What is Payment Switch – Working, Architecture, Features, and Benefits
Simply said, Payment Switch is a tool that facilitates communication between different payment service providers.
Switch typically provides a merchant-driven rules-based authorization and switching solution.
It dynamically routes payment transactions between multiple acquirers and Payment Service Providers.
It sits at the center of the payment processing and dynamically acquires, routers, switches, authenticates, and authorizes transactions across multiple payment channels.
The switch enables an extension of the payment network by adding new payment methods and providers easily, without enormous integration costs.
Protect Your Company from Payment Providers’ Downtime & Outages
Several high-profile FinTechs and PSPs have experienced multiple outages for card processing.
Aggregators need a constant connection to multiple new endpoints. Banks, PSPs, and facilitators are implementing and opting for 24-by-7 payment options.
A number of service providers are implementing multiple online payment options.
But having more providers makes the transaction process vulnerable to acquirer failures and prone to transaction failures with connectivity and security issues.
This issue will not only irritate customers but ultimately can lead to revenue loss and a damaged reputation.
And that’s where Switch comes in.
Switching process
Payment switch – How it works
After the payment request is initiated, the payment switch authorizes the merchant and transaction. Based on the status of the transaction (either failure or success), it is further processed.
Switch then dynamically routes authorized payment transactions based on the rules.
These rules include routing by bin (bank identification number), routing by amount, routing by the time of the day, etc. Based on the bin identification, switch formats and send a message to the provider, and receive a back response from the provider.
It again formats the received response and returns back to the caller.
What to look for in a payment switch:
Nowadays, merchants sell on a global level with multiple acquirers, in order to provide uninterrupted service to the customer following requirements must be fulfilled by a Payment Switch.
Dynamic routing: Acceptance rates of different acquirers differ based on multiple variables, switch considers these variables as rules and uses them to dynamically route the transactions, maximizing payment acceptance performance and minimizing transaction failures
Fraud Management: Every PSP should offer a perfect balance between a seamless experience and effective fraud management.
Lyra’s Switch handles tens of thousands of transactions making it difficult to spot suspicious behavior, so in order to detect fraud, a Payment Switch must support 3DS processing and provide real-time notifications.
Extension of payment network: Multiple PSPs: Customers generally pay online with the option they are most comfortable with.
There are plenty of PSPs in the market and the number will keep increasing.
Above all payment, Switch should support the integration of multiple PSPs and global acquirers minimizing the integration cost for the merchant
Security: One of the most important aspects of online/digital payments is security.
For the security of customers as well as merchants, payment Switch should be compliant with PCI DSS offering encryption and tokenization tools.
Lyra’s Switch – A robust and secure switching solution
Lyra’s Payment Switch saves merchants from connectivity and security issues.
Apart from debit cards and credit cards, a payment switch also processes transactions such as immediate payments, ATMs, POS, MPOS, etc.
Know Switch Clearing and settlement Guide
Lyra Payment Switch Architecture
How Lyra’s payment switch is beneficial?
- Lyra’s switch dynamically routes payment transactions between the acquirer and payment service provider revamping the transaction success rate.
- It encrypts sensitive payment information prior to them transmitting it to the processing bank.
- Easier to integrate multiple payment methods and providers, the software solution is tailor-made for customers’ requirements.
- With direct connectivity with card schemes, Lyra’s payment Switch also provides services like reconciliation, fraud and chargeback management.
- It processes all payments in real-time between the point of customer interaction and the processing system.
- It has direct connectivity with card schemes and supports Visa, Mastercard, Maestro, and Rupay
In conclusion, Lyra’s switch along with Lyra Payment gateway provides an independent transaction solution with fewer hops as no 3rd party software is included. This maximizes acceptance rates, improves approval rates, and reduces payment processing fees. This is a sensitive system and hence Lyra constantly maintains multiple data centers to avoid downtime. Payment switch boosts financial inclusion, growth, and Customer Lifetime Value.
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