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Comment by granzymes | Hacker News Reader

Square & Stripe don't seem to be reselling other processing platforms.

> We work directly with multiple networks

https://squareup.com/us/en/payments/payment-platform

> Stripe’s platform connects directly to Visa, Mastercard, American Express, Discover, JCB, and China Union Pay across global markets

https://stripe.com/newsroom/news/direct-platform

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In the merchant processing industry, there are frontends (where your transaction initially is routed for approval by Visa/MasterCard/American Express/Discover or by one of the Debit Networks) and backends (where the amounts of these transactions are debited between banks).

Square and Stripe are both Independent Sales Organizations riding atop Chase Paymentech and First Data respectively: https://www.quora.com/What-payment-processor-do-Braintree-St...

Stripe does use Wells Fargo for the backend settlement, they are one of the most popular acquiring banks on First Data (though many other banks can be used for underwriting risk and settlement of payments on First Data).

Don't you need to be a bank to settle funds from issuing banks? That's not what I interpreted you meaning when you said "platform reseller" for processing.

I believe Square is a bank now, so maybe they'll stop using Chase.

The frontend (what authorizes the transaction with the card network, like Visa, Pulse, Star, Mastercard, etc) and backend (settlement bank that ACHes the cash around and usually takes the underwriting risk (unless the independent sales organization, eg: Stripe or Gravity decides to do this themselves)) are generally called a payment platform in the industry.

This platform can get wrapped with many different payment terminals (Verifone, Pax, Dejavoo, Ingenico, etc) or processing interfaces (Authorize.net, PayPal, Stripe, Square, et all).

Square does look to be a bank now, but it appears the only products they are underwriting risk on are loans to businesses, which they immediately try to sell off to third party investors: https://www.cnn.com/2021/03/02/tech/square-bank-business-len...

Kinda surprising, I would expect them to have underwritten their own payment processing, but it might be the case that they don't want to have the outsized liability of chargebacks on their books if a client business goes bankrupt, all to save 2 cents on a $100 transaction.

Perhaps once the US economy slows its rapid economic shift they will consider handling their own underwriting and batch settlement.

This is tangential but you seems really knowledgeable about the payments industry. Can you perhaps recommend some sources to understand how the payments infrastructure works (POS but also web/online/mobile)? I only seem to have a broad idea and would love to understand the nitty-gritty of it all!

This is a good overview of the landscape in the UK, though it's a little out of date.

https://storekit.com/advice/uk-payments-industry/

Interestingly Square basically created this category (the merchant aggregator) by somewhat secretly running all their early clients' payments through a single merchant account.

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