Payment Processing Basics

Payments have evolved from paper and plastic to APIs and orchestration - giving rise to a new breed of players that simplify the complexity and connect the dots behind the scenes. Here's how we got here. 𝟭. 𝗜𝗻 𝘁𝗵𝗲 𝗽𝗿𝗲-𝟭𝟵𝟵𝟬𝘀 𝗲𝗿𝗮, banks owned the entire payments value chain -acquiring, processing, settlement. Merchant onboarding was complex, and domestic clearing systems ruled. 𝟮. 𝗧𝗵𝗲 𝗿𝗶𝘀𝗲 𝗼𝗳 𝗲-𝗰𝗼𝗺𝗺𝗲𝗿𝗰𝗲 in the late 1990s changed everything. Players like PayPal and Authorize made online payments possible, while banks began exiting the acquiring space or partnering with processors to keep up with demand. 𝟯. 𝗕𝗲𝘁𝘄𝗲𝗲𝗻 𝟮𝟬𝟬𝟬 𝗮𝗻𝗱 𝟮𝟬𝟭𝟬, specialized gateways and regional wallets began to scale, offering merchants greater flexibility and control. The launch of SEPA in Europe marked a push toward payment harmonization, while non-bank players started building infrastructure that bypassed traditional acquiring models altogether. 𝟰. 𝗧𝗵𝗲 𝘀𝗵𝗶𝗳𝘁 𝘁𝗼 𝗔𝗣𝗜-𝗱𝗿𝗶𝘃𝗲𝗻 𝗶𝗻𝗳𝗿𝗮𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 transformed payments from siloed systems into modular, developer-friendly tools. Merchant onboarding became faster, integrations simpler, and innovation more scalable. Open Banking regulations enabled direct access to bank data, while new credit models redefined consumer behavior. Payments evolved into a flexible, programmable layer of the digital economy. 𝟱. 𝗧𝗼𝗱𝗮𝘆, we’re in the age of seamless integration. Payments are embedded in everything - from ride-hailing apps to SuperApps. Real-time rails like SEPA Instant, UPI and PIX are live. CBDCs are in pilot. However, as payment ecosystems grow more fragmented - with new methods, regional schemes, compliance layers, and fraud risks -complexity has become a major bottleneck for merchants, fintechs, and even banks. Integrating multiple providers, maintaining uptime across systems, and ensuring regulatory compliance isn't just costly - it's unsustainable without the right foundation. This is where a new breed of infrastructure players like 𝗔𝗸𝘂𝗿𝗮𝘁𝗲𝗰𝗼 fit in - offering the tools to simplify complexity and still retain control. • 𝗪𝗵𝗶𝘁𝗲-𝗹𝗮𝗯𝗲𝗹 𝗽𝗮𝘆𝗺𝗲𝗻𝘁 𝗴𝗮𝘁𝗲𝘄𝗮𝘆𝘀 let banks, PSPs, and fintechs launch their own branded platforms fast - without building from scratch. • 𝗣𝗮𝘆𝗺𝗲𝗻𝘁 𝗼𝗿𝗰𝗵𝗲𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻 enables merchants to route transactions dynamically across multiple acquirers, reducing costs and failed payments while improving UX. • 𝗕𝗮𝗻𝗸𝘀 can embed API-driven acquiring services into their offerings without the burden of a full-scale tech overhaul. In a world where growth brings fragmentation, the real challenge isn’t enabling payments - it’s managing them. The advantage will lie with infrastructure that can unify complexity, adapt in real time, and scale across borders without adding friction. Opinions: my own, Graphic source: Akurateco Payment Hub Subscribe to my newsletter: https://lnkd.in/dkqhnxdg

