Payment Processing Basics

🚨 𝙅𝙐𝙎𝙏 𝙄𝙉: EPI is in talks with Spain’s Bizum and Portugal’s Sibs about a potential partnership, as Europe pushes to reduce its reliance on U.S. tech giants in the payments sector. A few weeks ago, news broke that the European Union wants to reduce its reliance on Visa, Mastercard, PayPal, and Alipay, according to European Central Bank President Christine Lagarde: https://lnkd.in/d36daRwY “Visa, MasterCard, PayPal and Alipay are all controlled by American or Chinese companies. We should make sure there is a European offer,” she said. In an effort to reduce Europe’s dependency on American companies in the payments space, European payment providers are exploring opportunities for collaboration. The European Payments Initiative (EPI)—a consortium of 16 financial institutions from four countries—is currently in talks with Bizum in Spain and Sibs in Portugal about a potential partnership, according to EPI CEO Martina Weimert. “Both sides are fundamentally interested, but the technical details are complex,” Weimert told Handelsblatt: https://bit.ly/44o7Lb0 EPI, which aims to create a unified European payment system, launched its own payment service called Wero last year. Initially, Wero enables phone-to-phone payments in Germany, Belgium, and France: https://bit.ly/3RO2uC8 Its backers include German savings banks, cooperative banks, and Deutsche Bank, along with institutions from Belgium, France, and the Netherlands. The move to seek cooperation marks a shift in EPI’s strategy. Previously, it had mainly focused on recruiting more banks across Europe to join its project. “The urgency for Europe to become more independent from U.S. firms in the payment space has increased due to the recent U.S. tariff disputes,” Weimert said. “We must leverage effective payment solutions within Europe—and partnerships should be part of that strategy.” Bizum, which supports real-time mobile payments in Spain and is already working with banks in Portugal and Italy to connect national systems, also expressed openness to working with EPI. “We are pleased to see that other European solutions like EPI are open to collaboration. This is the best way to create a pan-European instant payment solution that benefits both consumers and merchants,” the company said. Both Bizum and Wero are built on instant payments, meaning bank transfers completed within seconds. This and more FinTech news in my newsletter: https://lnkd.in/e-tzDwh7 Find this helpful? [ 𝗿𝗲𝗽𝗼𝘀𝘁 ] Anything to add about this subject? [𝗶𝗻𝘃𝗶𝘁𝗲𝗱 𝘁𝗼 𝗰𝗼𝗺𝗺𝗲𝗻𝘁] Nice story, Marcel. Next! [ 𝗹𝗶𝗸𝗲 ] 

#Africa bleeds $5B a year not to #corruption or #mismanagement, but just to move money within its own borders. Example: A Kenyan business paying a Ugandan supplier. Instead of Nairobi → Kampala, money goes: Nairobi → USD conversion (1–2%). USD routed via New York/London ($20–50 fee). USD → Ugandan shillings (another 1–2%). By the time a $26,000 invoice is paid, $500–1,000 is gone. Whilst we may be denied visas, our money travels freely through New York. And it’s not just trade: Africa’s #diaspora sends $95B home each year, yet pays the world’s highest remittance costs. -We pay the highest cost for credit. -We pay the highest cost for payments. -We pay the highest cost to send our own money home. It’s not inefficiency. It’s design. The #GlobalFinancialSystem wasn’t built for us. The good news? Solutions exist. #PAPSS (Pan-African Payment and Settlement System) is already live linking 15 central banks, 150 commercial banks, and 14 payment switches, with the capacity to handle $300B in intra-African trade annually. Through PAPSS, that same Kenya–Uganda  transaction could  look very different: -One direct conversion from KES → UGX (0.2–0.5% spread). -Settlement netted via African central banks. -Funds received in hours, not days. Estimated cost: $60–150.  Potential savings: $500–950 on a single $26,000 payment. No detours. Value stays in Africa. The challenge isn’t invention. It’s implementation. One Africa. One market. One #payment system. AI image below*

