Payment Processing Basics

#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*

TL;DR: We built a transformer-based payments foundation model. It works. For years, Stripe has been using machine learning models trained on discrete features (BIN, zip, payment method, etc.) to improve our products for users. And these feature-by-feature efforts have worked well: +15% conversion, -30% fraud. But these models have limitations. We have to select (and therefore constrain) the features considered by the model. And each model requires task-specific training: for authorization, for fraud, for disputes, and so on. Given the learning power of generalized transformer architectures, we wondered whether an LLM-style approach could work here. It wasn’t obvious that it would—payments is like language in some ways (structural patterns similar to syntax and semantics, temporally sequential) and extremely unlike language in others (fewer distinct ‘tokens’, contextual sparsity, fewer organizing principles akin to grammatical rules). So we built a payments foundation model—a self-supervised network that learns dense, general-purpose vectors for every transaction, much like a language model embeds words. Trained on tens of billions of transactions, it distills each charge’s key signals into a single, versatile embedding. You can think of the result as a vast distribution of payments in a high-dimensional vector space. The location of each embedding captures rich data, including how different elements relate to each other. Payments that share similarities naturally cluster together: transactions from the same card issuer are positioned closer together, those from the same bank even closer, and those sharing the same email address are nearly identical. These rich embeddings make it significantly easier to spot nuanced, adversarial patterns of transactions; and to build more accurate classifiers based on both the features of an individual payment and its relationship to other payments in the sequence. Take card-testing. Over the past couple of years traditional ML approaches (engineering new features, labeling emerging attack patterns, rapidly retraining our models) have reduced card testing for users on Stripe by 80%. But the most sophisticated card testers hide novel attack patterns in the volumes of the largest companies, so they’re hard to spot with these methods. We built a classifier that ingests sequences of embeddings from the foundation model, and predicts if the traffic slice is under an attack. And it does this all in real time so we can block attacks before they hit businesses. This approach improved our detection rate for card-testing attacks on large users from 59% to 97% overnight. Perhaps even more fundamentally, it suggests that payments have semantic meaning. Just like words in a sentence, transactions possess complex sequential dependencies and latent feature interactions that simply can’t be captured by manual feature engineering. Turns out attention was all payments needed!

