We already understand quite well how transactions go between banks and the payment system. It's time to figure out who earns what in this business.
First of all, let me remind you of one thought that I have already expressed more than once. For a modern bank, the card business as a whole is either unprofitable or brings very little profit. It is practically not a source of income for the bank by itself. But without these plastic cards, the modern bank is nowhere. One way or another, all services are tied to the card or its equivalent. Therefore, banks issue and service cards in order to attract customers and sell other services.
Hipster Feoktist decided to buy himself a vape "iDuy Model X" to complete his bearded image. He went to the Tucked-up Jeans store, pointed at the device with the bitten off logo, and handed the seller a gold HipsterBank card. The cashier inserted it into the terminal, which is connected to the processing of the bank "ITD-24". I pressed various buttons there, the hipster Feoktist entered his PIN code, the transaction ran through the wires and cells of base stations ...
On the way, she met the impenetrable forests of public networks, then the cozy secure servers of the processing bank ITD-24, then she flew into the heavens, into the Zhiza payment system, flew to the processing of HipsterBank, confirmed herself there and flew back the same way to the terminal and to the chip card. Then we will leave her to flutter further in the usual way for her, and we ourselves will begin to figure out how all these participants will cut the money that the hipster Feoktist has kindly brought to the "Tucked Jeans" store.
Let me remind you that the entire calculation takes place in two stages. First, the transaction was confirmed (and the amount was blocked on Feoktist's account), then clearing will need to be done. Such a beautiful foreign word means the banal "knock out the grandmother." After that, there will still be a stage of mutual settlements, but it already looks like ordinary banking, not directly related to card transactions. So today we are interested in the process of knocking down women ... um ... clearing.
There are four participants in this whole story. And by the way, I don't mean the hipster Theoktist. The participants are the acquiring bank ITD-24, the issuing bank HipsterBank, the payment network Zhiza and the seller (merchant), the Tucked Jeans store.
The hipster Feoktist was charged exactly the amount that was on the price tag of the iDuy Model X vape. Here, by the way, there is one cool thing. The fact is that the acquiring agreement between ITD-24 and "Tucked Jeans" states that the price for payments by card must exactly correspond to the price for payments in cash. And the bank ITD-24 did not come up with these rules by itself, these are the rules of the payment network. By the way, and from the legal tzr. payment by card - as if in cash, at least you need to issue all the checks as if the hipster Feoktist paid with crisp bills. Payment systems are vitally interested in this order of things, because if the price when calculating with a card were different, then people would not be so interested in these cards.
However, stores love to steal in this matter. Here and there you will come across a "cash discount" or something. According to my information, this is a violation of the terms of the contract, and in many cases it is possible to "complain". And, for example, it is not realistic to buy a car with a plastic card at all. Why is that? You will understand a little later.
So, the full cost of his new fashionable vape was written off from the hipster Feoktist. You won't be able to take a dime from him anymore. But all market participants must somehow earn, or at least cover their costs minimally. Here it all starts with a certain initial commission, which in Russian is called a "trade concession". And this "concession" pays ... That's right, the merchant! He is the only one in this chain that bears the costs, everyone else only makes money on this transaction. This trade concession is then “spread” between banks and the payment network. But the seller is not such a fool to just give money to everyone. He simply solves the problem "to provide the hipster Feoktist with as many conveniences as possible so that he part with his money."
Because the hipster Feoktist, having learned that his gold card with the HipsterBank and Giza logos is refused to be accepted in Tucked Jeans, will simply proudly turn his beard 180 degrees from the counter and follow her out of the store. The service of accepting plastic cards to the "Tucked Jeans" store actually brings additional sales. By the way, when deciding to install a terminal, the owner of the store in his mind also figured out the cost of collection. We will assume that "Tucked up jeans" bring enough revenue so that the owner does not take the proceeds to the bank himself, but hires collectors. Collectors take a percentage of the collected amount. Bank "ITD-24" takes interest for the card transaction (the very "trade concession" plus a little of his own profit, he removes from the store). Both here and there - a percentage for some kind of operation, as a result of which the current account of "Tucked up jeans" is replenished through the sale of goods. I must say, these rates are comparable. Therefore, "Tucked up jeans" is not so offensive.