Subscription fraud is often invisible - but its impact is significant. Fake free trials and recurring payment abuse rarely appear fraudulent at the start. They typically mimic legitimate user behavior, making detection challenging. Common fraud patterns in subscription businesses • Multiple accounts created by the same user • Use of temporary emails and shared or stolen cards • Abnormal usage during trial periods • Intentional chargebacks after extensive consumption Business impact • Revenue leakage • Increased chargeback ratios • Payment gateway penalties • Distorted growth and retention metrics • Higher customer acquisition costs How fraud is detected effectively • Device and IP intelligence • Behavioral signal analysis • Payment reuse and failure patterns • Usage anomalies during trials and renewals Prevention strategies that scale • Limit free trials per device and payment method • Apply step-up verification for high-risk users • Monitor usage prior to renewals • Block bots and high-risk IP ranges • Leverage AI models to identify evolving fraud patterns Outcomes of a strong fraud strategy • Reduced fake users • Lower chargebacks • Accurate business metrics • Protected recurring revenue • Improved trust with genuine customers Fraud prevention is not friction. It is a safeguard for legitimate users and sustainable growth.

Africa’s Cross-Border Payments Are at a Turning Point — But Can Digital Fix the “Last Mile”? Africa’s $200+ billion* annual cross-border payments market is growing fast, but cost, speed, and transparency gaps still hold it back. Citi’s latest research shows that digital rails — from ISO 20022 to regional schemes like PAPSS — could change the game. The question: will the ecosystem move together, or build new silos? ⸻ THEMES • Speed & Transparency Are Now Baseline Expectations — Swift GPI and ISO 20022 adoption are giving banks and corporates package-tracking-style visibility on payments. • Regulators Are Raising the Stakes — Multiple central banks are piloting instant cross-border settlement models to reduce reliance on USD/EUR corridors. • Fintechs Are Closing Merchant Gaps — Players like Yoco are targeting SMEs with POS, e-commerce, and reconciliation tools to smooth the last mile. VARIATIONS • PAPSS in West Africa enables real-time settlement in local currencies — but adoption remains uneven. • Southern Africa still leans on legacy correspondent models, with higher friction and cost. • BRICS Pay pilots could bypass traditional rails entirely, but risk fragmentation if not interoperable. IMPLICATIONS • Banks risk losing corporate flows to fintechs if they don’t match speed and user experience. • Regional rails will only succeed if they integrate seamlessly with global systems. • Digital assets (stablecoins, CBDCs) offer potential cost savings but will stall without clear regulatory alignment. WHAT’S NEXT The future hinges on ecosystem orchestration, not just tech. To truly modernise, Africa’s cross-border payments must combine: 1. Common data standards (ISO 20022 end-to-end) 2. Interoperable domestic and regional scheme 3. Regulatory frameworks that enable innovation without silos ⸻ The real disruptor isn’t a single new rail — it’s multi-rail intelligence that routes payments dynamically for cost, speed, and compliance, in real time. Opinions: my own. Source: Citi, “Cross-Border Payments in Africa” #payments #africa #iso20022 #digitalpayments

Stripe Built a Transformer-Based Payments Foundation Model 💡 For years, they relied on traditional machine learning models trained on hand-engineered features—like BIN, ZIP code, or payment method—to drive conversion and fight fraud. That approach delivered real results: +15% conversion, -30% fraud. But it had limits 💳 Each model was task-specific, required curated inputs, and missed deeper relationships hidden in the data. So they asked: what if a large language model-style approach could work for payments? Surprisingly, payments do have a kind of syntax and semantics. Inspired by the power of transformer architectures, Stripe trained a self-supervised foundation model on tens of billions of transactions. It learns rich, general-purpose embeddings for every payment—capturing subtle relationships across card issuers, banks, email addresses, and transaction sequences. The results? Powerful new capabilities 🤖 Take card-testing: Traditional ML reduced it by 80%. But for the most sophisticated, high-volume attacks, more was needed. With this new model, Stripe built a sequence-based classifier that detects these patterns in real time—boosting detection on their largest users from 59% to 97% overnight 🔍 The best part: these embeddings aren’t just for fraud. They’re foundational. The same representations improve tasks like dispute prediction, authorization optimization, and more. Payments may not look like language—but it turns out, attention was all they needed. Source: Stripe x Gautam Kedia - tiny.cc/0i6k001 #Innovation #Fintech #Banking #EmbeddedFinance #API #FinancialServices #Payments #AI #MachineLearning #Data #Fraud

