Cards and Payments - Part 1 - Introduction to Payments and Cards Industry

Summary

In this video, Saurabh Khandelwal, a manager in AI and analytics, introduces his YouTube series focused on the cards and payments industry. He aims to share insights gathered from his work in data and reporting, highlighting industry trends and best practices. The series is designed for professionals in the banking and financial services sector, specifically those in cards and payments. Viewers will learn about the roles of merchants, acquirers, networks, issuers, and cardholders through detailed explanations, and Saurabh encourages interaction through comments and feedback to foster mutual learning.

Takeaways

• 👋 Introduction: Saurabh Khandelwal introduces himself as a manager in the artificial intelligence and analytics space, working specifically with data and reporting in the cards and payments industry.
• 💡 Purpose: The video aims to share knowledge gathered over the years in both technical and functional areas of the cards and payments industry.
• 📊 Focus: The series will cover trends, best practices, and insights in delivering IT projects within the cards and payments domain, which is a part of the broader banking and financial services industry.
• 💳 Industry Overview: The payments and cards industry involves various players such as issuers, merchants, acquirers, networks, and cardholders.
• 🧠 Mnemonic for Entities: Saurabh introduces the 'MANIC' model to remember key entities—Merchant, Acquirer, Network, Issuer, and Cardholder.
• 🏦 Key Entities: The issuer is the bank that issues cards to cardholders, while merchants provide services and receive payments through acquirers who handle transactions on their behalf.
• 💻 Network Role: Networks like Visa and Mastercard process transactions, communicating between the acquirer and issuer to authorize and settle payments.
• 🏪 Everyday Usage: Saurabh emphasizes how everyday transactions, like using a credit or debit card at a grocery store or gas station, fit into the payments and cards industry.
• 📚 Target Audience: The videos are intended for software engineers and IT consultants working in the cards and payments domain, but are open to anyone interested in learning more.
• 💬 Interactive Element: While the videos are pre-recorded, viewers can leave questions and feedback in the comments, fostering a collaborative learning experience.

Q & A

What is the primary focus of the YouTube channel introduced in the video?

The primary focus of the YouTube channel is to share knowledge about data, reporting, and trends within the cards and payments industry. The creator aims to discuss both technical and functional aspects, best practices, and current shifts in this domain.

Who is the intended audience for the videos on this YouTube channel?

The intended audience includes software engineers, IT consultants, and professionals working in or transitioning into the cards and payments domain. However, anyone interested in learning about this industry is welcome to watch the videos.

What is the 'MANIC' model described in the video, and what does each letter stand for?

The 'MANIC' model is a mnemonic device used to remember key entities in the payments and cards industry. It stands for: M - Merchant, A - Acquirer, N - Network, I - Issuer, C - Cardholder.

What role does the acquirer play in the cards and payments industry?

The acquirer is responsible for taking money on behalf of the merchant and depositing it into the merchant's account when the transaction is settled. It acts as the intermediary between the merchant and the cardholder’s bank.

What is the function of the network in the payments process?

The network handles the processing and communication between the acquirer and the issuer. It ensures that the transaction is authorized and that money is transferred from the cardholder's account to the merchant's account.

Can you give examples of networks commonly used in the payments and cards industry?

Common examples of networks include Visa and Mastercard. These networks facilitate the processing of transactions between acquirers and issuers.

Who is considered a cardholder in the payments and cards industry?

A cardholder is an individual, like you or me, who possesses a physical or virtual card used for monetary transactions, such as credit or debit cards.

What does the issuer do in the payments and cards industry?

The issuer is the organization, typically a bank, that issues the card to the cardholder. Examples of issuers include Barclays, ICICI, and HDFC.

What is the role of a merchant in the payments process?

A merchant is a provider of goods or services to the cardholder. Examples include grocery stores, e-commerce portals, and other businesses that accept card payments.

How does the creator of the YouTube channel intend to interact with viewers and take their questions?

Since the videos are pre-recorded, viewers can ask questions and provide feedback in the comment section. The creator will address the questions in the comments or future videos.

Outlines

00:00

👋 Introduction to the Presenter and Video Purpose

In this paragraph, Saurabh Khandelwal introduces himself as a manager in AI and analytics, focusing on data, reporting, and the cards and payments industry. He explains the purpose of the video, which is to share knowledge gathered from years of experience in both technical and functional aspects of the field. The video series aims to foster collaboration, discuss industry trends, and share best practices within the cards and payments domain.

