When I first signed up for processing I had a difficult time figuring out with whom I was dealing.  Who were the guys calling me up and trying to sell me processing services when I first opened the business?  Who were the people on the other end of the phone when I had questions about my bill?  Who decided what rate I got charged?

The electronic transaction industry has grown very quickly.  The industry has grown up in an efficient manner where companies at each stage of the supply chain share their resources with other companies.  This manner, however, has become quite confusing to the customer.  The chart below is our attempt to provide some clarity to the situation.

USA

Category # Examples Explanation
Credit card associations 2 Visa, Mastercard
Sponsor Banks 10 Chase, HSBC, Bank of America, Wells Fargo, First Bank of Omaha, 5th-3rd Bank, USBank
Processors 5 Chase Paymentech, First Data, Global Payments, Nova (USBank), TSYS These companies run the networks in which the transactions communication takes place. There are fewest of these types because running such networks is massively expensive.

The processor is responsible for verifying that the money for the transaction is available and then for transferring the money from one account to the other upon settlement of the transaction.

Acquirers 100s Chase Paymentech, First Data, Global Payments, Nova (USBank)

United Bank Card, Heartland Payment Systems, Cynergy Data, North America Bankcard, many many more

Most processors are also acquirers.

The acquirer is the company that ultimately bears responsibility for and “owns” the relationship. For example, if the merchant has chargebacks that they cannot pay the acquirer is first in line to accept liability for the returns, the acquirer handles the underwriting of the account. If the Acquirer wants to switch processor or sponsor banks they usually can without the merchant needing to sign a new contract.

The Acquirer and the ISO split the customer service burden. Which party bears the majority of responsibility depends on the situation but oftentimes the Acquirer will handle call-center based issues and routine customer service issues (such as billing issues and terminal reprogramming).

ISOs (Independent Sales Offices) ~1K Chase Paymentech, First Data, Global Payments, Nova (USBank)

Heartland Payment Systems, Cynergy Data

While most acquirers sell their own services they also contract with ISOs to sell their services.

For most merchants the primary relationship is with the ISO but the contract that the merchant signs is the Acquirer and usually the ISO cannot move the merchant with them if they decide to work with another acquirer.

Agents ~14K The ISOs and acquirers employ agents that sell the product to the merchant. The agents don’t have an official customer service responsibility but usually they provide some level of service to their customers after the sale.

 

Merchants often ask if it is better to get service from a company higher up on the supply chain.  For example they hypothesize that they might get better pricing or service by using Chase Paymentech directly than by using an ISO that resells Chase’s acquiring services.  In our experience no such hard and fast rule exists and you should consider your options on a case-by-case basis.

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