Is the future of payments about competition—or coexistence? Payments in Change: Where is the journey heading? The payments industry is at a crossroads. Digitalisation, regulation, and cybersecurity are reshaping everything—from how we pay to who controls the rails. But here's the twist: instead of one dominant winner, we may be heading toward a complex coexistence of models. This whitepaper by Thede Consulting explores five scenarios shaping the future of payments—and what they mean for banks, PSPs, fintechs, and merchants. Let’s break it down: 1. Digitalisation is changing the game. Cash is declining, mobile and digital are rising. AI is improving fraud detection and personalisation, while APIs and cloud tech enable new business models like embedded finance. Consumers want fast, seamless, and secure payments—and businesses must keep up. 2. Regulation is ramping up. PSD3, PSR, DORA, and FIDA are coming fast, with major implications: - Stricter fraud liability rules and SCA requirements. - Mandatory IBAN-name verification. - Open finance mandates (FIDA) enabling broader data sharing via APIs. These shifts mean higher compliance costs—but also new chances to innovate. 3. The digital Euro is on its way. The ECB is building a CBDC aimed at complementing cash. If adopted widely, it could reshape the ecosystem: - Legal tender status means merchants must accept it. - No scheme fees like Visa/Mastercard—only regulated service charges. - PSPs and banks must adapt roles fast or risk losing relevance. But success depends on user adoption and seamless UX, not just regulation. 4. Europe wants independence with Wero (EPI). Wero, the European initiative backed by major banks, aims to be the continent’s answer to PayPal. But lack of awareness and limited functionality are holding it back. Without convenience, it won't compete—even with patriotic backing. 5. Cybersecurity meets usability. As AI enables sophisticated fraud, the EU is doubling down on DORA to enforce resilience. But there's tension between security and user experience. The winners will be those who master both. What’s next? Multiple futures. Thede outlines 5 plausible paths: - A2A payments replace cards. - The digital Euro takes over. - Card networks maintain dominance. - A new super app (like X or WeChat) breaks through. - Or… business as usual, with overlapping systems. Each scenario comes with implications for players across the ecosystem—no one is immune. Adaptation isn’t optional. Source: Thede Consulting #payments #embeddedfinance #psd3

The Infrastructure Mismatch Africa is now a $3.3 trillion economy. That number alone should end every lazy “frontier market” conversation quickly But here’s what this GDP map doesn’t show: ◾️ $1.43 trillion flowed through mobile money wallets across the continent in 2025; yet 75% of registered accounts sit inactive every month ◾️ Cross-border payments between African nations still cost 7–20% of transaction value and take 3–5 days to clear The GDP is real but the financial infrastructure underneath it is not keeping pace Look beyond the big 3️⃣ ➖ South Africa, Egypt, and Nigeria account for 35% of the continent’s output but what’s more interesting is the tier forming beneath them which includes the likes of - Kenya at $141B, Ethiopia at $126B, Ghana and Côte d’Ivoire both above $110B, Tanzania approaching $100B. Five or more economies have crossed the $100B threshold in the last cycle alone The above isn’t a “rising Africa” narrative, it’s a structural shift that demands a different question: who builds the financial rails for a continent where GDP is scaling faster than the payment systems, identity infrastructure, and cross-border settlement mechanisms required to capture the value? PAPSS is connecting 160+ banks for local-currency cross-border settlement & AfCFTA’s Digital Trade Protocol is laying regulatory groundwork but 350m adults remain fully unbanked, and 90% of transactions are still in cash The continent doesn’t have a growth problem, it has a plumbing problem and the institutions or fintechs that solve it won’t just serve a market, they’ll define one #Africa #Fintech #Payments