05:00

🎓 Purpose and Scope of the Video Series

Saurabh describes the aim of the video series, highlighting the importance of sharing insights on data and reporting trends within the cards and payments industry. He expresses his intent to make these videos a learning platform, covering project management, industry shifts, and best practices in IT. The series is aimed at professionals in the domain and anyone seeking to gain knowledge about cards and payments.

10:03

💳 Overview of the Payments and Cards Industry

The payments and cards industry, like other major verticals such as healthcare or retail, falls under the broader banking and financial services space. The focus of this video series will be on cards and payments. Saurabh touches on the variety of services within banking and finance, including consumer finance, loans, and mortgages, which all contribute to the complexity and vastness of this domain.

15:04

📱 Importance of Staying Connected During the Pandemic

Saurabh reflects on the challenges brought by the pandemic, such as remote collaboration and communication. He views the video series as a platform for professionals to connect, share knowledge, and learn from each other during these trying times. He emphasizes the mutual benefit of learning from one another and creating an enriching experience for all involved.

🧑‍💻 Intended Audience and Video Format

The intended audience for the video series includes software engineers and IT consultants working in the cards and payments space. However, anyone interested in the domain, such as those transitioning into the field, is welcome. Saurabh mentions the format will vary, with some short and focused videos and others covering topics in-depth. He will use general knowledge websites and occasionally create presentation decks to support the content.

💡 Exploring the Cards and Payments Industry Entities

Saurabh introduces the different entities in the payments and cards industry using the 'MANIC' model. The acronym stands for Merchant, Acquirer, Network, Issuer, and Cardholder. He explains the role of each entity: merchants accept payments, acquirers facilitate transactions, networks handle communication, issuers provide the cards, and cardholders are the consumers using the cards for transactions.

🏦 Deep Dive into Key Entities: Cardholder and Issuer

The cardholder is a typical consumer using a credit, debit, or prepaid card for daily transactions. The issuer is the financial institution that provides the card to the cardholder, often a bank. Saurabh mentions common issuers like Barclays in the UK and ICICI in India, explaining how they enable the cardholder to make payments in various situations.

🛒 Understanding the Merchant and Acquirer Roles

Merchants are businesses that provide services to cardholders, accepting payments through card transactions. The acquirer is the entity that manages the transaction for the merchant, taking money from the cardholder's account and depositing it into the merchant's account. Saurabh gives examples of acquirers such as First Data and Worldpay.

🌐 Role of the Network in Payments Processing

The network is the intermediary that processes the transaction between the acquirer and the issuer. It ensures that all communication happens smoothly, authorizing the transaction and facilitating the transfer of funds. Saurabh names Visa and Mastercard as examples of networks that enable seamless card transactions. He also touches on the messaging standards that govern how these transactions are processed.

📊 Recap of the MANIC Model and Key Players

In this final section, Saurabh summarizes the MANIC model, emphasizing the five key entities (Merchant, Acquirer, Network, Issuer, Cardholder) involved in processing payments. He explains how these entities collaborate to authorize and settle transactions. He encourages viewers to leave feedback and share the video series with others interested in learning more about the cards and payments industry.

Keywords

💡Cards and Payments Industry

The 'Cards and Payments Industry' refers to the financial ecosystem involving credit, debit, prepaid cards, and payment networks. This industry handles transactions between consumers, merchants, and financial institutions. The speaker focuses on this sector, explaining how it functions and the entities involved, such as merchants, acquirers, and issuers.

💡Issuer

An 'Issuer' is a financial institution, usually a bank, that provides cards to cardholders, enabling them to make transactions. Issuers are responsible for approving transactions on behalf of the cardholder. In the video, the speaker explains how issuers like Barclays or HDFC Bank play a key role in the payments process by issuing cards to customers.

💡Acquirer

An 'Acquirer' is a financial institution or service provider that processes card payments on behalf of merchants. The acquirer collects payments from cardholders and deposits them into the merchant’s account. The video emphasizes how acquirers like First Data facilitate transactions by ensuring merchants receive payments securely.

💡Merchant

A 'Merchant' refers to any business or individual that accepts card payments in exchange for goods or services. Merchants include grocery stores, e-commerce platforms, or gas stations. The video highlights the role merchants play in the payments process by interacting with cardholders and initiating payment transactions.

💡Cardholder

A 'Cardholder' is the individual who owns and uses a card issued by a financial institution to make purchases. This can be a credit, debit, or prepaid card. The video explains that cardholders, like you and me, are central to the transaction process as they initiate payments for services or goods.

