All About Card Payments

Paying by debit cards and credit cards, especially using contactless payments, is becoming the norm. Increasingly people are no longer carrying cash and relying on their cards to pay for everything, even for less expensive items such as purchasing a cup of coffee. 

Figures from the Banking & Payments Federation Ireland (BPFI) show that Irish people spend more on their debit cards than they withdraw as cash from an ATM. So it is not surprising that the value of debit and credit card transactions in the Republic continues to grow at record levels, fuelled by the popularity of contactless payments.

Despite the fact that Irish consumers spend more by card than cash, the Irish retail community is unusual in that many businesses remain highly cash-centric, this despite the fact that it is usually cheaper to accept €1 as a card payment over cash when costs are examined as a percentage of a merchant’s turnover.

This may be because it can be a little confusing when selecting a card machine as there is a wide choice of solutions and considerations to be made. This website is designed to help you make your selection. The information below is provided to help you understand the overall process involved in taking card payments.

Who is involved with taking card payments?

 

Debit and credit cards are provided (usually by banks) to consumers and business customers, they are known as issuers. An acquiring bank (also known simply as an acquirer) is a bank or financial institution that processes credit or debit card payments on behalf of a merchant.

Card payments are processed when the consumer who wishes to make the purchase has their payment routed through to the acquiring bank via a payment service provider and often following the sign-up by an ISO (Independent Sales Organisation) which is an organisation accredited by the card schemes to provide services from acquiring banks to merchants.

There are approximately 10 notable ISOs who resell services through 4 main acquiring banks in Ireland. The acquiring part of the process is the banking aspect of the payments service.

When the payment is processed the transaction it is passed through to an acquiring bank for the credit or debit card transaction to be processed. This is essentially the same whether it is an online transaction or a face to face transaction, but the flow of a transaction will vary slightly if the customer is paying online or using a physical payment terminal (face to face payment).

How does it usually work?

Merchants (the business taking the money) usually opt to lease or rent a card payment machine or set up a virtual terminal to take online payments. In either instance the merchant will be assessed by the acquiring bank for suitability to get access to the merchant account. If approved the merchant will be awarded a merchant identification number (MID). There are a few business types that for varying reasons, may not be accepted.

In addition to monthly service costs the merchant will need to pay a minimum monthly service change, authorisation fees and transaction charges. Merchants also need to become PCI compliant to avoid the potential of fines. PCI compliance is best practice and shows a merchant is acting responsibly with the data supplied to them by their customer.

What are the benefits of card payments?

  • Increased sales
  • Convenience for customers
  • Meeting customers’ expectations – especially among the younger demographic
  • Increased security
  • Less risk of theft
  • Reduced queues and faster service (no worrying about giving the correct change)