the networks (both bank and card networks) to provide the system record, manage the issuance of cards and authorise transactions. This involves acting as a mediator between the merchant and the issuer.
For small businesses, outsourcing the role of issuer processor is becoming more common.
A processor is an issuer…
Authorises transactions. It is up to the issuer processor to decide whether transactions can be authorized or denied. This is based on whether funds are available to the customer and whether evidence is provided to support fraud.
Transaction settlement. The funds must travel from the issuer to merchant. The issuer processor ensures that the funds are taken from the correct account.
Transparency and security The processor issues authentication to detect fraud. This is done based on regulatory requirements and the risk. It also ensures compliance with PCI regulations and data governance rules.
What is the importance of an issuer processor?
We’ve seen over the years why choosing the right issuer process has become so important. After outsourcing their processing, at least one challenger bank has brought it in-house when it was experiencing downtime. Customers of banks found they couldn’t pay their bills without resilient infrastructure. This was because the problem was not with the merchant but the processor.
There are many moving parts when a business issues cards, whether virtual or physical. To connect to the card scheme and obtain card numbers, the business must work with an E-Money license holder to make it all work. A processor is needed to link everything and ensure that everything is processed. Any card program won’t last if it isn’t trusted with the right provider.
Why are issuer processors becoming more important?
A business can offer bank-like services. This is a significant step. This shifts the relationship between customers and businesses, so many will choose to move one step at a while. Instead of offering a complete suite of services at first, they will likely offer a limited range and then expand on it.
Visit https://www.verygoodsecurity.com/use-cases/card-issuers to read all about card issuing platforms.
Businesses can provide a unique service to their customers by offering them their own accounts that they can use to store money and make and get payments. A cryptocurrency exchange might offer an easy way to buy or sell new currencies. However, transferring funds to or from a bank account can be difficult, which could lead to a bad customer experience. A virtual card allows customers to access banking services and convert crypto funds into fiat currency.
What about applications that go beyond these?
A good issuer processor can offer more than just basic services. They can also help businesses offer additional services. Customers can access multiple currencies, virtual card information and transaction history via a mobile app with digital wallets. Customers can quickly move money into and out of their accounts using a variety of payment methods.
Payments will be more integrated into our everyday lives in the future. Voice assistants can transfer money to a pre-paid account. Sending an email quickly will send a payment. Thanks to embedded devices, other payments can be made invisible. Picking up a coffee or a meal at a restaurant requires no payment interaction from customers. Only the right processor can make this future possible.