💡Network

The 'Network' is the intermediary that facilitates communication between the acquirer, issuer, and other parties during a card transaction. Networks like Visa or Mastercard are responsible for ensuring the transaction is processed, validated, and completed. The video describes how networks enable the smooth flow of transaction information between banks and merchants.

💡Transaction Processing

'Transaction Processing' refers to the entire sequence of activities that occur from the moment a cardholder initiates a payment to the moment funds are transferred to the merchant’s account. The speaker outlines how acquirers, issuers, and networks collaborate to ensure that transactions are processed accurately and securely.

💡MANIC Model

The 'MANIC Model' is a mnemonic introduced in the video to help understand the five key entities in the payments ecosystem: Merchant, Acquirer, Network, Issuer, and Cardholder. This model simplifies the explanation of how these different actors interact in a typical payment transaction, making it easier to remember.

💡Acquiring Transaction

An 'Acquiring Transaction' is the process where the acquirer takes the payment information from the cardholder and, through the network, requests authorization from the issuer. The video explains how the acquirer plays a crucial role in collecting funds from the cardholder and crediting them to the merchant.

💡Prepaid Cards

'Prepaid Cards' are cards that are pre-loaded with a specific amount of money that can be used for purchases until the balance is depleted. The video mentions prepaid cards as one of the various card types involved in the cards and payments industry, highlighting how they differ from credit or debit cards.

Highlights

Introduction to Saurabh Khandelwal, a manager in the artificial intelligence and analytics space working with data and reporting, particularly in the cards and payments industry.

Purpose of the video series: sharing knowledge gathered over years in the technical and functional domains of cards and payments.

Aims to collaborate, learn from fellow professionals, and discuss latest trends in data, reporting, and the cards and payments industry.

Focus on discussing best practices for delivering IT projects within the cards and payments domain.

Payments and cards industry falls under the banking and financial services domain, which also includes capital markets, consumer finance, loans, and mortgages.

COVID-19 pandemic situation has led to a new way of connecting with people through videos to share and learn from each other.

Video format: pre-recorded sessions aimed at software engineers and IT consultants, with Q&A through the comments section.

Plan to create a series of playlists covering both technical and functional aspects of the payments and cards industry.

Overview of the key entities in the payments and cards industry using the mnemonic 'MANIC': Merchant, Acquirer, Network, Issuer, and Cardholder.

Explanation of the 'Cardholder' as the end-user who holds a physical or virtual card for monetary transactions.

Issuer refers to banks or organizations that issue cards to customers, examples being Barclays or ICICI Bank.

Acquirer handles transactions on behalf of merchants and deposits the money into the merchant’s account.

Network (e.g., Visa, Mastercard) handles the communication and processing between acquirer and issuer for transaction authorization.

Breakdown of the role of each entity (merchant, acquirer, network, issuer, cardholder) in the real-time transaction process.

Conclusion: Invitation to ask questions or provide feedback through the comments section, and encourage others to learn about the payments and cards industry.