A Modern Payments Architecture Consists of Six Core Elements 💡 For incumbents with legacy technology, the question is not whether to modernize but how quickly to get the job done. Three main paths are available: 🔹 build and manage everything in house (a route typically available only to very large banks with sufficient scale); 🔹 blend customized vendor solutions with in-house operations; 🔹 or outsource payments technology and operations to a specialized business payments processing provider. The result must enable an open and modular architecture that can accommodate RTP, large data volumes, API and host-to-host connectivity, and cloud-based applications and infrastructure. It must also have the capability to apply transaction data analytics and GenAI to create new client offerings such as real-time liquidity projections, predictive payment scheduling, and transaction filtering 🤖 In many cases, designing the target architecture will require banks to make tradeoff decisions along the different building blocks of the payments architecture, including balancing richness in future functional and technical requirements against development costs and timely implementation. For this reason, determining the target tech landscape requires close collaboration among business (sales and product management), payment operations, and IT 👨💻 Source: Boston Consulting Group (BCG) - https://bit.ly/3RVmp35 #Innovation #Fintech #Banking #OpenBanking #API #FinancialServices #CoreBanking #CreditCards #Payments #DigitalPayments #Cloud #SaaS #OpenData

The payments stack is quietly being rebuilt — and the latest move from Visa shows how fast that transformation is accelerating. Visa Intelligent Authorization is a new capability on the Visa Acceptance Platform that allows acquirers to modernize payment processing through a single API integration, capable of processing transactions across multiple card networks. On the surface, this looks like an infrastructure upgrade. But the implications for the payments ecosystem are far bigger. 1️⃣ Payments infrastructure is becoming “API-first.” Instead of banks or acquirers building and maintaining their own authorization stacks, they can plug into modular infrastructure through a single API. This significantly reduces the cost and complexity of modernization. 2️⃣ Orchestration is becoming the new battleground. As payment flows become more complex — with wallets, A2A, stablecoins and AI-driven commerce entering the mix — the ability to intelligently route and authorize transactions across networks will be a key differentiator. 3️⃣ Lower barriers for ecosystem innovation. Fintechs, PSPs and software platforms can integrate once and access multiple payment rails, accelerating innovation for merchants and enabling new commerce experiences without rebuilding core infrastructure. 4️⃣ Networks are evolving into platforms. Moves like this reinforce a broader trend: payment networks are no longer just processing transactions — they are becoming programmable infrastructure layers that others build on. For those of us working in payments, this shift is fascinating. The industry is moving from “card networks” to “payments platforms.” And when infrastructure becomes programmable, the real innovation happens at the edges — where fintechs, merchants, developers and partners build the next generation of commerce experiences. Exciting times ahead for the ecosystem! #payments #fintech #apis #digitalpayments #innovation https://lnkd.in/gXkpYQ2i

Europe’s “local hero” payment systems are quietly doing what many thought impossible… They’re starting to outgrow cards. Europe still has 43+ domestic mobile payment systems, and despite consolidation, they’re becoming stronger, not weaker. Here are the key shifts happening right now: 👉 EPI Company’s Wero is reshaping the landscape ► giropay (Germany 🇩🇪) has been sunset to make way for Wero ► Paylib (France 🇫🇷) users are migrating to Wero for P2P ► Pivo (Finland 🇫🇮) shut down, with OP + Nordea doubling down on Siirto ► Lydia is refocusing on P2P as Sumeria takes over e-commerce & POS 👉 Tap-to-Pay changes everything Since the European Commission forced Apple to open the NFC interface in 2024, domestic wallets have rushed to launch tap-to-pay alternatives. This is a massive usability upgrade, moving from QR codes to an OEM-style experience. 👉 Cross-border acceptance is coming Several domestic systems are partnering across markets to extend reach beyond national borders. Then there is the rise of Europe’s “local heroes”: Blik, Twint, MB Way, Swish, Vipps and others continue to dominate their markets, some still growing 50%+ per year. Even the more mature players (Swish, Vipps) only slowed because they’ve reached near-total penetration. Between 2017–2023, these local A2A systems grew much faster than card payments in their respective markets. And the data tells a powerful story: ► A2A mobile transactions already equal 7%–25% of card volumes in some markets ► P2P remains a key driver of adoption and frequency ► Growth is expected to remain above market for the next 3–5 years Source/more info: Arkwright Consulting - https://lnkd.in/dS5e-7wf A clear signal for Europe’s future. If you connect all the dots: ✔ Local systems keep scaling ✔ Tap-to-pay is unlocking mainstream usage ✔ A2A economics are far superior to cards ✔ Consumers already trust these local champions Europe is becoming one of the strongest regions globally for account-based payments, and the shift away from cards is no longer theoretical. It’s happening. What’s your view — will A2A payments take a double-digit share from cards by 2030?

