Payments Ecosystem: The Connection Layer

The Connection Layer is where the need, and ability, to transfer value is communicated to a ledger. Payment requests are both transmitted and confirmed (or denied) by actors in this layer.

It consists of network providers, and the service providers who send the messages to and across those networks. In this layer there are both open and closed networks, meaning that some allow intermediaries to provide portions of the service (open), and others provide the services directly to the merchants and cardholders (closed).

Networks

Payment Networks are systems that use a common protocol to transmit payment messages. They typically ride on top of communication networks such as the internet, mobile networks, telephone networks, or proprietary communication networks. They include:

  • Card Networks
    • Credit
    • Debit
  • CPA Services Network (CSN)
  • Society for Worldwide Interbank Financial Telecommunication (SWIFT)
  • Email (e-Transfers)
  • DLT/Blockchain

Service Providers 

There are different categories of service providers that act as intermediaries between merchants and the networks associated with the payment types accepted at point of sale. In many cases, one service provider will cover more than one function. They include:

  • Gateways
  • Processors
  • Acquirers and ISOs (Independent Sales Organizations)
  • Money Transfer Services