About the mechanism and features, the payment agency

Credit cards are now an integral part of everyday life. However, many people may not be familiar with the mechanism by which payments are made.

Therefore, this time, we will introduce the mechanism and features of credit card payment and the payment agency.

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What is a credit card?

A credit card is a card that allows you to pay for your purchases. You can shop without having to carry cash, and you can also make online payments by simply entering your credit card number on the website.

Billing is a postpaid method that is made once a month.

There are various theories about the origin of credit cards, but when a businessman noticed that he had forgotten his wallet when paying at an American restaurant, he created a system that allows “payment” so that even in such cases it will not be a problem It is said that what I wanted to do was the trigger.

Ten years after the establishment of a credit card company in the United States, a credit card company was also established in Japan.

The number of credit cards issued is increasing year by year, and according to a 2017 survey by the Japan Credit Association, the number of credit cards issued in Japan is 272.01 million. Compared to the adult population of the same year, it will be 2.6 times larger, so the average number of credit cards owned per person will be 2-3.

It seems that it is natural to have multiple cards because the shops that can be used are limited depending on the credit card brand and the benefits such as point services differ depending on the type of credit card.

Credit card payment mechanism

How is credit card payment done?

Here, we will explain the case where payment is made between three parties, a consumer, a store, and a card company, and the case where payment is made between four parties including a payment agency.

Payment mechanism between consumers, shops, and card companies

First, I will explain payments between consumers, stores, and card companies.

Payment flow

• Consumers purchase items from the store with a credit card. At this point, no money has been exchanged.
• When the information that you used a credit card arrives at the card company, the card company will pay the purchase price in advance to the store. At this time, the store charges a member store fee (settlement fee) to the card company, so the actual purchase price minus the fee is paid to the store.
• Finally, the amount of the purchase price is paid from the consumer to the card company by a method such as direct debit.

About fees

If the consumer chooses installment payment or revolving payment at point 1, the consumer will be obliged to pay the fee. The amount of this fee varies depending on the card company and will be paid to the card company at the time of 3.

In Japan, the member store fee incurred at point 2 is stipulated to be borne by the store, and cannot be borne by the consumer.

Zeus credit card payment

Payment mechanism between consumers, shops, payment agents, and card companies

Next, I will explain the mechanism of payment between four parties including a payment agency.

What is a payment agency?

In the first place, what kind of role does a settlement agency play?

The payment agency has the role of acting as an intermediary between the store and the card company. If the store does not use the payment agency service, it is necessary to carry out procedures and system construction with each card company, but if you use the payment agency service, the procedures and system construction will be done with the payment agency. Only complete.

It is indispensable for EC sites (online shops) that carry out online shopping.

Payment flow

The general flow is the same as for the three parties, but there are some differences in the second process.

• Consumers purchase items from the store with a credit card. At this point, no money has been exchanged.
• If the store has a contract with a payment agent, the credit card usage information will first reach the payment agent, and then the payment agent will send the usage information to the card company. It is also the settlement agency that makes advance payments to the At this time, a settlement fee will be charged from the shop to the settlement agency, so the actual amount of the purchase price minus
• the fee will be paid to the shop.
• Finally, the amount of the purchase price is paid from the consumer to the card company by a method such as direct debit.

About fees

If a settlement agent is sandwiched between the store, the settlement fee will be paid from the store to the settlement agency, so the amount obtained by deducting the settlement fee from the purchase price will be transferred to the store. As with the merchant fees above, it is forbidden to charge the consumer, so no additional charges can be made to the consumer.

Handling of receipts for credit card payments

The consumer who purchased the item may need a receipt. What is the treatment of issuing a receipt if payment is made by credit card instead of cash?

The Civil Code stipulates that when a consumer requests the issuance of a receipt, the business operator (shop) is obliged to issue a receipt. However, there is a principle of simultaneous performance that the receipt should be issued at the same time as the delivery. As mentioned above, in the case of credit card payment, the price is not delivered at the time of product purchase. Therefore, the business operator is not obliged to issue a receipt at the time of credit card payment.

