The global payments ecosystem

The payments ecosystem comprises several key segments, each playing a crucial role in facilitating transactions. These segments include:

• Acquirers
• Card networks
• Card issuers
• Card gateways
• Non-card payment providers

Acquirers are financial institutions that provide banking services to merchants. They manage the bank accounts of the merchant, process transactions, and offer lines of credit. Acquirers also manage the infrastructure around any exceptions that happen with a card transaction.

Card Networks are infrastructure providers that facilitate transactions between cardholders and merchants. These networks provide the infrastructure and services that enable transactions, including the issuance of physical cards.

Card Issuers are financial institutions that issue credit and debit cards to consumers. Any financial institution through which you can maintain an account relationship would be considered a card issuer, and some institutions can be both a card issuer and an acquirer.

Card Gateways are technical infrastructure providers that facilitate the authorization and processing of transactions.

Non-card payment providers offer other payment types that are not underpinned by a card or card provider. These institutions do not issue or manage cards, but all other operations are done through their network. A notable example is Swift, which is responsible for approximately 50% of the global transactions around the globe.

Various payment methods are available to consumers, each with its own advantages and challenges. The most common payment methods include cash, card payments, electronic funds transfers (EFT), wire transfers, and Swift transfers.

Cash is a traditional payment method used primarily for person-to-person and person-to-business transactions. While cash is untraceable and irrevocable, it presents challenges such as the risk of theft and the lack of security. Cash is typically used for lower-value transactions.

Card Payments offer more protections and options compared to cash. They are widely used for person-to-business transactions and can also be used for person-to-person payments through services such as PayPal. Card payments are the most common payment instrument in use today and provide fraud protection as well as the ability to settle higher amounts.

Electronic Funds Transfers (EFT), including Wire transfers and Swift, are commonly used for business-to-person and person-to-business transactions. They involve the transfer of funds between bank accounts and are typically used for payroll and utility payments. Wire Transfers specifically are used for high-value transactions, often in a business-to-business context. They allow for the transfer of money across borders but can be expensive and time-consuming.

There are also bulk electronic fund transfers, which are used for regular, lower-value transactions in business to person, or person to business scenarios. One such example is a company paying employees.

Pega applications such as Pega Smart Investigate™ and Pega Smart Dispute™ are designed to help with Card, Wire, Swift, and EFT exceptions.

Market infrastructures are systems administered by public organizations, typically governments, that provide services to the financial industry. These infrastructures facilitate trading, clearing, settlement, and matching of financial transactions. They are essential for managing cash, electronic fund transfers, treasury, trade, securities, commodities, and foreign exchange markets.

Payment exceptions and disputes are an everyday issue. Exceptions can occur due to issues such as missing reference numbers, incorrect amounts, or unauthorized transactions. Disputes often arise from fraud, consumer complaints, authorization errors, and processing errors.

Types of exceptions include:

• Payment tracing (Creditor Claims Non-Receipt or CCNR)
• Stop/Recall a payment
• Modify a payment
• Handle value adjustments/compensation for delayed payments
• Request for information for client unable to apply a payment, or to satisfy regulatory or sanction blocks
• Reconciliation exceptions
• Correspondent Bank charge settlement

Types of Disputes include:

• Fraudulent
• Consumer
• Authorization error
• Processing error

Pega smart applications, such as Smart Investigate and Smart Dispute, are designed to manage these exceptions and disputes. These applications offer guided workflows, case management tools, and comply with industry standards. They help financial institutions handle complex payment scenarios and ensure smooth transaction processing.

Pega Smart Investigate is used for managing payment exceptions in commercial transactions. It helps financial institutions resolve issues such as creditor claims of non-receipt, incorrect payment amounts, and reconciliation queries.

Pega Smart Dispute is used for managing disputes in retail transactions. It helps card issuers and acquirers handle consumer complaints, fraud claims, and processing errors. The application helps ensure that disputes are resolved efficiently and in compliance with industry regulations.