There are also companies called "back-end" processors that provide processing services for a group of financial institutions only. Or, in the case of large card-issuing banks, back-end processing can take place within the bank itself. "The Bank of America wouldn't be referred to as a third-party processor, for example, because they process their own transactions," said Mike Stevenson, president of Western Reserve Processors and vice president of WRG Services, Inc. in Euclid, Ohio. Another term for the processor that accepts the transaction request from the ATM is the Acquirer. The ATM card is issued by the Issuer, which is therefore responsible for authorizing the transaction. It is possible for a processor to play a dual role if it operates the ATM and issues the card, as well. A processor, or perhaps a network, also may be called a "switch," an industry term that means the entity that switches the transaction in and out of the networks as necessary. Nowadays, most transactions can find a route to the national networks and back, but to ensure their transactions get approved, a smaller processor may contract with a larger one for gateway services. The larger processor will then act as a switch to provide the direct connection to the networks that the smaller one lacks. Concord/EFS; MPS Midwest Payment Systems); ACS (Affiliated Computer Services, Inc., Dallas, Texas); eFunds and Core Data are examples of these larger processors.
Processors make the ATM transaction run smoothly
In a heartbeat, a Transaction Processor will tell you his job is based on fulfilling the trust of everybody he deals with. Trust that he can do what he says. Trust that the transaction will go through so smoothly it will appear to be easy -- even when it's not. Trust that customer disputes will be handled in a timely manner, and that the processor knows his way around the industry. Mike Stevenson What does the processor do to earn this trust? He sends vital customer information from the ATM to the networks to the card-issuing bank and back again, and he does it...
- Efficiently
- Securely
- Accurately
- Repeatedly
This customer information is sent over communication lines by computers running special software developed by such companies as Mosaic Software, ACI or S2 Systems. The software has routing tables that the processor configures to tell the computer exactly where to send the electronic transactions. A few processors actually develop and operate their own proprietary software. By pushing vital customer information efficiently through this giant, electronic maze, processors operate their own kind of closed-loop, secure electronic communications system. In some cases, information can be sent and received right on the Internet when security can be guaranteed. Processors assist ATM customer service Every transaction is recorded in the Daily Transaction File (or log) for future reference. This file is used to keep track of the money and all the fees. If the cardholder initiates a dispute -- he requested $100, but only got $50 -- first, he goes to his card-issuing bank and fills out a form. Then the Issuer presents the dispute to the Network, who in turn asks the Acquirer what actually happened in the transaction. The Acquirer looks at his Daily Transaction File first. Then he asks the ATM owner what the Journal says from the ATM terminal. After checking and gathering pertinent information, the Acquirer sends it all back through channels to the card-issuing bank. At that point, the burden of proof is on the card-issuing bank. If the ATM owner and the Acquirer can produce a Journal that says the machine dispensed cash, they have no further responsibility; and it's the job of the card-issuing bank to solve the customer's problem. ATM transactions run smoothly almost all the time. When they don't, Acquirers play a vital role in gathering accurate information for all the entities involved. The certification process is not a piece of cake Processing is an exacting business. It's important to belong to the right networks, but because the Acquiring Processor is usually not a bank, he'll probably be required to be "sponsored into" the networks by a financial institution that stands behind him and says, "Okay, I'm liable for his actions," said Ron Schuldt, COO of Columbus Data Services.
Then the processor has to complete the certification process. "The networks have certain specifications you have to write to in terms of how the transaction is handed off to them," said Schuldt.
"This means you do testing with them. For instance, Cirrus will come in and go through the procedures: This is the log; these are the different specifications we use. And, then they set up a testing time. You run through a simulator, and you practice test transactions. You go through a test mode with them.
"Once you've done a number of transactions, everything's been 100 percent fine,and there are no problems, then, you're certified to go live," said Schuldt.
"It's time consuming and it's costly, because you're paying the network. Not only are you paying the application fees, you're paying for the test time. Some of them require different pieces of equipment, different lines in, because normally you've got a dedicated line between yourselves and the network. So, you've also got that data line sitting there that you're paying for and monitoring," Schuldt said. Ron Schuldt
President and CEO of Core Data Resources Campbell Burgess added, "For larger processors, such as Core Data, certifying compliance with the networks is a monthly affair due to constant additions, changes and updates to the routing mechanism." Clearly, processors go through a lot to stay on top of the industry.
