Transaction structure

The structure of a transaction involves a series of steps that identify a 4-party model or scheme. In this scheme the actors involved are:

1. Card holder: The owner of the payment card or, generally, the buyer.

2. Merchant: The merchant or, generally, the Ecommerce site.

3. Issuer: The company that issued the card.

4. PSP / Acquirer: The financial company managing the funds transfer. In some cases, PSP and Acquirer may be two different entities that deal respectively with the technical management of the transaction and the financial transfer.

Let's now look at the various payment stages:

1. The payment is entered by the buyer: during this stage, the transaction is entered by the buyer (also known as the card holder) on the payment page through a PSP (Payment Service Provider)

2. The payment is sent to the issuer: The payment is sent to the issuer through the services offered by the PSP (often it correspond to the Acquirer).

3. Analysis of the transaction: The issuer receives the payment request, assesses its viability (e.g. card validity, capacity, etc.) and responds with a positive or negative outcome.

4. Communication of the outcome: The acquirer receives the outcome from the issuer and communicates it to the PSP which shows it to the buyer.

Watch the video on the four-party model of a payment to learn more.

When the acquirer and issuer coincide, we refer to the three-party model.