In some cases, we issue a receipt as a service, in which case it will be clearly stated on the receipt as “credit card payment”. If it is clearly stated, it does not correspond to a receipt under tax law, so even if the purchase price exceeds 50,000 yen, it is not necessary to attach a revenue stamp.

In addition, if the customer’s copy of the usage statement includes “issuer, address, amount, date, purchase details”, it can be used as a substitute for a receipt. It is common to submit this usage statement when recording the purchase price as a company expense.

Advantages and disadvantages of credit card payment

Credit card payments have many benefits for both credit card users and businesses. But at the same time, there are disadvantages and risks.

Here, we will introduce the advantages and disadvantages of credit card payment. Use your credit card safely and profitably, with both advantages and disadvantages.

Benefits for those who use credit cards

No need to exchange cash

All you have to do is show your credit card at the store and enter your signature or PIN to shop. For online shopping, all you have to do is enter your credit card number on the website. There is no need to make a transfer at a bank or convenience store in advance or prepare cash on delivery according to the arrival date of the item, and the payment will be completed on the spot when you order the item.

It is also useful when traveling abroad because there is no need to exchange Japanese yen for local currency.

You can pay in installments

If you use installment payments, you can reduce the monthly payment amount, so you can shop even at the timing of “There is not much room in your account balance this month …”. In some cases, you can select lump-sum payment at the time of checkout and change to installment payment later, which is convenient when other expenses are charged.

In addition, installment payments are often avoided because they require a fee, but double payment is a great payment method that does not require a fee. Another advantage of paying with a credit card is that you can postpone the payment period with a one-time bonus payment. Installment payments and lump-sum bonus payments are payment methods unique to Japan. One-time payments and revolving payments are common overseas, so be careful when shopping overseas.

Earn points

Many credit cards allow you to earn points according to the amount you spend. The point redemption rate varies depending on the type of credit card and payment method, but there is no doubt that it is more profitable than cash payment.

There are various ways to use the accumulated points, such as using them for payment or exchanging them for miles or gift certificates.

Comes with ancillary insurance

Many credit cards come with insurance that provides a variety of coverage without premiums.

Representatives include “Travel Accident Insurance” which covers costs and damages in the event of illness, injury, or theft while traveling, and “Shopping Insurance” which covers damage or theft of purchased products. Ancillary insurance. The contents of the insurance and the amount of compensation vary depending on the credit card company and the rank of the credit card.

There are member special benefits such as discounts

When you use your credit card at a specific store, you may receive discounts on product prices and facility usage fees, as well as special benefits for credit card members such as drink services.

In addition, there are various special benefits such as tickets for concerts and sports watching for members only, point-up campaigns at specific stores, and so on.

Disadvantages for those who use credit cards

Maybe overused

Credit cards can be overused because payments are completed even if you don’t have cash on hand or in your account at the time of payment.

As a way to prevent the overuse of your credit card, it is recommended that you check the usage amount on the WEB statement once a week to understand how much you are currently spending.

Depending on the payment method, the fee will be high

There is no fee for double payment, lump-sum payment, or bonus payment, but there is a fee for installment payment or revolving payment (revolving payment).

Especially in the case of revolving payment, the fee tends to be high. The repayment tends to belong because only the fixed amount is repaid every month.

Some credit cards are set to automatically revolving payments, so if you have a monthly fee that you don’t remember, it’s a good idea to check your contract.

May be abused

The causes of fraudulent use by malicious third parties are roughly divided into three categories: “leakage/leakage of credit card information”, “theft/loss of credit card itself”, and “credit master”.

To prevent “leakage/leakage of credit card information” such as phishing scams, it is important to check whether the EC site can be used with peace of mind when using online shopping.

For “stolen/lost credit card” such as pickpockets and vandalism, and skimming to extract information from magnetic cards, reduce the number of credit cards you carry around, do not leave them in the car or locker, and carry them with you. Measures such as doing can be considered.