Transcripts

hello everyone welcome to my youtube

channel

my name is saurabh khandelwal and i'm a

manager in the artificial intelligence

and analytics space

with one of the leading i.t services

firm

i particularly work in the stream of

data and reporting

and the functional area that i am

keenly involved in is the cards and

payments

industry so

this is a bit of an introduction about

myself

okay here's the interesting question why

am i here why am i making this video and

putting this on my youtube channel so

this is all about

sharing some knowledge that i have

gathered

over the last few years working in this

domain

both in the technical as well as the

functional space

and i also thought that this would be a

good way to

collaborate and to learn with fellow

professionals

i also wanted to discuss some of the

latest trends

in the space of data and reporting not

just about data and reporting but

uh also functionally i wanted to talk

about what are the kind of things what

are the kind of

shifts that i'm seeing in the cards and

payments industry

i would also like to talk about some

best practices so again

this is all about you know delivering it

projects

within the cards and payments domain so

um

this is a huge domain you know you know

just like other domains

and other verticals for example

healthcare

or logistics hospitality

retail so this comes under the gamut of

banking and financial services and

banking and

financial services in itself is a huge

space right you've got capital markets

there then you've got

banking you've got cards and payments

you've got consumer finance and

loans mortgages and so on so forth it's

huge

so particularly within the banking and

financial services gamut

we're going to talk about cards and

payments in this series of videos

all right and last but not the least

well

you know we are all facing these trying

times dealing with the

pandemic sitting at home

trying to to collaborate with each other

trying to communicate with each other

beat your

colleagues your friends your families so

i just thought that this is a good forum

to

to connect with people whom i don't know

so far working in this industry

and um well we can have some fun

together i can learn some things from

you you can learn some things

from me and uh we can make this an

enriching experience for both of us

and i have a last slide here about

the format of these videos like i said

these videos

uh would be intended audience being

software engineers i.t consultants

in the cards and payments functional

domain

however anyone else who wishes to learn

about this domain is more than welcome

you know if somebody is trying to switch

over to

payments and cards domain or

is going to be assigned to one of the

projects in future say for example and

he wants to

get some knowledge this is a good place

there'll be short videos some of the

videos would be extensive i mean it

depends really

if there are topics that i feel that

would be better to just

cover in totality then maybe those

videos would be a little longer

but other than that the videos would be

off short duration right just just

enough

so that we can all digest that that

little bit of uh

information let's say a five minute or

ten minute video i'll be using some

websites and resource references again

uh i'll specifically be going with some

general websites some general knowledge

websites which

you know all of us have been using for

example i'll be using wikipedia

investopedia anything that is

generally available wherever possible

i'll try to create a small deck

so there'll be a series of playlists

both technical and functional in nature

i'll probably begin with the functional

aspects where i'll talk about the

payments in the card industry and what

the kind of different entities that you

see within this industry and then we'll

go

deeper and talk and learn more about

each of these

entities in detail we'll also take some

q a but since

at the moment these are not live

sessions so the live q a may

not be possible these will all be

pre-recorded videos

so what we will do is we can take up

some

q a in the comment section so feel free

to put in your comments

i'll try to address all the questions if

there's any feedback

if there is any thing that you would

suggest to help me to improve the

content of these videos

those are absolutely welcome so with

this my friends

um let's maybe get the learning going

i'll end this deck here and i'll quickly

give you an

overview of what we are going to cover

in these sessions

and then i'll end this first video there

and from the second video onwards we'll

start looking into each of those

those entities in a bit detail all right

so let's get going

we are here to talk about the

payments and

cards industry

okay so this is how you generally refer

this industry some

may be calling this as cards and payment

networks

payments cards they're all under the

same umbrella

this is the payments and cards industry

most of us

know about this industry if not say from

a learning perspective

but from a usage standpoint we all have

actually

been a part of this industry somewhere

or the other we all have used credit

cards debit cards

some sort of cards you know prepaid

cards vouchers

and things like that while uh making

transactions for a day-to-day needs

right so for example if you go to a

grocery store you make a payment

you use a card or for example when you

are

going to a patrol station to get you

to get the fuel up in your car you may

be using a card over there

so there are many places in your

day-to-day life

where you use a card to do certain

transactions

so now if we specifically talk about the

various

entities that are there in the payments

and cards industry

we can list them down into certain

buckets

you know so you would have a card that

is being issued by a bank

that's the issuer of the card uh you use

the card

in a grocery store the grocery store

is actually the merchant who is using

this card for you

and then you would also have

entities like an acquirer a network

which does the processing of the payment

and things like that

so if we talk about all of these

entities

and we want to just list them down

there is a very easy mnemonic that you

can use to

remember them in future so i'm gonna

write that down for you

it's called as manic okay it's the manic

model and the mnemonic manic that you

can use

to remember all of these entities used

in a payments and cards industry

now what does this mnemonic stand for

how do you expand this mnemonic right

this is an abbreviated form obviously

so how do you expand that well it's very

simple

some of you may have guessed it m is

actually nothing but

the merchant a is

your acquirer

n is the the network

i is your issuer

and c is your

card holder okay

so this is how you

define all of the entities within the

payments and cards industry

at a very very high level you have a

merchant

you have an acquirer you have a network

you have an issuer you have a cardholder

and this sky here sits in the middle

this is the guy which does the talking

on the two sides this side and this side

you have two entities the merchant

and the acquirer sitting on the one side

the issuer

the cardholder sitting on the other side

in the middle you have the network

that does the talking the communication

part of it

and does the processing of the payments

okay a little bit more about

these entities and so we better

understand them

at a high level of what they are well

let's start from the card holder

on your extreme right here right

who is this guy well this guy is

just an ordinary person with a card like

you and me

unless of course you happen to be the

owner of an acquiring

firm or the ceo of a bank well actually

ceos would also have their own personal

cards but then

you know just for the sake of it unless

you belong to any of these entities here

on the uh on the on the left of

c you would all be falling under this

entity called as card holder if you have

a card a physical card

or a virtual card that you're using for

your monetary transactions it's

people like you and me who form the card

holder

then comes the issuer okay as the name

says

this is the guy who issues the card for

the card holder

so so who's an issuer it's the

card issuing authority or

the kardashian organization

there could be some banks you know

there's so many banks for example

depends on which part of the world you

are in

if you are in uk you could probably

relate to something like a barclays

or an at west if you are in india you

could some relates up to

something like an icici um

or htfc or sbi so all of these are

issuers of the cards they issue the

cards for you which you then use

for your day-to-day purpose okay

now let's leave this here we'll talk

about

it at the end this guy here in the

middle let's look at these two here

okay so now let's shift on the on the on

the extreme left

and talk about merchant merchant is very

very simple

right as the name says this is the

merchant who is providing you these

services

so he is the

[Music]

