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6
Business
Industry andmarket overview
35
Worldline
2016 Registration Document
Themain parties involved in a typical credit or debit
card transaction include
The card issuer:
Generally, but not necessarily, banks issue
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debit, credit or prepaid cards to individuals or corporations
to be used as a payment method in face-to-face (card
present) or remote (card not present) environments. The
process of issuing and managing the cards and the process
of authorizing, clearing and settling the payments is
complex. As a result many issuers outsource part or all of
these activities to so-called
third party issuer processors
such as Worldline;
The merchant:
Merchants are any party which sells good
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and/or services in exchange for payment. Merchants need a
mechanism that enables their acceptance of card payments
(online to face-to-face);
processing providers provide merchants with the means
(POS terminals, mobile POS (mPOS) terminals, online
payment gateways) to collect and transmit card data and
receive payment authorizations in stores, online and via
mobile devices. Some of these also provide merchant with
acceptance-related services beyond core processing
functions, such as enhanced reporting, loyalty programs,
advertising services, quality surveys using payment
terminals, dynamic currency conversion (DCC) services, etc.;
The Merchant Services Provider:
Payment acceptance
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from merchants’ physical or online payment gateways with
a view to obtaining payment authorizations via the credit
and debit card scheme networks, known as “front-end”
processing, and then ensuring that each transaction is
appropriately cleared and settled into the merchant’s bank
account, known as “back-end” processing. Worldline, which
is the largest commercial acquirer in Belgium, expanded its
Commercial Acquiring activities into the Netherlands,
Luxembourg, and Slovakia. The completed acquisition of
Paysquare brings Worldline strong positions in merchant
institutions that provide merchants with access to the card
scheme
(e.g.,
Visa,
MasterCard,
Carte
Bleue,
Bancontact/Mister Cash, etc.) network and a merchant
account. Commercial acquirers receive funds from issuing
banks and deposit the proceeds, net of a “merchant service
charge,” into the merchant’s account. Acquirers may or may
not also provide Merchant Services as described above. Like
issuers, many acquirers outsource part or all of their
activities to “third party acquirer processors”. Such
processors will typically route transaction data received
services in The Netherland, in Germany and to a lesser
extent in Poland. Additionally, the acquisition of the
merchant portfolio of Komercni banka and the
accompanying strategic alliance signed with this bank gives
Worldline a significant presence in the Czech Republic;
The Commercial Acquirer:
Acquirers are banks or payment
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and clearing houses for their respective card brands. Card
schemes include both international brands such as Visa and
MasterCard, and domestic schemes such as Carte Bancaire
in France or Bancontact Mister Cash in Belgium;
Card schemes:
Card schemes settle card transactions
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between all of its member banks, typically through a
separate batch payment system, which set card scheme
network rules and interchange fees and act as custodians
Clearing and settlement system:
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messages contain data on the validity of the payment, but
no funds are transferred,
Clearing is a process through which a card issuing bank
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exchanges transaction information with a processing bank.
It occurs simultaneously with the settlement. The acquirer
or merchant service provider will connect the merchant
card acceptance system to card scheme. The clearing
Settlement is the exchange of funds between a card issuer
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and an acquiring bank to complete a cleared transaction
and the reimbursement of a merchant for the amount of
each card sale that has been submitted into the network.
All credits and debits of a given bank are summed up and
the net amount is transferred in a lump sum to the bank’s
account with the respective scheme network (in the case
of an acquirer) or from the bank’s account (in the case of
an issuer).
RevenueModel
– Interchange Fees and Service Fees
In a typical card based payment transaction, most of the key
“core” players deduct their service fees from the gross amount
originally charged by the merchant for the good or service.
By way of a simplified illustration, in a €
100 “off-us” credit
transaction using (i.e., a transaction in which the commercial
acquirer is not the same institution as the issuing bank) Visa or
MasterCard with an interchange fee of 0.30% and a card
scheme processing fee of € 0.05 per transaction:
the issuing bank would immediately withdraw € 100 from
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the cardholder’s available balance and a debit of €
100
would appear on the cardholder’s monthly statement at the
end of the month;
the issuing bank would then transfer €
99.70 to the card
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scheme, having deducted the interchange fee of 0.30%. If
the issuing bank outsources Issuing Processing services, it
might separately pay the issuing processor, for example,
€ 0.03 of the € 0.30 fee;
commercial acquirer;
the card scheme would then transfer €
99.70 to the
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