Payment Cards Concepts

An acquiring bank provides merchant accounts that enable legal entities to accept card payments. The acquiring bank works in conjunction with an acquirer processor. In some cases, the acquiring bank and acquirer processor are a single entity.

Acquirer processors connect with merchants, the card network, and the acquiring bank (either directly or through a payment gateway) to facilitate payment at a merchant. They provide the means to create the system of record that communicates with the authorization and settlement entities. In some cases, the acquirer processor and the acquiring bank are a single entity.

An advice message updates or amends an existing or ongoing transaction. The receiver of the advice message must send an advice response message to acknowledge receipt of the advice.

For example, a cardholder purchases fuel at an automated fuel dispenser and the initial authorization request is for $100. However, the final transaction is only for $50. In this case, the automated fuel dispenser sends an authorization advice message to the card network with the updated amount for the final sale. The card network then sends an authorization advice message to the Marqeta platform with that same updated amount. The Marqeta platform sends an authorization advice response to the card network to acknowledge the updated authorization.

An authorization is requested by a merchant through their acquirer processor when a cardholder attempts to make a purchase. The authorization process determines three conditions about a card in a given transaction:

If all three conditions are met, the issuer processor authorizes the transaction and places a temporary hold on the necessary funds. A clearing transaction follows a successful authorization.

ACH is the primary electronic network for money movement in the United States. It automates the movement of money between banks.

Capture is the process of finalizing a successful authorization, including the initiation of a money transfer by a merchant.

A card network connects merchants to card issuers in order to approve transactions. The network connects bank computers, processors, and payment card terminals all over the world. Each network uses a proprietary encryption code that is shared only with its partners. Visa, Mastercard, and Pulse are all examples of card networks.

Payment card transactions can be either single-message transactions or dual-message transactions:

Clearing is the process by which the acquirer processor and issuer processor exchange financial transaction details. In the clearing process, the issuer processor posts an authorized transaction to a cardholder’s account and determines the amount of money the issuing bank must send to the acquiring bank to settle the transaction.

Money does not move in the clearing process, but rather in the settlement process.

The General Purpose Account (GPA) holds the money that cardholders access when transacting with their cards. Every user and business on the Marqeta platform has an associated GPA. Funds in a GPA are "open-loop" funds that can be used at any merchant, subject to authorization controls. Most Visa and Mastercard accounts access GPA funds.

On the Marqeta platform, a GPA order refers to the direction of funds into the GPA of a user or business.

The issuer processor connects directly with card networks and issuing banks to provide a system of record for payment card data, manage the issuance of cards, authorize transactions, and communicate with settlement entities. Marqeta is an issuer processor.

The issuing bank fills three primary roles in payment processing:

Just-in-Time (JIT) Funding is a method of automatically funding a GPA in real time during the transaction process.

With JIT Funding, GPAs do not need to carry a balance. Instead, the Marqeta platform automatically moves funds from your funding source into the appropriate GPA at transaction time.

The ledger is the system of record that keeps track of credits and debits for a given account. On the Marqeta platform, each GPA has a ledger to track its credits and debits.

When using standard funding: The funds that are available to spend immediately, including funds from any authorized transactions that have not yet cleared.

When using Just-in-Time (JIT) Funding: Authorized funds that are currently on hold, but not yet cleared.

A peer-to-peer transfer occurs when two users transfer money between two different accounts on the Marqeta platform. These are also known as "peer transfers."

A primary account number is a multi-digit number used to identify a primary account. Also called payment card numbers, it can be found printed on credit and debit cards.

A refund occurs when a cardholder requests that the merchant return funds from a previous transaction after the clearing process has completed.

A reversal occurs when a merchant cancels a transaction after the authorization succeeds, but before the clearing process begins.

Settlement is the process by which a merchant’s bank and a cardholder’s bank exchange both financial data and money with each other.

In the standard funding model on the Marqeta platform, GPAs must be funded before the account holder can perform any transactions. You must manage each account balance to avoid under-funded or over-funded accounts.