Payments Players and the Stack



Issuing Banks

  • Issues cards to consumers on behalf of card networks like Visa and Mastercard

  • Bear the risk for transferring funds to acquiring banks, liable for consumer purchases, has all the checking and savings accounts information

  • Revenue earned based on consumer behavior and spending

Issuing Processors

  • TSYS, FIS, Galileo

  • NOT payments processors

  • Approves and declines transactions in real time


Acquiring Banks

  • Gets information from issuing banks about transactions

  • Gets funds too, transfers them to merchant's bank

Payment Processors

  • Does all the heavy lifting to help underwrite, pay / transfer funds, manage risk and disputes

Payment Facilitators

  • Comes in many names like PSPs too. Check Visa and Mastercard definitions

  • Aka aggregator / master merchant

  • Basically like a big merchant that can underwrite sub-merchants, process transactions, manage disputes, and manage fund transfers for their sub-merchants

  • Revenue potential dependent on monetizing the payments stack. Opportunity from onboarding to bps / transaction to risk management to speed

  • We see a lot of specialized payfacs now for different verticals like restaurants, spas, etc.

Classifying as a processor or payfac is kind of wishy - washy. It depends on how much of the stack economics you own. E.g. Stripe, Square, Helcim, all have back end acquiring banks but they own the majority of the economics so they're considered processors. But they all use a Wells Fargo / Elavon / etc.