Online or in-store credit card payments can include up to 30 different parties to complete a transaction and settle an account. Each one of those parties takes a cut of the transaction and creates a potential access point for hackers. The number of organizations involved and security risks created drives the price up for merchants and consumers. Small business and high risk merchants are especially susceptible to price gouging and penalties if they receive chargebacks. The current card associations have a monopoly on digital payment infrastructure and do not have the flexibility to adapt to in state or local community needs.
Although Visa is synonymous with credit card and debit payments in the US, they are simply the technological infrastructure necessary for the transaction to take place. The issuing financial institution evaluates your credit, sets the rate and supports the card. Other services confirm identity, credit limit, credit risk, contact information, provide security, etc.
For any given credit card transaction, there is at least one of the following involved in authorization and sometimes two or more:
- Card association: Provides infrastructure for payment process.
- Cardholder: Pays with credit card.
- Merchant: Captures credit information.
- Payment Gateway/ Point of Sale: Provides infrastructure to accept credit card payments.
- Sponsoring Bank: Gives processors access to their card association membership.
- Processor: Pays the acquirer and debits the card issuer account. Updates issuer.
- Acquirer (Merchant bank): Funds the merchant account.
- Issuer (Customer card issuing bank): Posts the transaction to the customer’s account.
- Issuer Consumer Portal: Customer receives statement from card issuer.
- Customer payment: Customer pays issuer with personal bank.
For each one of these parties and transactions, there is an increased cost and additional access point for hackers:
In addition to having the various parties involved in the payment, there are other 3rd parties with independent centralized databases that provide:
- Identity proofing.
- Fraud prevention.
- Credit scoring.
On the blockchain, the transactions are confirmed by a network of independent computers. These are the parties involved:
- Sender: Requests payment.
- Receiver: Confirms payment.
- Blockchain network: A decentralized network of computers confirms encryption key, confirms unique transaction ledger/ account balance, completes transaction and updates decentralized ledger. Every aspect of the transaction and individual account is encrypted.
The current antiquated payment infrastructure has created an enormous number of silos with big databases and poor security. Each silo expects to get paid on their contribution to the process. Even though the costs and fraud continue to increase, these silos will not evolve until they are at risk of losing the enormous amount of revenue that they currently generate. Card-not-present transactions, which are transactions made without the credit card present, are up 30%. Credit card fraud, identity theft, and chargebacks are all increasing due to the enormous number of vulnerabilities in the current payment process. Every fraud that happens, increases the cost to the end consumer.
seedpay helps local communities thrive by delivering a more secure and effective payment infrastructure. Local businesses depend on legacy payment infrastructure to run their business which is not built around loyalty. By using blockchain technology seedpay is able to deliver payment solutions that meet statewide and local needs. Unlike other payment technology seedpay has built an entirely new infrastructure that lowers costs, increases loyalty and seamlessly gives back to local communities.