Further, Zhiza divides this "trade concession" into three, but does not do it equally. Part he takes for himself, part he gives to HipsterBank, part - to bank ITD-24. Moreover, the way money is divided between HipsterBank and ITD-24 is a way to stimulate the development of the plastic card market. For example, if the ITD-24 terminal services the card along the magnetic stripe (outdated technology), then it receives less than if it passes it along the chip. Life makes the use of terminals with chip readers more profitable, which stimulates banks to develop technologically. Similar things happen with other technical nuances.
Therefore, Zhiza can increase the commission either in favor of acquirers (ITD-24) or in favor of issuers (HipsterBank), stimulating either the development of an acquiring network (distribution of payment terminals), or an increase in the issue of plastic cards. Well, banks also take into account Zhiza's policies and form their own business decisions.
Actually, in fact, all these incomes of each of the participants are at first a little virtual. Clearing shows how much money is awarded at the end of the transaction to each of the parties. Well, then, when the settlement is carried out, it already happens transfer of funds. HipsterBank, as it were, transfers money to Zhiza and to ITD-24 (withholding its honestly earned issuing commission), ITD-24 credits money to the Tucked Jeans account minus the very trade concession (and often also withholding a small additional percentage), and deposits its acquiring commission on the account of its income from the money that came from HipsterBank.
Well, in reality, everything is not so straightforward, since every single transaction is not so sawed. And they immediately make mutual settlements for a batch of transactions, so I used the words "like". But the essence of the calculations is just that.
One might get the impression that all the costs of paying for this infrastructure fall on the textile mmm ... the shoulders of "Tucked Jeans", but in fact, the hipster Feoktist paid for everything, of course. The store simply spread its expenses at a trade margin for all goods, as you understand.
By the way, banks have the ability to turn all these transactions past Zhiza, and thus earn more. And so they often do, I wrote about it.
PS Yes, now you can easily guess why cars are not sold when paying with a plastic card. Because the purchase amounts are large, the trade concession from this amount is quite noticeable, but the margin in this business is very small, somewhere comparable to the amount of the trade concession. This makes car sales with a plastic card much less profitable for auto centers. Why do they need this? ...
First of all, let me remind you of one thought that I have already expressed more than once. For a modern bank, the card business as a whole is either unprofitable or brings very little profit. It is practically not a source of income for the bank by itself. But without these plastic cards, the modern bank is nowhere. One way or another, all services are tied to the card or its equivalent. Therefore, banks issue and service cards in order to attract customers and sell other services.
Hipster Feoktist decided to buy himself a vape "iDuy Model X" to complete his bearded image. He went to the Tucked-up Jeans store, pointed at the device with the bitten off logo, and handed the seller a gold HipsterBank card. The cashier inserted it into the terminal, which is connected to the processing of the bank "ITD-24". I pressed various buttons there, the hipster Feoktist entered his PIN code, the transaction ran through the wires and cells of base stations ...
On the way, she met the impenetrable forests of public networks, then the cozy secure servers of the processing bank ITD-24, then she flew into the heavens, into the Zhiza payment system, flew to the processing of HipsterBank, confirmed herself there and flew back the same way to the terminal and to the chip card. Then we will leave her to flutter further in the usual way for her, and we ourselves will begin to figure out how all these participants will cut the money that the hipster Feoktist has kindly brought to the "Tucked Jeans" store.
Let me remind you that the entire calculation takes place in two stages. First, the transaction was confirmed (and the amount was blocked on Feoktist's account), then clearing will need to be done. Such a beautiful foreign word means the banal "knock out the grandmother." After that, there will still be a stage of mutual settlements, but it already looks like ordinary banking, not directly related to card transactions. So today we are interested in the process of knocking down women ... um ... clearing.
There are four participants in this whole story. And by the way, I don't mean the hipster Theoktist. The participants are the acquiring bank ITD-24, the issuing bank HipsterBank, the payment network Zhiza and the seller (merchant), the Tucked Jeans store.
The hipster Feoktist was charged exactly the amount that was on the price tag of the iDuy Model X vape. Here, by the way, there is one cool thing. The fact is that the acquiring agreement between ITD-24 and "Tucked Jeans" states that the price for payments by card must exactly correspond to the price for payments in cash. And the bank ITD-24 did not come up with these rules by itself, these are the rules of the payment network. By the way, and from the legal tzr. payment by card - as if in cash, at least you need to issue all the checks as if the hipster Feoktist paid with crisp bills. Payment systems are vitally interested in this order of things, because if the price when calculating with a card were different, then people would not be so interested in these cards.
