GPWA Times Magazine - Issue 26 - October 2013

ships directly, especially when operating internationally. Furthermore, by nego- tiating bulk deals, PSPs can often offer cheaper fees to the merchant. Choosing the right PSP is critical. A com- pany like Optimal Payments allows mer- chants such as gaming sites and retailers to process payments online for thousands of customers via a single integrated pay- ment page. Debit and credit cards, Visa and MasterCard prepaid debit cards, ACH fund transfers, alternative payment meth- ods such as eWallets and other country- specific deposit options which are alterna- tives to cash – e.g., iDeal, UK Direct Debit, Sofort, Giropay or Ukash – can all be ac- quired by a retailer or gaming site through a good PSP. Processing a payment Ever wondered how payments move be- hind the scenes? Let’s take a detailed look at a credit card payment. When players on a gaming site or retail site use a credit card to put money into their account or make a purchase, the payment process starts when they hit the checkout or de- posit button on the merchant site cashier page. An authorization request is sent to the payment processor (such as NET- BANX) which, after the appropriate risk management controls have been passed, is then forwarded to the acquiring bank. The information forwarded to the bank includes the credit card number, expira- tion date, billing address, the CVV num- ber and the amount of the deposit or retail purchase, including any delivery charges and additional fees. The acquiring bank will forward this transaction to the card schemes and the transaction will finally reach the issuing bank (the bank supply- ing the credit card). The issuing bank then validates the card number and expiration date, checks the amount of the order against the avail- able funds in the account and also con- firms that the account’s billing address matches the one provided by the indi- vidual who is making the purchase. The CVV number also undergoes a checking process, and finally the payment is ei- ther approved or declined. If it’s approved, the amount of the order is separated from the rest of the cash in the shopper or player’s account and re- served for the purchase. But the transac- tion isn’t finished just yet. The issuing bank sends the authorization response to the payment processor. The transac- tion status is presented by the payment processor and the information is passed on to the merchant. The payment pro- cessor then collects the approved funds from the player’s bank account (through its payment network) and that’s the end of the process. The player or shopper re- ceives a confirmation that the process is complete. The payment processor also reconciles the funds directly with the merchant afterward. Alternative payment methods “Alternative payments” refers to payment methods that are used as an alternative to credit or debit card payments. These pay- ment methods address a domestic econ- omy or have been specifically developed for electronic commerce. Each alterna- tive payment method has its own unique application and settlement process, lan- guage and currency support, and is sub- ject to domestic rules and regulations. NETELLER is one such example. An eWallet like NETELLER enables mem- bers to store their card details on their ac- count. NETELLER will verify the address and identity when new members sign up to make the process of depositing money fast and more secure. Money leaves the player’s credit account or bank account in a way similar to what is described above, via a process involv- ing authorization requests and an even- tual settlement into the eWallet’s business bank account, but the eWallet reserves the funds in the member’s name. Customers use a secure ID associated with their account to instantly transfer funds from their eWallet to their favor- ite sites. They don’t need to worry about their card being declined due to restric- tions on placing purchases with certain credit cards, nor do they need to type all of their card information into a merchant site to be able to buy, which makes things much easier. With so much money moving back and forth, fraud is a risk. Alternative payment providers mitigate risk for merchants if they provide funds indemnification. NE- TELLER, for example, provides this ser- vice for its merchants via a no-chargeback option that includes a 100 percent indem- nified guarantee. Data managing and reporting are also key elements of how payments are processed and are critical for security. Large mer- chants seek out secure, multilingual inter- faces so they can easily manage customer data and transactions in real time. That makes flexible systems which are able to generate data and chargeback reports in multiple formats extremely useful to gam- ing merchants and retail clients. And that – in short – is how payment pro- cessing works! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lorenzo Pellegrino is vice president, digital business development for Optimal Payments. He joined NETELLER in July 2012 and has more than nine years’ experience in financial services and global payment methods worldwide. “Payment processing involves a complex infrastructure of specialized, cutting-edge technology, fraud prevention techniques, security tactics, technical integrations, banking relationships and more.” 37 Quick, seamless – and very complicated