Product selection, basket validation and online payment. This is the tip of the iceberg for a customer who makes a purchase on an online sales site.
Mustapha Badr-Ezzaman is Chief Operating Officer at Vantage Payment Systems (VPS), a fintech specializing in issuing innovative online and cash payment solutions and managing prepaid programs across private and open networks. He dissects for Averages24 the payment chain when a consumer buys online.
Let’s start with the beginning. First, there’s the cardholder: you! You have validated your “basket” and want to pay online. You then arrive at a page where you enter your bank details: this is the page of a fintech called “Payment Service Provider” (or PSP), which e-commerce uses to offer different means of payment, including online payment.
The information entered from the payment card (name, bank details, expiry date, pictogram), as well as the other elements of the transaction, such as the value, address and identifier of the acquirer, are transmitted to a card system called MPI, through international processors such as Visa and MasterCard.
This information eventually reaches the card-issuing bank, which usually sends a one-time code via text message: “We’re talking about 3D Secure V1 verification here, a system for securing online payments. In our region, the ecosystem is in the process of migrating to 3D Secure V2, which corresponds to an evolution of the current V1 authentication”, explains Mustapha Badr-Ezzaman.
Once authentication is confirmed, “the PSP transmits the cardholder’s information to another fintech, called the payment acquirer, such as the Center monétique interbancaire (CMI), incumbent operator in the field, or, more recently, NAPS (non-banking specialization in electronic means of payment, editor’s note)”, he continues.
The payment acquirer, in turn, transfers the request authorization from your bank issuer through:
– the HPSS National Switch in the case of a Moroccan card;
– international processors in the case of a foreign card such as Visa, MasterCard, AMEX, etc.
They contact the issuing bank to verify the availability of funds. Once you get the green light from your bank, the transaction will be approved and payment made. “This communication and validation process between the different platforms is done in a few seconds”, says Mustapha Badr-Ezzaman.
What is the role of the payment acquirer?
The acquirer is a payment institution which allows, among other things, to accept online payments. “The acquirer is the intermediary between the e-commerce site and the banks (the merchant’s site and the customer’s): the e-merchant opens a payment account with the acquirer, similar to a bank account, but which never may be a debtor. When the issuing bank debits the buyer’s account, the e-merchant does not receive payment directly. It is placed in the payment account, and then the acquirer is responsible for transferring the amount to the e-merchant’s bank account”, explains our interlocutor.
Thus, in the event of a problem (non-conforming product, delay in delivery, etc.), it is the buyer who guarantees The reimbursement of the buyer. “It’s like an online payment intermediary. Does not automatically agree with the buyer. The responsibilities of each party are defined through a procedure called Chargeback. We must certainly protect consumers from scams, but also e-merchants from abuse,” says our source.
In addition, the buyer assesses the risk related to the activity of the e-merchant and applies a deposit in the form of an amount usually blocked in the first transactions. This ensures payment security and fraud protection.
Commissions for an online transaction
The technical integration of a payment platform depends on the e-merchant profile. If it is small, it launches in e-commerce, usually using CMS in SAAS, easy to use, where it integrates the part of the product, the blog, etc. “For this type of merchant, we offer a payment module plugin that works after 15 minutes. This type of integration is the most adopted by e-merchants in Morocco”, underlines Mustapha Badr-Ezzaman.
When the e-merchant is informed and has technical knowledge, they usually turn to a specialized agency that integrates specific functionalities as needed. “We offer payment APIs (API is the acronym for Application Programming Interface), that is, application programming interfaces where the payment process is more fluid”, he observes.
Finally, large accounts often use what’s called a “low-level API”, which offers programming freedom and agility in terms of the customer experience. “This requires extensive knowledge of e-banking and some e-banking and security certifications, such as PCI DSS (Payment Card Industry Security Standard). We offer this payment solution in particular to Glovo, in Morocco”, specifies the specialist.
How much should an e-merchant pay who wants to integrate an online payment solution? In addition to setup costs, “a commission of 0.5% is generally applied to each transaction by the PSP”, it is specified. According to CMI data, the acquirer charges 2% for the Moroccan card and 2.75% for the foreign card.
At the end, for an online sale at 100 DH, the e-merchant pays 97.5 DH for a Moroccan card and 96.75 DH for a foreign card.
“Legally speaking, no billing for e-merchants has been imposed by Al-Maghrib Bank, or by international processors such as Visa and MasterCard for acquirers or PSPs. Each of the interested parties (buyers and PSPs) is free to charge for their offer what they deem appropriate. It would not be illegal to offer the service at 0.1% or 5%”, insists Mustapha Badr-Ezzaman.
The e-merchant who wants to offer online payment must absolutely be a legal entity. Informs the membership procedure with the buyer and the PSP, who verify the eligibility conditions. If the order is validated, a statement is sent to Visa and Mastercard by the acquirer or the PSP. Once the e-merchant has been validated, the buyer assesses the risk: “We must protect the Moroccan consumer by applying guarantees to the e-merchant”, recommends our interlocutor.
While e-commerce is becoming more and more common, online payment remains minimal compared to cash payment, according to industry professionals. “Payment is the decisive step in the shopping experience on an e-commerce site”he watches.
Mustapha Badr-Ezzaman believes that all players in the e-commerce value chain have a share of responsibility: “From the cardholder who prefers to pay in cash for fear of being scammed or having their bank details stolen, to the government that must operationalize its e-gov payment services through banks that do not offer adequate products, insurance and complicated procedures in the event of a problem, or e-logistics that must be adapted to the immediacy requirements expressed by customers. »
Online payment remains a performance and growth lever for companies. “A great shopping experience requires a simple and secure payment process, because if online commerce knows no geographical borders, Moroccan e-merchants should try internationalization. But that is another matter”, concludes our interlocutor.