Thursday, January 5, 2012

ATM, Credit Card, Debit Card, MasterCard, Visa, Payment Gateway


ATM (automated teller machine) is a computerized telecommunications device that provides Bank Customers with access to financial transactions in a public space transactions without the aid of a branch representative or teller.  ATMs are known by various other names including ATM machine, automated banking machine, and various regional variants derived from trademarks on ATM systems held by particular banks.
There are two primary types of automated teller machines, or ATMs. The basic units allow the customer to only withdraw cash and receive a report of the account's balance. The more complex machines will accept deposits, facilitate credit card payments and report account information. To access the advanced features of the complex units, you will usually need to be a member of the bank that operates the machine. You are in need of money, so you walk over to the automated teller machine (ATM), insert your card into the card reader, respond to the prompts on the screen, and within a minute you walk away with your money and a receipt. These machines can now be found at most supermarkets, convenience stores and travel centers.
Both a debit card an a credit card offer financial benefits to you in the sense that both assist you in desisting you from carrying hot cash on hand while making purchases in merchant shops.  Both of them allow you to go through the financial transactions without hassles.  Yet they differ in a few ways.
A debit card also offers a facility that a credit card offers namely allowing money on credit but in a different way.  A debit card is tied directly to your checking account in your savings bank.  Therefore the money to the extent of which you make a purchase is debited from your checking account in your bank.  If the transaction goes through for a day or two, then a kind of hold would be created on the amount due to the merchant in your checking account in your savings bank.  Till that period when the transaction fully goes through you are not supposed to overdraw money from your savings bank account.  Hence to protect you from the embarrassment of not providing enough funds in your account till the transaction goes through, the bank would create a hold on the amount due.
A credit card as the name itself suggests differs from a debit card in the sense that money is allowed on credit for you to make a purchase in any merchant shop.  A credit card allows you literally to borrow money in small amounts initially to go through the process of purchasing goods from merchant shops.  You can easily use the card to make some basic transactions.  You will be liable to pay some interest to the borrowed money or the money given on credit card to you by the credit card concern after the expiry of a certain period of time.  The period of time that is normally allowed is up to thirty days from the date of transaction or purchase.  Once the time of repayment of the borrowed money exceeds the allowed time limit of 30 days, you are supposed to pay interest to the bank that has provided you with the facility of using the credit card.  This period of 30 days is called as the grace period.  You are advised to carry your balance in the credit card from month to month to avoid any liability of paying high interest.  Hence it is important to note that the use of a credit card is akin to borrowing money from a financier.
Most people in the world prefer to carry either credit card or debit card with them when they travel.  This is because of the fact they would not like to carry hot cash during travel.  They would not mind to borrow money through a credit card or allowing a kind of hold on their checking account in their bank by using their debit card.  All said and done debit and credit cards are very comfortable financial tools available to man these days.  It is important that he should make the best use of them.

