The payment card industry (PCI) denotes the debit, credit, prepaid, e-purse, ATM, and POS cards and associated businesses.
The payment card industry consists of all the organizations which store, process and transmit cardholder data, most notably for debit cards and credit cards. The security standards are developed by the Payment Card Industry Security Standards Council which develops the Payment Card Industry Data Security Standards used throughout the industry. Individual card brands establish compliance requirements that are used by service providers and have their own compliance programs. Major card brands include American Express, Discover Card, JCB, Mastercard, Mir, RuPay, UnionPay and Visa. Most companies use member banks that connect and accept transactions from the card brands. Not all card brands use member banks, like American Express, these instead act as their own bank.[1][promotional source?]
As of 2014[update], the United States uses a magnetic stripe on a card to process transactions and its security relies on the holder's signature and visual inspection of the card to check for features such as hologram. This system will be outmoded and replaced by EMV in 2015.[2][needs update] EMV is a global standard for inter-operation of integrated circuit cards (IC cards or "chip cards") and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions. It has enhanced security features, but is still susceptible to fraud.[2]
On 7 September 2006, American Express, Discover Financial Services, Japan Credit Bureau, Mastercard and Visa International formed the Payment Card Industry Security Standards Council (PCI SSC) with the goal of managing the ongoing evolution of the Payment Card Industry Data Security Standard. The council itself claims to be independent of the various card vendors that make up the council. As of 1 August 2014, the PCI SSC website lists 688 "Participating Organizations".[3] Internationally, 61 different financial institutions were noted, including Bank of America, Capital One, JPMorgan Chase, Royal Bank of Scotland, TD Bank and Wells Fargo.[3] A total of 275 merchants were listed, including Amazon, Burger King, Citgo, Dell, Equifax, ExxonMobil, Global Cash Access, Motorola, Microsoft, Southwest Airlines and Walmart.[3]
MasterCard's Nicole Krieg has noted that the Russian credit card market started in early 2000, when issuers first began launching products.[4] However, credit products became especially popular in Russia in 2005, after new legislation took effect. Immense growth was noted in just eight years, by comparing second quarter growth on Visa card purchases, which went from $306 million in 2002 to $61.5 billion in 2010. Merchants who accepted Visa cards also increased from 21,000 to 331,000 during the same period. Visa also noted that they had issued 70 million cards and the Central Bank of the Russian Federation reported that 8.6 million credit cards were on issue.[4]
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The Interac Association is Canada's national organization linking financial institutions and enterprises that have proprietary networks, to enable communication with each other for the purpose of exchanging electronic financial transactions. The Association was founded in 1984 by RBC, CIBC, Scotiabank, TD, and Desjardins. Today, there are over 80 members. The Interac Association is the organization responsible for the development of Canada's national network of two shared electronic financial services: Shared Cash Dispensing (SCD) for cash withdrawals from any ABM not belonging to a cardholder's financial institution; and Interac Direct Payment (IDP) for debit card payments at the point-of-sale.
A payment service provider (PSP) is a third-party company that allows businesses to accept electronic payments, such as credit card and debit card payments. PSPs act as intermediaries between those who make payments, i.e. consumers, and those who accept them, i.e. retailers.[1]
They will often provide merchant services and act as a payment gateway or payment processor for e-commerce and brick and mortar businesses. They may also offer risk management services for card and bank based payments, transaction payment matching, digital wallets, reporting, fund remittance, currency exchange and fraud protection. The PSP will typically provide software to integrate with e-commerce websites or point of sale systems.[2]
PSPs establish technical connections with acquiring banks and card networks, enabling merchants to accept different payment methods without the need to partner with a particular bank. They fully manage payment processing and external network relationships, making the merchant less dependent on banking institutions.[3]
PSP can also offer risk management services for card and bank based payments, transaction payment matching, reporting, fund remittance and fraud protection. Some PSPs provide services to process other next generation methods (payment systems) including cash payments, wallets, prepaid cards or vouchers, and even paper or e-check processing.[citation needed]
PSP fees are typically charged in one of two ways: as a percentage of each transaction, or as a fixed cost per transaction. [citation needed]
US-based online payment service providers are supervised by the Financial Crimes Enforcement Network (or FinCEN), a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat money laundering, terrorist financiers, and other financial crimes. [citation needed]
European payment service providers are supervised based on the European Payment Services Directive.[4]
Each merchant remains responsible for his own actions and must accordingly ensure that the selected provider observes the guidelines, e.g. with regard to data protection. Compliance with PCI DSS guidelines is important. There are four levels of PCI compliance, that must be respected by the PSP. Depending on the volume of transactions as well as other details about the level of risk assessed by payment brands, the payment service provider has to follow higher standards.
The levels are as follows:
As of 2022[update], there were more than 900 payment providers in the world. More than 300 offer services just for Europe[6] and North America. The global payment service provider market is expected to reach $US88 billion by 2027 from $US40 billion in 2019.[7]
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The examples and perspective in this article may not represent a worldwide view of the subject. (May 2024)
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In 2010, the People's Bank of China issued administrative measures regarding online non-financial payment services.[8]: 33 These measures retroactively recognized the legal status of online third-party payment platforms like Alipay.[8]: 33 Prior to the 2010 measures, these services existed in a legal grey area.[8]: 32
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