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The merchant can be a brick-and-mortar outlet or an online outlet. The PoS SaaS provider is usually a smaller company that provides customer support to the merchant and is the receiver of the merchant's transactions. The PoS provider represents the aggregator to merchants. The PoS provider transaction volumes are small compared to the aggregator transaction volumes, so a direct connection to the major credit card networks is not warranted, because of the low traffic. Additionally, the merchant does not handle enough traffic to warrant a direct connection to the aggregator. In this way, scope and responsibilities are divided among the various business partners to easily manage the technical issues that arise.
349:, in 2001. The market continued to expand over the following two decades, branching out into a full payment processing ecosystem that includes card companies, digital wallets and apps, cryptocurrencies, payments software platforms and gateways, eCommerce partnerships, and peer-to-peer payments. Other technologies that are vital to the payment ecosystem are data security systems and processes, automated functionality, and customer engagement tools.
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merchants offer subscription services, which require payment from a customer every month. SaaS payment processors relieve the responsibility of the management of recurring payments from the merchant and maintain safe and secure the payment information, passing back to the merchant a payment "token" or unique placeholder for the card data. Through
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recurring ACH and cash transactions, process remittances and Web payments. These cloud-based features occur regardless of origination through the payment processor's integrated receivables management platform. This results in cost reductions, accelerated time-to-market, and improved transaction processing quality.
398:, which encrypts cardholder data so that clear text payment information is not accessible within the merchant's system in the event of a data breach. Some payment processors also specialize in high-risk processing for industries that are subject to frequent chargebacks, such as adult video distribution.
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Over the following decades, the evolution of payment technology accelerated. The first digital currency is attributed to an algorithm developed by David Chaum in 1983. Although modern folklore suggests the possibility of early internet purchases – specifically, online marijuana sales between MIT and
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The typical network architecture for modern online payment systems is a chain of service providers, each providing unique value to the payment transaction, and each adding cost to the transaction: merchant, point-of-sale (PoS) software as a service (SaaS), aggregator, credit card network, and bank.
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and abuse. Liability for misuse of credit card data can expose the merchant to significant financial loss if they were to attempt to manage such risks on their own. One way to lower this cost and liability exposure is to segment the transaction of the sale from the payment of the amount due. Many
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After centuries of using metal coins, paper currency made its first appearance in China during the Tang dynasty (around the 10th century AD) and was later introduced to the West in the 17th century. Also in the 17th century, people began to use checks as a payment method, which grew in popularity
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The ATM emerged in the 1960s and 1970s as part of the growing movement toward “self-service” technology. ATMs provided the first technology-enabled banking option that allowed consumers to conveniently deposit and withdraw cash, without being restricted to a particular bank location or business
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payment processors offer a single, regulatory-compliant electronic portal that enables a merchant to scan checks (often called remote deposit capture or RDC), process single and recurring credit card payments (without the merchant storing the card data at the merchant site), process single and
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Stanford students in 1971 and 1972, a 1974 pizza order by Donald
Sherman, and a 1984 grocery purchase by Jane Snowball – the first legitimately recognized online purchase was most likely a CD sold by Dan Kohn in 1994 using a website he developed called
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Front-end processors have connections to various card associations and supply authorization and settlement services to the merchant banks' merchants. Back-end processors accept settlements from front-end processors and, via the
394:. Tokenization can be either local (on the merchant's system) or remote (on the service provider's system); the latter provides a higher level of security against a breach. Another method of protecting payment card data is
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to the merchant, who will then complete the payment transaction. If verification is denied by the card association, the payment processor will relay the information to the merchant, who will then decline the transaction.
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The first payment card was created in 1950 by Ralph
Schneider and Frank McNamara to allow members to use charge cards at their Diners’ Club, and consumers were required to pay their bill in full each month. In 1959,
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Wertenbroch, Klaus; Schrift, Rom Y.; Alba, Joseph W.; Barasch, Alixandra; Bhattacharjee, Amit; Giesler, Markus; Knobe, Joshua; Lehmann, Donald R.; Matz, Sandra; Nave, Gideon; Parker, Jeffrey R. (2020-06-08).