Stripe 𝗯𝘂𝗶𝗹𝘁 𝘁𝗵𝗲 𝗳𝗶𝗿𝘀𝘁 𝘁𝗿𝗮𝗻𝘀𝗳𝗼𝗿𝗺𝗲𝗿 𝗺𝗼𝗱𝗲𝗹 𝘁𝗿𝗮𝗶𝗻𝗲𝗱 𝗼𝗻 𝗽𝗮𝘆𝗺𝗲𝗻𝘁 𝗱𝗮𝘁𝗮! Not for text and NOT for code, BUT for billions of payments. Think GPT, but instead of learning language, it learned the structure, behavior, and patterns behind every transaction: ⬇️ 𝗛𝗲𝗿𝗲 𝗶𝘀 𝘄𝗵𝗮𝘁 Stripe 𝗷𝘂𝘀𝘁 𝗱𝗶𝗱? For years, Stripe used traditional ML — separate models for fraud, disputes, and authorizations. Each one relied on handpicked features like BIN codes, ZIP codes, email addresses, and payment methods. That worked — but it was narrow, manually intensive, couldn’t scale and most importantly, it missed the bigger picture. So Stripe trained a transformer, just like GPT — but instead of learning language, it learned from billions of transactions. Each payment — from a coffee in Paris to a subscription in Tokyo — was turned into a dense vector: a numerical fingerprint capturing its behavior and context. 𝗧𝗵𝗲 𝗼𝘂𝘁𝗰𝗼𝗺𝗲? ➜ Transactions with similar behavior cluster naturally — by issuer, merchant, location, or risk ➜ Suspicious patterns emerge organically — without handcrafted rules ➜ Fraud becomes easier to detect — not because it was labeled, but because it’s "understood" This foundation model captures now the structure and relationships between transactions — in real time — the way GPT models understand the flow of words in a sentence. Stripe no longer needs a different model for every use case. They’ve built one that generalizes across many — and keeps learning. 𝗧𝗵𝗲 𝗿𝗲𝘀𝘂𝗹𝘁? They tested it on one of the hardest problems in the space: Card testing attacks that hide in legitimate traffic. ➜ Traditional ML: 59% detection ➜ Transformer-based model: 97% — overnight Visionary work by Stripe! BUT this approach has implications far beyond payments. Great example to see that foundation models aren’t limited to text. The next phase of AI will probably focus more on transformer architectures trained on high-value, underexplored data domains: transactions, supply chains, behavioral signals, scientific processes — even spreadsheets. 𝗜 𝗮𝗺 𝗽𝗿𝗲𝘁𝘁𝘆 𝘀𝘂𝗿𝗲 𝘄𝗲 𝘄𝗶𝗹𝗹 𝘀𝗲𝗲 𝗺𝘂𝗰𝗵 𝗺𝗼𝗿𝗲 𝗱𝗼𝗺𝗮𝗶𝗻-𝘀𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝗳𝗼𝘂𝗻𝗱𝗮𝘁𝗶𝗼𝗻 𝗺𝗼𝗱𝗲𝗹𝘀 — 𝗽𝘂𝗿𝗽𝗼𝘀𝗲-𝗯𝘂𝗶𝗹𝘁 𝘁𝗼 𝗼𝗽𝗲𝗿𝗮𝘁𝗲 𝗶𝗻𝘀𝗶𝗱𝗲 𝗰𝗼𝗺𝗽𝗹𝗲𝘅 𝘀𝘆𝘀𝘁𝗲𝗺𝘀 𝗹𝗶𝗸𝗲 𝗳𝗶𝗻𝗮𝗻𝗰𝗲, 𝗵𝗲𝗮𝗹𝘁𝗵𝗰𝗮𝗿𝗲, 𝗮𝗻𝗱 𝗲𝗻𝗲𝗿𝗴𝘆. 𝗙𝗼𝗿 𝘆𝗲𝗮𝗿𝘀, 𝗺𝗮𝗰𝗵𝗶𝗻𝗲 𝗹𝗲𝗮𝗿𝗻𝗶𝗻𝗴 𝗵𝗮𝘀 𝗯𝗲𝗲𝗻 𝗳𝗼𝗰𝘂𝘀𝗲𝗱 𝗼𝗻 𝗹𝗮𝗯𝗲𝗹𝗶𝗻𝗴 𝗽𝗿𝗼𝗯𝗹𝗲𝗺𝘀. 𝗡𝗼𝘄, 𝘄𝗲'𝗿𝗲 𝗲𝗻𝘁𝗲𝗿𝗶𝗻𝗴 𝗮 𝗽𝗵𝗮𝘀𝗲 𝘄𝗵𝗲𝗿𝗲 𝗺𝗼𝗱𝗲𝗹𝘀 𝗯𝗲𝗴𝗶𝗻 𝘁𝗼 𝘂𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 𝘁𝗵𝗲𝗺 — 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗮𝗹𝗹𝘆, 𝗰𝗼𝗻𝘁𝗲𝘅𝘁𝘂𝗮𝗹𝗹𝘆, 𝗮𝗻𝗱 𝗮𝘁 𝘀𝗰𝗮𝗹𝗲. Full story in the comments. 𝗣.𝗦. 𝗜 𝗷𝘂𝘀𝘁 𝗹𝗮𝘂𝗻𝗰𝗵𝗲𝗱 𝗮 𝗳𝗿𝗲𝗲 𝗻𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿 𝗼𝗻 𝗔𝗜 𝗮𝗴𝗲𝗻𝘁𝘀 𝗮𝗻𝗱 𝘄𝗼𝗿𝗸𝗳𝗹𝗼𝘄𝘀 — 𝗮𝗹𝗿𝗲𝗮𝗱𝘆 𝗿𝗲𝗮𝗱 𝗯𝘆 𝟮𝟬,𝟬𝟬𝟬+. 𝗝𝗼𝗶𝗻 𝗵𝗲𝗿𝗲: https://lnkd.in/dbf74Y9E