Is the future of payments about competition—or coexistence? Payments in Change: Where is the journey heading? The payments industry is at a crossroads. Digitalisation, regulation, and cybersecurity are reshaping everything—from how we pay to who controls the rails. But here's the twist: instead of one dominant winner, we may be heading toward a complex coexistence of models. This whitepaper by Thede Consulting explores five scenarios shaping the future of payments—and what they mean for banks, PSPs, fintechs, and merchants. Let’s break it down: 1. Digitalisation is changing the game. Cash is declining, mobile and digital are rising. AI is improving fraud detection and personalisation, while APIs and cloud tech enable new business models like embedded finance. Consumers want fast, seamless, and secure payments—and businesses must keep up. 2. Regulation is ramping up. PSD3, PSR, DORA, and FIDA are coming fast, with major implications: - Stricter fraud liability rules and SCA requirements. - Mandatory IBAN-name verification. - Open finance mandates (FIDA) enabling broader data sharing via APIs. These shifts mean higher compliance costs—but also new chances to innovate. 3. The digital Euro is on its way. The ECB is building a CBDC aimed at complementing cash. If adopted widely, it could reshape the ecosystem: - Legal tender status means merchants must accept it. - No scheme fees like Visa/Mastercard—only regulated service charges. - PSPs and banks must adapt roles fast or risk losing relevance. But success depends on user adoption and seamless UX, not just regulation. 4. Europe wants independence with Wero (EPI). Wero, the European initiative backed by major banks, aims to be the continent’s answer to PayPal. But lack of awareness and limited functionality are holding it back. Without convenience, it won't compete—even with patriotic backing. 5. Cybersecurity meets usability. As AI enables sophisticated fraud, the EU is doubling down on DORA to enforce resilience. But there's tension between security and user experience. The winners will be those who master both. What’s next? Multiple futures. Thede outlines 5 plausible paths: - A2A payments replace cards. - The digital Euro takes over. - Card networks maintain dominance. - A new super app (like X or WeChat) breaks through. - Or… business as usual, with overlapping systems. Each scenario comes with implications for players across the ecosystem—no one is immune. Adaptation isn’t optional. Source: Thede Consulting #payments #embeddedfinance #psd3