The most striking figure in our new Ripple report isn't an adoption statistic. It's this: of the 31 instant payment systems operating across Africa, only 3 can process cross-border payments in real time. And 171 mobile money operators still run in isolation from one another. To me, that is the real story of 𝐒𝐭𝐚𝐛𝐥𝐞𝐜𝐨𝐢𝐧 𝐒𝐩𝐨𝐭𝐥𝐢𝐠𝐡𝐭 𝐨𝐧 𝐀𝐟𝐫𝐢𝐜𝐚. This is a continent that led the world on consumer fintech: 835 million registered mobile money accounts (nearly half the global total) and 156 mobile money services (half the world's total), sitting on top of underlying rails that were never built for the scale of its ambitions. Africa didn't play catch-up on fintech; it charted its own path. The unfinished work is in the plumbing beneath it. A few things that stand out: 💸 𝐓𝐡𝐞 𝐜𝐨𝐬𝐭 𝐨𝐟 𝐟𝐫𝐢𝐜𝐭𝐢𝐨𝐧 𝐢𝐬 𝐦𝐞𝐚𝐬𝐮𝐫𝐚𝐛𝐥𝐞 Sending $200 to Sub-Saharan Africa costs 8% in fees on average. Intra-African corridors regularly exceed 20%. With an estimated 75% of remittances going directly to households, that isn't an abstraction. It's a structural tax on families. 🏦 𝐃𝐞-𝐫𝐢𝐬𝐤𝐢𝐧𝐠 𝐡𝐚𝐬 𝐥𝐞𝐟𝐭 𝐚 𝐠𝐚𝐩 𝐭𝐡𝐚𝐭 𝐧𝐞𝐞𝐝𝐬 𝐟𝐢𝐥𝐥𝐢𝐧𝐠 Only 12% of intra-African payments are fully processed on the continent. The rest rely on correspondent banking relationships that, as the Financial Action Task Force (FATF)Financial Action Task Force (FATF) has observed, banks are increasingly terminating wholesale rather than managing. 💵 𝐃𝐨𝐥𝐥𝐚𝐫 𝐚𝐜𝐜𝐞𝐬𝐬 𝐢𝐬 𝐚 𝐠𝐫𝐨𝐰𝐭𝐡 𝐪𝐮𝐞𝐬𝐭𝐢𝐨𝐧 With around 56% of global reserves and over half of global invoicing in USD, dollar liquidity is a structural requirement for participating in trade. For the many African economies operating as net importers, USD-denominated stablecoins, working in tandem with well-regulated local currency stablecoins, offer a practical route to it. ⚖️ 𝐓𝐡𝐞 𝐫𝐞𝐠𝐮𝐥𝐚𝐭𝐨𝐫𝐲 𝐬𝐞𝐪𝐮𝐞𝐧𝐜𝐢𝐧𝐠 𝐢𝐬 𝐚 𝐠𝐞𝐧𝐮𝐢𝐧𝐞 𝐚𝐝𝐯𝐚𝐧𝐭𝐚𝐠𝐞 No African market has implemented a stablecoin framework yet, which means provisions can be built directly into first-phase crypto regulation rather than retrofitted later. 🚀 𝐀𝐧𝐝 𝐭𝐡𝐢𝐬 𝐢𝐬 𝐚𝐥𝐥 𝐛𝐞𝐟𝐨𝐫𝐞 𝐭𝐨𝐤𝐞𝐧𝐢𝐬𝐚𝐭𝐢𝐨𝐧 Agricultural commodities, real estate, natural resources, infrastructure - assets that have long struggled for liquidity and investor access. Stablecoins are the settlement layer that makes any of it work. Great work Abdallah Mukalled - this is exactly the kind of evidence-based analysis the policy conversation needs. As the report concludes: regulation and trust are key, and the time to act is now. 📖 𝐑𝐞𝐚𝐝 𝐦𝐨𝐫𝐞 𝐡𝐞𝐫𝐞: https://https://lnkd.in/g8FRYwhm

