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Process Flow Comparison: How VISA Works When Swiping a Credit Card at a Merchant’s Shop VS Digital Wallet

ByteByteGo | Alex Wu | Jul 16, 2022

QR code credit cards - Process Flow Comparison:  How VISA Works When Swiping a Credit Card at a Merchant’s Shop VS Digital Wallet

What happens when you swipe your credit card at a merchant's shop

VISA, Mastercard, and American Express act as card networks for clearing and settling funds. The card acquiring bank and the card issuing bank can be – and often are – different. If banks were to settle transactions one by one without an intermediary, each bank would have to settle the transactions with all the other banks. This is quite inefficient.

How Visa works swipe credit card at merchant - Process Flow Comparison:  How VISA Works When Swiping a Credit Card at a Merchant’s Shop VS Digital Wallet

See: 

FTP Report: B2B Payments: A Major Fintech Opportunity to Solve Paper-based Payments and Processes

Instagram Launches Payment Service for Small Businesses (Directly in Chat)

Crypto Payments Report 2022: How digital currencies are revolutionizing commerce, corporates and culture

Bank of Canada: The Latest on Retail Payments Supervision and Survey

 

QR Code payment process using your digital wallets, such as Venmo, Paytm, or Paypal

To understand the process involved, we need to divide the “scan to pay” process into two sub-processes:

  1. Merchant generates a QR code and displays it on the screen
  2. Consumer scans the QR code and pays

QR code payment process - Process Flow Comparison:  How VISA Works When Swiping a Credit Card at a Merchant’s Shop VS Digital Wallet

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NCFA Jan 2018 resize - Process Flow Comparison:  How VISA Works When Swiping a Credit Card at a Merchant’s Shop VS Digital WalletThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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