The Prologue
Before we jump on to bigger task, let us breakdown a few terms often used in the Indian payments ecosystem.
Merchants: The entity which intends to collect funds for services or goods. Eg: department stores, educational institutes, e-commerce platforms, etc.
For any transaction, there are two entities directly involved:
- Issuing bank: The one who issues the card with which the payment is made by the consumer.
- Acquiring bank: The bank which processes the transaction and settles it to the merchant.
Card Networks: Entities who issue the card (via banks), either Credit & Debit, and decide where is the card accepted. Eg: Visa, Mastercard, Amex.
Payment instruments: Any mode which facilitate the purchase of goods and services against the value stores in it. They are majorly of three types:
- Prepaid based: wallets, prepaid cards
- Bank/Account based: Debit Card, UPI
- Credit Line: Credit Cards
Payment Containers: These allow consumers to make payment through cards, wallets, UPI etc. Eg: PhonePe, AmazonPay
Payment Aggregators: These entities integrate acquiring banks, containers, wallets, net-banking to provide a single point for the settlement of payment to the merchant. Eg: PayU, RazorPay.
Resources: AuthNCapture, CashFree