Malaysia's cross-border QR payments grew 550% in 2024. Thailand's grew 300%. Philippines: 467% volume, 372% value. The fintechs didn't build the rails. They built on them. → Adoption data • Thailand PromptPay: 350 transactions per person per year. 2019: 40 per person. • Malaysia e-money: 8% of annual GDP. • Singapore: 300 e-money transactions per person. • Thailand e-money accounts: 50% of adults. ASEAN average: 20%. • Asia cross-border payments: 12.8 billion transactions (2024) → 23.8 billion projected (2032). → What drives it (IMF regression) IMF analyzed Thailand's cross-border QR flows across seven countries, monthly data 2020-2024. Positive correlations (statistically significant): • Higher USD volatility → higher local currency QR usage • More tourism → higher QR volume • Fewer credit cards → higher QR adoption • Fewer bank branches → higher QR adoption QR payments substitute for cards and traditional banking. Users choose local currency settlement when USD creates risk. → Infrastructure economics • Remittance cost (East Asia): 5.8% to send $200. G20 target: 3.0%. • Credit cards: 2-3 day settlement, dollar conversion, FX risk. • QR: real-time, local currency, transparent rates. Intra-ASEAN tourism: 42% of visitors (up from 36% in 2019). Tourism = 8% of regional GDP, 12% of employment. Every QR payment is margin correspondent banking loses. → The models • Bilateral model (current): Thailand has 9 separate cross-border QR connections. Each required individual negotiation, technical integration, bilateral agreement. • Multilateral model (2027): Project Nexus connects 5 countries (India, Thailand, Malaysia, Singapore, Philippines) through one hub. One connection = access to all five systems. • Stablecoin model: 99% of stablecoins backed by USD. Every cross-border stablecoin payment reinforces dollar settlement infrastructure. → What the data proves • Central banks built: PromptPay, QRIS, PayNow, UPI. • Fintechs built: apps, merchant acceptance, interfaces. • Result: 8x growth Thailand. 550% Malaysia. 467% Philippines. Zero fintechs raised billions to rebuild settlement rails. IMF analyzed 60 months of payment flows. The conclusion: infrastructure that eliminates dollar conversion and intermediaries changes user behavior. Fintech is still building on top of intermediaries. The question isn't whether infrastructure works. It's whether the rest of the world builds it or keeps funding innovation on rent-extracting rails.

Alipay just crossed 100M daily transactions using something that sounds almost… boring. 👀 Tap your phone. No QR code. ✅ And yet — it’s winning.  What caught my attention wasn’t the scale. It was the behavior.  When users had a choice between QR and tap, most chose tap. Not because it’s new. Because it’s easier. ⚡ Here’s the part people miss 👇 This wasn’t designed for power users. It was built for 👵 older adults 👁️ people with visual impairments 🌍 tourists unfamiliar with local apps The irony? Solve for the “hard” users — and everyone benefits. 🎯 Adoption tells the story. In under a year: 100M users. Not long after: 200M.  That kind of velocity usually means something was broken before. Open app. Find QR. Scan. Confirm. Tap removes the mental load.  And it didn’t stop at payments. 💳 Now one tap can: 🍜 order food 🚲 unlock a shared bike 📦 collect a package 💸 process a tax refund Thousands of everyday actions. One gesture. ☝️ Then comes the next layer 👓 AI smart glasses. Voice command: “help me pay.” No screen. No app. Just intention → result. ✨ This matters because real innovation in mature markets isn’t about adding more features. It’s about removing steps nobody wanted. ✂️ Designing for accessibility isn’t a niche move. With hundreds of millions of older consumers coming online, it’s a strategic one. 🧠 Sometimes the biggest breakthrough isn’t new technology. It’s finally getting out of the user’s way. Curious how you’re seeing this shift play out. 👇

Mobile wallets now dominate in-store debit transactions. 50.6% of all debit payments for two months running. 360 million mobile transactions versus 324 million card taps in July. But here's what the transaction count misses: mobile payments are consistently 20% smaller. $39 average for mobile wallets versus $46 for card taps. That gap hasn't shifted in 10 months of data. Translation? Mobile wallets own the quick transactions. Coffee, lunch, convenience stores where speed matters more than basket size. There is a demographic split as well as a location split. Younger users, smaller purchases, faster service locations. Mobile wallets capture 43% of debit dollar value despite winning 51% of transactions. Card taps still move more money overall. But, at current growth rates, mobile wallet value is projected to overtake card taps by January 2026. We are seeing a shift in multiple ways: 1. how different generations spend 2. changes in who still carries a wallet 3. preference for mobile over card based on the size of the transaction How do you spend? Everything on mobile, everything by tap? A mix? Or one of the declining number that still insert their card?

