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March 2, 2017

Seven entities help the payer and payee exchange money online

Seven entities help the payer and payee exchange money online

Online payment processing relies on the concept of a giver and a receiver. The giving side is composed of the account owner or cardholder, while the cardholder’s bank is called the issuer or issuing bank. The receiving side is composed of the merchant; the merchant’s bank, which is called the acquirer or acquiring bank; and the company that acquires payments, which is called either the payment service provider or the acquiring bank.

If a payment is made using a card, there are also card schemes or networks that define the rules used to process card payments as well as companies called settling banks that are in charge of set- tling the payments.

Seven entities to process online payments.

# Side Intermediary Role
1 Issuing side Cardholder The online buyer
2 Issuing bank The cardholder’s bank
3 Acquiring side Merchant The e-commerce service
4 Acquiring bank The merchant’s bank
5 Acquiring service A payment service provider or the merchant’s bank
6 Referee Card networks The companies that define the rules used to process payments
7 Facilitator Settling bank The company that helps transfer the money

Issuing side

The issuing side comprises the cardholder and the issuing bank. The issuer issues payments on behalf of its customers when card- holders use branded payment cards to make purchases online.

Acquiring side

The acquiring side comprises the merchant and the acquirer. The role of the acquirer is to process credit or debit card payments on behalf of the merchant.

Card schemes

Card schemes, which are also referred to as card networks, are payment networks that manage brands of payment cards. Some examples of credit card schemes are Visa, MasterCard, Discover, American Express, Diners Club, and Japan Credit Bureau (JCB).

Settlement services

Issuing and acquiring banks need to maintain cash accounts to clear the payment obligations associated with their daily transactions. In some instances, acquirers and issuers can settle their payments directly; these are referred to as interbank settlements. However, in the absence of bilateral agreements, issuing and acquiring banks depend on settlement bank services.


  1. Seven players in online payment processing; Blog Ubivar.com
  2. Photo by ING Nederland (http://www.flickr.com/photos/ingnl/8966256167/) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)]