SARB just became a 50% Owner of BankservAfrica. South African Reserve Bank (SARB) has taken a major stake in BankservAfrica. And Bankserv has now rebranded as PayInc SA. But who are they? They're the core engine behind SA’s payment systems. Think of BankservAfrica as the national railway for digital payments – it handles everything from card transactions and EFTs to real-time platforms like PayShap SA. Now, with SARB acquiring them, SARB isn’t just the regulator, they'll also be the co-owner and modernizer of that railway. It's like the government is making sure the train goes to underserved towns (the unbanked), and the train keeps "running" smoothly. 🔁 But why is SARB stepping in? Interoperability: They want to ensure all payment systems – old and new – can work together seamlessly. Inclusion: They want to extend affordable digital payment access to underserved communities, "the unbanked". Innovation: They want to accelerate the shift from cash to digital, supporting initiatives like instant settlements and lower transaction costs. And this follows a trend seen in emerging markets like India (UPI) and Brazil (Pix), where central bank-led payment modernisation dramatically increased financial inclusion and reduced reliance on cash. But this also theoretically means faster, cheaper, and safer transactions for everyone – from street vendors accepting QR payments to businesses settling invoices in real time. SARB’s move signals that payments are now critical national infrastructure. And when central banks invests directly, change tends to happen faster. But will this actually increase financial inclusion in South Africa? Will this make a difference? #SARB #BankservAfrica #Payments #DigitalTransformation #FinancialInclusion #Fintech #SouthAfrica —— I'm Elly - a data analyst in banking. If you liked this, you'll like my free newsletter THE BANKING BRIEF: 5 Minute banking and fintech news.

Something interesting in our industry is how differently innovation is defined depending on the infrastructure it starts from. Innovation is not always the same as progress. A product can be innovative while still relying on the old underlying rails. The existing infrastructure often dictates how innovation unfolds and the environment it operates within. In Europe, the payments evolution has taken place within a mature ecosystem and regulatory environment. That has anchored progress around interoperability, consumer protection, and systemic stability. In the US, cards and platforms have been dominant distribution layers. A lot of visible innovation has happened on top of existing rails, while the core infrastructure has evolved more slowly by comparison Africa sits in a different position. There, innovation was less about improving traditional banking infrastructure and more about working around its limits. Mobile money is a good example. It emerged out of necessity. Limited bank branches, constrained access to formal ID, large informal economies, vast rural populations. That produced a different kind of innovation, one that prioritised: 🔘 Access 🔘 Distribution 🔘 Trust through agents rather than institutions 🔘 Usability over formal standards The mobile phone became the financial infrastructure. As these systems mature, the focus naturally shifts. Scale brings new questions around interoperability, standards, and cross-border integration. There were some insightful updates shared at the nexo standards conference last year on that front. Mobile money is NOT a niche solution. ◾ More than 2.1 billion mobile money accounts are registered globally, with over 1 billion active users ◾ Africa accounts for roughly 66% of global mobile money value ◾ Over 178 mobile money services operate across the continent, out of around 336 worldwide This is not incremental change. It is a structural shift in how financial services are accessed, delivered, and used. Essentially, the same themes debated in EU and the US, but approached from a very different starting point. In that context, standardisation is approached as a way to: ◾ Allow wallets, banks, fintechs, and governments to interoperate ◾ Reduce fragmentation without undermining inclusion ◾ Create shared languages for trust, data, and settlement ◾ Connect local innovation to regional and global payment rails So innovation is truly contextual. It generally reflects the constraints, incentives, and infrastructure of its environment. And sometimes, the models that travel furthest are born not from abundance, but from absence. #paymentinfographics #card #paymentstrategy #acquiring #payprwork #mobilemoney Merchant Hub Merchant Hub: Merchant Voice, Amplified! Paypr.work [ˈpeɪpəwəːk] #nexostandards #paymentacceptance #standards Jacques Santiago Ana Mylene Jacqueline Gary ---- 𝘓𝘦𝘵’𝘴 𝘵𝘢𝘭𝘬 𝘱𝘢𝘺𝘮𝘦𝘯𝘵 𝘴𝘵𝘳𝘢𝘵𝘦𝘨𝘺. 👉 intro@paypr.work 👉 www.paypr.work