Your shopper’s wallet moved to their phone. Did your org chart follow? I am seeing a clear shift in every CPG and retail conversation right now. Payments is no longer a checkout feature. It is a growth, trust, and data strategy. Digital wallets already power nearly half of US eCommerce transactions, and most consumers say they feel safer paying through a wallet than typing card details on a site. Add biometric authentication and you have speed plus confidence at the exact moment people decide to buy. Here is what this means for leaders. Friction is a P&L line. If you still treat Apple Pay, PayPal, Cash App, or Zelle as nice-to-have buttons, you are leaving conversion on the table in DTC, subscription, and even B2B portals. Wallets reduce checkout abandonment, raise repeat purchase, and unlock micro-transactions that traditional flows quietly kill. Trust is the new promo. Encrypted details, tokenization, and biometric verification are not just compliance. They are marketing. Parents will hand a phone to a teenager to approve a snack order if they trust the rails. You do not earn that trust with a banner. You earn it with clean payment experiences, clear permissions, and zero drama when something goes wrong. Omnichannel finally means payments too. Proximity mobile payments at store level are still under-penetrated in the US. That is a rare advantage window. If your retail partners can accept wallets in aisle, your sampling, loyalty, and retail media moments can jump the line from awareness to paid in one tap. Think QR to wallet to reorder. Think events and pop-ups with instant capture that flows back into CRM without a form. Data gets smarter and more sensitive at the same time. Wallets and biometrics compress the distance between signal and purchase. Your teams need to handle that data with care while actually using it. That means better identity stitching, cleaner cohorts, and real incrementality reads. It also means your CIO and your CMO need a weekly standing meeting. Talent is the bottleneck I keep seeing. Most orgs do not have a true payments owner inside brand, DTC, or shopper. You probably need one. Practical checks you can run this quarter. • Measure wallet share by channel and market, not just overall conversion. • Test one-tap checkout against your current flow on a meaningful SKU. • Link loyalty to preferred payment to raise repeat and reduce cost to serve. • Build a biometric-friendly returns and refunds path that feels as smooth as purchase. • Stand up a cross-functional payments council. Marketing, product, CX, security, finance. We talk a lot about retail media, creative, and content. Payments sits upstream of all of it. The brands that treat wallets and biometrics as part of experience design, not plumbing, will quietly take share while others debate formats. If you are leading a heritage brand, who owns payments in your house today, and do they have the remit to move the numbers? #digitalwallet #fmcg #consumertrends

The payments infrastructure underpinning global treasury is being rebuilt—and it will fundamentally change how businesses of all sizes operate. For years, Treasury teams have managed fragmented ecosystems and multiple payment processes running in parallel. It worked, but those systems weren’t designed for today’s on-demand, borderless world. Today, streamlined workflows that enable intelligent cash movement are the difference-makers. CFOs and treasurers need technology that supports an “always-on” model—enabling near-real-time execution where available, across borders and currencies, around the clock. Our clients are leaning into a digital-first treasury approach characterized by three factors: 1. Richer payment data with more structured fields and remittance detail 2. A single connectivity layer, with APIs bridging payment types, regions, and rails through one integration 3. AI elevating efficiency, intelligence, and decision-making As ISO 20022 and richer data standards become a key enabler of cross-border payments, they create the foundation for these factors to drive impact. When banking systems connect directly to a company’s ERP or TMS through a single API layer, a live, unified view of the financial position becomes accessible. This allows for real-time forecasting, speeds up processing, and reduces fraud. AI can go a step further—helping with anomaly detection, pattern matching, and enabling scenario planning in real time. Treasury payment solutions are evolving quickly. Organizations that embrace data-first, API-connected, AI-enabled systems are building a platform to drive growth over the next decade—and to continue to scale into the future. Now is the time to modernize treasury operations. J.P. Morgan is dedicated to supporting your journey. Learn more here: https://bit.ly/4e4cXVI So here’s the question worth asking: Is your treasury infrastructure giving you control of the next decade—or anchoring you to the last one?