Unfortunately, no method has been found at this time to prevent the damage of the fraudulent method “Credit Master” which uses a computer program to determine and misuse credit card numbers.

No matter how much you take measures, an emergency situation can occur. If you suspect fraudulent use, contact your credit card company immediately to request suspension and investigation.

Benefits for businesses that have introduced credit card payments

Prevent the loss of sales opportunities

As mentioned in “Advantages for Credit Card Users”, there are many advantages to credit card payments, so many people choose to pay by credit card, whether it is online shopping or shopping at a physical store. Since some consumers do not want to shop unless they are online shops that accept credit cards, introducing credit card payments can prevent lost sales opportunities.

In addition, even if the consumer’s wallet or account does not have enough money, such as before the payday, credit card payment can complete the payment. Therefore, you can have them shop at any time.

You can expect to attract foreign tourists

Just as many Japanese people use credit cards when traveling abroad, some foreign tourists coming to Japan may want to use their credit cards when shopping. is. If you’re a tourist from a country where credit card payments are more prevalent than in Japan, you might think, “If you’re shopping, a store that accepts credit cards is a good choice.” In other words, by introducing credit card payment, it is possible to attract foreign tourists and prevent loss of sales opportunities.

The number of foreign tourists visiting Japan is increasing year by year. If your store is near a tourist destination that is popular with foreigners, why not consider introducing credit card payment?

Expected to increase the unit sales price

It is said that it is easy to make a purchase decision because it is not necessary to pay cash on the spot if you pay by credit card, even if it is a high-priced product that you would not be able to purchase with cash payment. For this reason, the unit purchase price tends to be higher in the case of credit card payments than in the case of cash payments.

Increase in repeaters

In the case of EC sites, consumers will be able to make payments smoothly from the second time onward once they register as a user. Since many consumers want to use an EC site that has already been registered as a user rather than entering a credit card number on another new EC site, encouraging user registration at the time of credit card payment will increase the number of repeaters. Will lead to.

Increased reliability

Introducing credit card payment is proof that you have passed the examination to become a member store of a credit card company. For individual stores that are not chain stores, or online stores that have face-to-face interactions with each other, it can be said that increasing the reliability of stores is a great advantage.

Reducing unpaid risk and management costs

Even if an order from a consumer is completed via online shopping, if a bank transfer is selected, the order may be canceled due to unpaid payment. In the case of credit card payment, the purchase price is definitely paid, so you can avoid the risk of unpaid payment.

In addition, because the timing of deposits is fixed, it is possible to reduce the work burden and cost of fund management.

Disadvantages for businesses that have introduced credit card payments

There is a risk of chargeback

Chargeback is the cancellation of sales if the credit card holder disagrees with the credit card payment for some reason. Chargeback also occurs when the business operator has not shipped the product or there is a problem with the product, but most of them are cancellations of sales. In other words, you will incur damage to the product price purchased by unauthorized use by a malicious third party.

When a chargeback occurs, the business operator must refund the product price to the credit card company, but the product is unlikely to be returned. for the number of sales.

To prevent chargeback due to unauthorized use, it is effective to increase the security level in the case of EC sites. The risk of fraudulent use can be reduced by introducing 3D Secure, which requires you to enter the security code printed on the back It is also important to use a payment agency that complies with standards such as Privacymark and PCI DSS.

Zeus’s strong security measures

In the case of a physical store, you can prevent damage caused by unauthorized use by entering your PIN when paying with an IC card.

However, credit card fraudulent use is becoming more sophisticated every day, so no matter how much you take measures, it cannot be said that it is perfect. If you are dealing with high-priced products that are easily targeted for fraudulent use, or if you have had a chargeback due to fraudulent use in the past, you should subscribe to the chargeback guarantee service provided by a payment agency. Probably.

The chargeback guarantee service is a service in which the guarantee company guarantees the amount of damage to the business operator The upper limit of the guarantee amount varies depending on the guarantee fee paid to the guarantee company.

It can be said that it is a reassuring existence for businesses that can reduce the damage caused by chargeback.