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Project Transaction Clearing System

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  Group - 2 Transaction Clearing System and Market Analysis Aditya Sood Harsh Bhardwaj Kriti Arora Lokesh Raisinghani Shantanu Shiwangi Vishwesh Prabhu Dessai Section - A  TRANSACTION CLEARING SYSTEM Process of settling of payments between card issuing bank and the bank of merchants 32.90% 19.40% 47.70% VisaMastercardOthers Types Closed Loop Payment Network Open Loop Payment Network Market share in card payments  Issue cards themselves and facilitate the settlement  Do not issue cards, only facilitate settlement of transaction ã Visa and MasterCard belong to the Open Loop Payment Network Visa and MasterCard Payment Values  TRANSACTION CLEARING PROCESS 1 ã Cardholder presents the card to the merchant for payment 2 ã Payment request is forwarded to the acquirer 3 ã Acquirer contacts the issuer through the VISA network 4 ã Issuer shares information about balance in cardholders network 5 ã The information is routed to the merchant 6 ã In case of sufficient balance the payment is accepted 7 ã At the end of month cardholder pays the bills to the issuer ã One who uses the card to make payment Cardholder ã Entity to whom the payment is made Merchant ã Bank in which the customer has an account and which has issued the card to the cardholder Issuer ãThe merchant’s bank   Acquirer Sequential Steps  BUSINESS MODEL Business Model - Financial Institutions (Issuers and Acquirers) - Cardholders - Merchants - Personnel - Network and Communications - Brand Promotion - Legal Provisions - Creates value for all stakeholders - Cardholders get convenience, security and loyalty rewards - Merchants benefit from improved sales by offering payment method options - Banks get new revenue streams like card fees, late payment interest - Multiple revenue streams - Service revenues from bank for their participation in card programs - Data processing revenues for transaction processing - International revenue when cardholder issuer country is different from the merchant’s country.  
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