How the Payment Market Works

To most people, a card tap is just a payment. To you—it’s a cost.

Every transaction hides fees and middlemen that eat into your margin. And most companies don’t realize how much they’re overpaying.

If you're a CFO, CEO, or just the person who cares about the numbers—understanding your payment flow isn’t a detail, it’s a profit lever.

Here’s what’s really going on behind each payment—and where the savings are hiding.


Customer

  • Uses a debit or credit card (or mobile wallet) to pay for goods/services.

  • May not realize that each transaction triggers a complex chain of intermediaries.

  • Wants speed, security, and reliability.

Business (Merchant)

Accepts card payments via a payment terminal, e-commerce platform, or POS system.

  • Pays transaction fees (usually 1.5%–3.5%) for every card payment.

  • Contracts with a Payment Service Provider (PSP) or acquirer to process payments.

  • Wants low fees, fast settlement, and transparent reporting.

Acquiring Bank (Merchant's Bank)

The bank that handles payments for the merchant.

  • Routes the transaction to the Card Network (Visa, Mastercard, etc.)

  • Takes a cut of the transaction (via acquiring fees).

Card Network (Visa, Mastercard, etc.)

Acts as the bridge between the acquiring bank and the issuing bank.

  • Transfers transaction data securely.

  • Charges interchange + network fees.

  • Sets rules for authorization, settlement, and chargebacks.

Issuing Bank (Customer’s Bank)

The bank that issued the customer’s card.

  • Approves or declines the transaction.

  • Sends the money (minus interchange fee) to the acquiring bank.

  • Keeps a cut via the interchange fee.

Transaction Flow Summary

  1. Customer swipes/taps card.

  2. Merchant’s terminal sends data to the Acquirer.

  3. Acquirer forwards it to Visa/Mastercard.

  4. Network contacts Issuer to approve the charge.

  5. Funds are approved and eventually settled to the merchant (minus fees).

Still feel like the world of fees, banks, and payment flows is a bit of a jungle?

No worries—get in touch with us at Optipaymnt and we’ll break it down in 60 minutes.
Minimal banker-speak, maximum focus on what matters: how much you could actually be saving.