Debit cards and credit cards are accepted at the same places. Debit cards all carry the symbol of one of the major types of credit cards on them, and can be used anywhere that credit cards are accepted. They both offer convenience. The fundamental difference between a debit card and a credit card account is where the cards pull the money. A debit card takes it from you banking account and a credit card charges it to your line of credit.
Debit cards offer the convenience of a credit but work in a different way. Debit cards draw money directly from your checking account when you make the purchase. They do this by placing a hold on the amount of the purchase. Then the merchant sends in the transaction to their bank and it is transferred to the merchants account. It can take a few days for this to happen, and the hold may drop off before the transaction goes through. For this reason it is important to keep a running balance of your checking account to make sure you do not accidentally overdraw your account. It is possible to do that with a debit card.
A credit card is a card that allows you to borrow money in small amounts at local merchants. You use the card to make your basic transactions. The credit card company then charges you interest on your purchases, though there is generally a grace period of approximately thirty days before interest is charged if you do not carry your balance over from month to month.
In the past many people felt that you needed a credit card to complete certain transactions such as rent a car or to purchase items online. They also felt that it was safer and easier to travel with a credit card rather than carrying cash or trying to use your checkbook. However debit cards offer the same convenience without making you borrow the money to complete the transactions.
Master Card vs Visa Card
Travel anywhere around the world with just your credit cards, which are either powered by master cards or visa cards, you will find yourself having an enjoyable and hassle free shopping experience. Master and visa cards are close competitors and therefore offer similar services for their customers. Both have a large customer base especially with their networks present in more than hundred countries worldwide. As a customer, we generally would not find much difference between the two types of credit cards, Its only two different brand names.
Master card
Master card can be used world wide at more than 23 million locations. It is important to note that the Master card does not issue the credit cards to the customer directly. Instead the issuance of Master cards is in the hands of the banks that have taken up the services of Master Cards. Any payments that we make to our banks for the usage of a Master card go to the bank and not to the Master Cards. Master cards generate its income by issuing its services to these banks.
Visa Card
Visa cards have a customer base present in billions and a direct competitor for Master Cards. Visa Cards are accepted around the world, and like Master Cards, the service payments charged by banks to their customers, goes towards the bank and not to Visa Cards. Visa cards receive its service payment from the banks issuing the Visa Cards services worldwide. It is a generalized concept now, that wherever you can pay with your Master Card, you can also use your Visa Card.
Difference between Master Card and Visa Card
There is no underlying difference between the two types of credit card servicing companies. The fact is that the two are a direct competition for a reason. When deciding for their first credit card, people generally do not ponder over whether to get a Visa card or a Master Card. They think more about which bank to get a credit card from based on their rewards scheme and the services charges. One difference that is present is that UK has an integrated Visa and Master Cards service. Wherever you can pay with our Visa Card, you can also pay with your Master Card in UK. However, around the world, different locations will accept either Master Card or Visa Card. There are a few places where even both are accepted.
Conclusion
So how is it that we determine which is better? Are there truly some things that money can’t buy and for everything else there is Master Card? Or does life really take Visa? The fact is, it is like choosing between two apples. In this case there are same benefits but only different names. How then do the two create a brand loyalty for themselves? Despite that the competition remains fierce globally in more than a hundred fifty countries and more than twenty million locations.
What is Payment Gateway?
A payment gateway is an e-commerce application service provider service that authorizes payments for e-businesses, online retailers.
Payment gateways protect credit card details by encrypting sensitive information, such as credit card numbers, to ensure that information is passed securely between the customer and the merchant and also between merchant and the payment processor.
How payment gateways work
A payment gateway facilitates the transfer of information between a payment portal and the Front End Processor or acquiring bank. Ex: PayPal, ICICI Bank payment Gateway etc.

Various steps of transaction
o    A customer places order on website by pressing the 'Submit Order' .
o    The customer's web browser encrypts the information to be sent between the browser and the merchant's webserver. This is done via SSL (Secure Socket Layer) encryption.
o    The merchant then forwards the transaction details to their payment gateway. This is another SSL encrypted and connection to the payment server hosted by the payment gateway.
o    The payment gateway forwards the transaction information to the payment processor used by the merchant's acquiring bank.
o    The payment processor forwards the transaction information to the card association (i.e., Visa/MasterCard)
o    The card association routes the transaction to the correct card issuing bank.
o    The credit card issuing bank receives the authorization request and sends a response back to the processor (via the same process as the request for authorization) with a response code.
o    The processor forwards the response to the payment gateway.
o    The payment gateway receives the response, and forwards it on to the website where it is interpreted as a relevant response then relayed back to the cardholder and the merchant.
o    The entire process typically takes 2–3 seconds
o    The merchant submits all their approved authorizations, in a "batch", to their acquiring bank for settlement.
o    The acquiring bank deposits the total of the approved funds in to the merchant's nominated account.
o    The entire process from authorization to settlement to funding typically takes 3 days.
Many payment gateways also provide tools to automatically screen orders and detect fraud include geolocation, velocity pattern analysis, delivery address verification, computer finger printing technology, identity morphing detection, and basic AVS checks.

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