services provider for you

typical examples could be grocery stores

um small merchants shops

brick and mortar shops online e-commerce

portals

these are all merchants of various kinds

okay

so as a card holder

you use the services of a merchant all

right

the merchant would would have their own

bank account right they would have their

own bank account

so if you do an online transaction or

you swipe the card

on a pos a point of swipe machine

at a merchant store then the money

automatically gets

deducted from your account and gets

credited to the merchant's bank account

so you would have the merchant would

have a bank account

associated right then let's talk about

the

the other entity on the right to the

merchant which is the acquirer

so

the merchant has the account where the

money gets deposited but the merchant

needs the services of a body

that handles the transactions on the

behalf of the merchant

so if i am a merchant let's see if i

have a grocery store

or if i have a departmental store i have

my bank account with say

a bank like barclays but then if a

customer comes to my shop

how am i going to take the payment from

him right

he has the card he would he would

present the card to me

and then i would take the card but then

how do i take the money from that card

and deposit into my bank account so

here is where the acquirer comes into

picture the acquirer

takes the money on behalf of the

merchant

right let me write it down here

it takes money

on behalf of

merchant

okay and then

deposits that into the merchants account

when the transaction

is settled okay so this is the role of

the acquirer

acquirer as the name says it acquires

the transaction it acquires the money

from the card holders account and then

deposits that into the merchant's

account okay

so that's the role of the acquirer

there are some acquirers that you can

read about you can do a little bit of

google the many acquirers some of the

renowned ones

for example there is an entity called as

first data

right very very popular a very famous

acquirer you can

you can read about that you can read

about world pay

another one so these are all the

different acquirers

again it depends what part of the world

you are so you have different set of

acquirers

then comes the network in the middle

right the network is the entity that

does the talking like i said in the

beginning

between the left side entities and the

right side entities

so the network is the guy

who tells the acquirer okay

now you have got to

make a transaction request on the behalf

of the merchant

give me all the details that you have

i'll take the details

i'll do the processing and i'll talk to

the issuer

and then eventually to the card holder

get the confirmation back okay get the

confirmation back

that everything is fine the transaction

is authorized

and then i will give you a confirmation

to transfer the money to the merchant's

account

lots of things handled by this entity

right so there's a lot of conversations

a lot of talking

all of this talking really happens with

the in the form of some messages

right there's various sort of messages

messaging systems

message messaging standards that are

being used

again there are certain bodies these

that govern these standards

we'll talk about these these bodies in

little detail in the forthcoming

videos but for now just remember that

this chap here in the middle is

responsible for handling the

the processing the transaction okay so

very important let's take some examples

here let so let me just write it down

here

network does the processing

the communication

okay then network

um talks both on the acquirer side as

well as on the issuer side

okay so typically in the payments cards

industry

an acquirer is in a shorthand written as

acq

in issuer is in shorthand written as iss

so wherever possible i'll try to stick

to the same formats

acq and iss so whenever i write acq i

mean an acquirer whenever

i write an iss i'd mean an issuer

for network i'd probably write n slash w

okay just to make it make it simple and

easy

and then let's take some examples here

for the network so you you would have

heard all of these names i'm sure you

know so you would have heard

names like visa you would have a name

heard of names like mastercard

and so on so forth okay

so these are the the networks

that provide that power the card of the

issuer

to to handle these transactions and

to ensure that the transactions they

happen successfully

so that at a very very high level is the

manic model for you

and the five entities that are

responsible for

a real-time transaction to be authorized

and the money

being settled across the accounts for

the parties

i hope you enjoyed this video

if you have any comments or any feedback

like i said please put that in the

comment section any questions that you

have

i'm happy to take all of those questions

please also let your

your friends or anyone else who's

interested to learn about this industry

in a little bit more detail

you can just pass on these links to him

or her

so that they can also benefit out of

these videos

okay so i'll see you all in the next

video then

happy learning thank you