Q&A: Card networks, payments, authorisations etc

(Tristan Thomas) #1

We just published a new blog post by @tom (with a lovely graphic by @Sam) which is an overview of how card networks work and the path that leads to each of your transactions being authorised or declined.

@jonas (our CTO) is here to answer any questions you have about payments, card networks, online/offline transactions etc. Things like “why are some of my transactions delayed”, “why is TfL so weird”, “how does xyz work” - ask away! Hopefully he’ll have answers :wink:

Going overdrawn
Offline Transactions
(willrax) #2

Naive bank user here :blush:. Is the difference between Visa and Mastercard purely a networking one? Is there a reason that Mondo chose to go with one over the other?

(Jonas Templestein) #3

Awesome question, thanks Will!

For debit cards in the UK there isn’t a big difference, both to us or the consumer. Visa and MasterCard acceptance rates are about equal and the processes described in the blog post are mostly the same. For the prepaid trial we chose the partner that allowed us to go to market the fastest :stopwatch:

We haven’t firmly committed to either MasterCard or Visa for the cards that we will roll out once we’re a bank. That decision will mostly come down to cost :moneybag:

(James Billingham) #4

Hi @jonas ,

Having read your blog post last week, I have been wondering about a few things…

You receive the “Presentment” file… is it possible for you to reject any of the charges in that file, or do you simply have to accept them as fact?

Do you respond to the Presentment file with another file back to the network?

If there are chargebacks, refunds, etc., are they just represented as more records in the Presentment file, or are they communicated to you some other way?

If the merchant is using the “authorize-then-capture” option, and captures the payment 7 days after authorization, what would happen with regards to the various Presentment files during that week? i.e. would it appear in two files, etc.?

How difficult would it be to run your own card network? Would you just have to work with the merchant acquirers, or do you need to add more of those little Java applets to all the card terminals as well?

Sorry for all the questions! I am just finding this quite interesting :smile:


(Jonas Templestein) #5

Hi @billinghamj, those are amazing questions, thank you! I’ll do my best to answer them, but we haven’t yet built a lot of those integrations. I’d be happy to update the community as we learn more over the coming 12 months, too :slight_smile:

You have to accept presentments as the truth. If presentments were made in error, we can initiate a chargeback. Real-time authorisations are designed to avoid this problem.

To be honest, I’m not 100% sure. Communication with the card network goes through a third party card processor and financial reconciliation is done by our card issuer, so we never get to see those files (at the moment).

I think this is true. In the case of chargebacks, the merchant can dispute the chargeback, in which case the process is taken offline and worked out between merchant, issuer, customer and MasterCard.

Only one presentment would appear. The “auth” in “auth-and-capture” is just a normal authorisation with a few additional flags set.

Technically speaking it wouldn’t be too hard. You can certainly make better card networks than Visa and MasterCard using today’s technology. I suspect the harder part is getting any kind of traction with merchants. You’d have to charge significantly lower fees than MasterCard and Visa.

Hope that helps a bit. These kinds of questions are especially helpful to us because we learn what things people would like us to write about. Maybe we can explore some of these questions in blog posts in the future!

(James Billingham) #6

Awesome, thank you for those answers. Hopefully you’ll be able to work with those files directly eventually :smile:

(Jolin) #7

I’m a bit late to the game, but just read the blog post. Very interesting. One question that remains for me is whether there’s anything you can do about offline payments? It seems there’s no way you can get the info before the presentments file arrives. Or is there something you can do to have offline payments show up as soon as the terminal is back online? And if not, how will these work if by the time an offline payment is presented, there is no balance on the card?

Thanks for all the blog posts and information, very interesting! I look forward to receiving my card one day. :wink:

(James Billingham) #8

Yes, the payment networks clearly do get the information a while before the presentment file is sent.

They could add another webhook-esque notification system for reporting the offline transactions they receive. My assumption is that this doesn’t exist yet and getting them to make it would be unfeasible. (@jonas?)

(Jonas Templestein) #9

AFAIK there is no such system. That said, the amount of offline payments going through is constantly decreasing. Most terminals now have the ability to go online.

@jzw95 you raise a good point about offline presentments. They can indeed take a card overdrawn and then the issuer needs to reclaim the money from the user. It’s not a good system in many ways :wink:

The ability to accept or decline _every_ transaction
(James Billingham) #10

That’s pretty interesting. I think there is a clear value proposition in such a system being created, because some types of transactions will always be offline. They will go online usually within a few hours of the transaction taking place. So it would be beneficial to sync the transactions - and notify the issuer of them - relatively soon afterwards.


  • buying tickets/food on a train which is currently in a tunnel, train exits tunnel, you get a notification a few seconds later
  • purchase on a plane, land & turn off airplane mode, get 1 collapsed notification a couple of minutes later

Anyway sadly this is outside Mondo’s control, so probably will never happen.