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association was formed in
California in response to bank industry concerns that widespread check usage would outpace the technology needed to process them. ACH became the primary method of
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The future of the payment processing industry is being driven by an increase in vertical-specific processors, the accelerated adoption of contactless payment methods (in response to
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Additional parameters, including the card's country of issue and its previous payment history, are also used to gauge the probability of the transaction being approved.
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In an operation that will usually take a few seconds, the payment processor will both check the details received by forwarding them to the respective card's
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Due to the many regulatory requirements levied on businesses, the modern payment processor is usually partnered with merchants through a concept known as
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356:-related limitations on contact and in-person interactions), and the trend toward customer choice and autonomy, particularly in western cultures.
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processing company was founded in 1998, first under the name
Confinity, which was later changed to X.com, changing again to its current name,
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Once the payment processor has received confirmation that the credit card details have been verified, the information is relayed back via the
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or card association for verification, and also carry out a series of anti-fraud measures against the transaction.
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for agencies, businesses, and individuals to pay or collect money online, and is still commonly used today.
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from the 1800s to the early 1900s. To help streamline and centralize the multiple types of currency, the
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created the first credit card that allowed users to carry a balance from month to month.
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is a system that enables financial transactions, commonly employed by a
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720:"In 1974, Someone Ordered a Pizza With a Computer for the First Time"
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512:"The History of American Currency | U.S. Currency Education Program"
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Type of financial service provider facilitating payment transactions
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795:"2020 Will Be a Transformational Year in Payments Technology"
928:"P2PE: Point to Point Encryption for PCI Compliant Payments"
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personal reflection, personal essay, or argumentative essay
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Quinn, Stephen; Roberds, William (November 4, 2008).
90:. Unsourced material may be challenged and removed.
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902:"Banks Blind To Many Cyberattacks, Research Says"
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770:"The History Of PayPal: Important Company Dates"
745:"What Was the First Thing Sold on the Internet?"
488:"The Song Dynasty in China | Asia for Educators"
381:Electronic payments are highly susceptible to
820:"The Many Ways to Make Contactless Payments"
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53:Learn how and when to remove these messages
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150:Learn how and when to remove this message
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639:"The ATM is Dead. Long Live the ATM!"
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88:adding citations to reliable sources
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793:Kashyap, Vinay (January 21, 2020).
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565:"FDIC: Historical Timeline"
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299:Federal Reserve Act in 1913
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862:10.1007/s11002-020-09521-z
692:"Automated Clearing House"
664:"The Evolution of the ACH"
618:about.americanexpress.com
463:"EVOLUTION OF CURRENCIES"
396:Point to Point Encryption
325:electronic funds transfer
432:Payment service provider
932:Bluefin Payment Systems
696:www.fiscal.treasury.gov
318:Automated Clearinghouse
492:afe.easia.columbia.edu
360:Modern implementations
266:to the merchant bank.
188:by rewriting it in an
768:PYMNTS (2015-07-02).
366:software-as-a-service
968:Electronics industry
749:Smithsonian Magazine
743:Fessenden, Marissa.
724:Smithsonian Magazine
643:Smithsonian Magazine
402:Network architecture
260:Federal Reserve Bank
84:improve this article
316:In 1972, the first
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537:"Economic Review"
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912:11 December
297:passed the
252:debit cards
963:E-commerce
952:Categories
937:2016-03-30
829:2020-09-25
804:2020-09-25
779:2020-09-25
774:PYMNTS.com
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448:References
417:E-commerce
341:The first
198:March 2009
140:April 2009
110:newspapers
39:improve it
870:0923-0645
336:NetMarket
45:talk page
958:Payments
888:32836798
411:See also
368:(SaaS).
354:COVID-19
244:merchant
879:7278769
313:hours.
184:Please
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678:2020
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