However, stores love to steal in this matter. Here and there you will come across a "cash discount" or something. According to my information, this is a violation of the terms of the contract, and in many cases it is possible to "complain". And, for example, it is not realistic to buy a car with a plastic card at all. Why is that? You will understand a little later.
So, the full cost of his new fashionable vape was written off from the hipster Feoktist. You won't be able to take a dime from him anymore. But all market participants must somehow earn, or at least cover their costs minimally. Here it all starts with a certain initial commission, which in Russian is called a "trade concession". And this "concession" pays ... That's right, the merchant! He is the only one in this chain that bears the costs, everyone else only makes money on this transaction. This trade concession is then “spread” between banks and the payment network. But the seller is not such a fool to just give money to everyone. He simply solves the problem "to provide the hipster Feoktist with as many conveniences as possible so that he part with his money."
Because the hipster Feoktist, having learned that his gold card with the HipsterBank and Giza logos is refused to be accepted in Tucked Jeans, will simply proudly turn his beard 180 degrees from the counter and follow her out of the store. The service of accepting plastic cards to the "Tucked Jeans" store actually brings additional sales. By the way, when deciding to install a terminal, the owner of the store in his mind also figured out the cost of collection. We will assume that "Tucked up jeans" bring enough revenue so that the owner does not take the proceeds to the bank himself, but hires collectors. Collectors take a percentage of the collected amount. Bank "ITD-24" takes interest for the card transaction (the very "trade concession" plus a little of his own profit, he removes from the store). Both here and there - a percentage for some kind of operation, as a result of which the current account of "Tucked up jeans" is replenished through the sale of goods. I must say, these rates are comparable. Therefore, "Tucked up jeans" is not so offensive.
Further, Zhiza divides this "trade concession" into three, but does not do it equally. Part he takes for himself, part he gives to HipsterBank, part - to bank ITD-24. Moreover, the way money is divided between HipsterBank and ITD-24 is a way to stimulate the development of the plastic card market. For example, if the ITD-24 terminal services the card along the magnetic stripe (outdated technology), then it receives less than if it passes it along the chip. Life makes the use of terminals with chip readers more profitable, which stimulates banks to develop technologically. Similar things happen with other technical nuances.
Therefore, Zhiza can increase the commission either in favor of acquirers (ITD-24) or in favor of issuers (HipsterBank), stimulating either the development of an acquiring network (distribution of payment terminals), or an increase in the issue of plastic cards. Well, banks also take into account Zhiza's policies and form their own business decisions.
Actually, in fact, all these incomes of each of the participants are at first a little virtual. Clearing shows how much money is awarded at the end of the transaction to each of the parties. Well, then, when the settlement is carried out, it already happens transfer of funds. HipsterBank, as it were, transfers money to Zhiza and to ITD-24 (withholding its honestly earned issuing commission), ITD-24 credits money to the Tucked Jeans account minus the very trade concession (and often also withholding a small additional percentage), and deposits its acquiring commission on the account of its income from the money that came from HipsterBank.
Well, in reality, everything is not so straightforward, since every single transaction is not so sawed. And they immediately make mutual settlements for a batch of transactions, so I used the words "like". But the essence of the calculations is just that.
Some remarks
In fact, if "Tucked Up Jeans" is not just a small shop for an IP, but a part of a huge federal network, then he can start dictating his terms to his acquirer (bank ITD-24), forcing him to sacrifice his own profit. ITD-24 estimates turnovers, income from them, and if the debit-credit continues to please, then he agrees.One might get the impression that all the costs of paying for this infrastructure fall on the textile mmm ... the shoulders of "Tucked Jeans", but in fact, the hipster Feoktist paid for everything, of course. The store simply spread its expenses at a trade margin for all goods, as you understand.
By the way, banks have the ability to turn all these transactions past Zhiza, and thus earn more. And so they often do, I wrote about it.
PS Yes, now you can easily guess why cars are not sold when paying with a plastic card. Because the purchase amounts are large, the trade concession from this amount is quite noticeable, but the margin in this business is very small, somewhere comparable to the amount of the trade concession. This makes car sales with a plastic card much less profitable for auto centers. Why do they need this? ...