Payments have evolved from paper and plastic to APIs and orchestration - giving rise to a new breed of players that simplify the complexity and connect the dots behind the scenes. Here's how we got here. 𝟭. 𝗜𝗻 𝘁𝗵𝗲 𝗽𝗿𝗲-𝟭𝟵𝟵𝟬𝘀 𝗲𝗿𝗮, banks owned the entire payments value chain -acquiring, processing, settlement. Merchant onboarding was complex, and domestic clearing systems ruled. 𝟮. 𝗧𝗵𝗲 𝗿𝗶𝘀𝗲 𝗼𝗳 𝗲-𝗰𝗼𝗺𝗺𝗲𝗿𝗰𝗲 in the late 1990s changed everything. Players like PayPal and Authorize made online payments possible, while banks began exiting the acquiring space or partnering with processors to keep up with demand. 𝟯. 𝗕𝗲𝘁𝘄𝗲𝗲𝗻 𝟮𝟬𝟬𝟬 𝗮𝗻𝗱 𝟮𝟬𝟭𝟬, specialized gateways and regional wallets began to scale, offering merchants greater flexibility and control. The launch of SEPA in Europe marked a push toward payment harmonization, while non-bank players started building infrastructure that bypassed traditional acquiring models altogether. 𝟰. 𝗧𝗵𝗲 𝘀𝗵𝗶𝗳𝘁 𝘁𝗼 𝗔𝗣𝗜-𝗱𝗿𝗶𝘃𝗲𝗻 𝗶𝗻𝗳𝗿𝗮𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 transformed payments from siloed systems into modular, developer-friendly tools. Merchant onboarding became faster, integrations simpler, and innovation more scalable. Open Banking regulations enabled direct access to bank data, while new credit models redefined consumer behavior. Payments evolved into a flexible, programmable layer of the digital economy. 𝟱. 𝗧𝗼𝗱𝗮𝘆, we’re in the age of seamless integration. Payments are embedded in everything - from ride-hailing apps to SuperApps. Real-time rails like SEPA Instant, UPI and PIX are live. CBDCs are in pilot. However, as payment ecosystems grow more fragmented - with new methods, regional schemes, compliance layers, and fraud risks -complexity has become a major bottleneck for merchants, fintechs, and even banks. Integrating multiple providers, maintaining uptime across systems, and ensuring regulatory compliance isn't just costly - it's unsustainable without the right foundation. This is where a new breed of infrastructure players like 𝗔𝗸𝘂𝗿𝗮𝘁𝗲𝗰𝗼 fit in - offering the tools to simplify complexity and still retain control. • 𝗪𝗵𝗶𝘁𝗲-𝗹𝗮𝗯𝗲𝗹 𝗽𝗮𝘆𝗺𝗲𝗻𝘁 𝗴𝗮𝘁𝗲𝘄𝗮𝘆𝘀 let banks, PSPs, and fintechs launch their own branded platforms fast - without building from scratch. • 𝗣𝗮𝘆𝗺𝗲𝗻𝘁 𝗼𝗿𝗰𝗵𝗲𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻 enables merchants to route transactions dynamically across multiple acquirers, reducing costs and failed payments while improving UX. • 𝗕𝗮𝗻𝗸𝘀 can embed API-driven acquiring services into their offerings without the burden of a full-scale tech overhaul. In a world where growth brings fragmentation, the real challenge isn’t enabling payments - it’s managing them. The advantage will lie with infrastructure that can unify complexity, adapt in real time, and scale across borders without adding friction. Opinions: my own, Graphic source: Akurateco Payment Hub Subscribe to my newsletter: https://lnkd.in/dkqhnxdg

Why Local Payment Methods (LPMs) dominate in Europe and how Wero could push that even further in 2025.👇 When it comes to payments across Europe, traditional card schemes like Visa, Mastercard, and AMEX do not reign supreme in the way they do in markets like the US or UK. Instead, local payment methods (LPMs) are king. There are several very good reasons for that: 🔸 Cultural familiarity. Consumers in countries like the Netherlands, Germany, and Sweden are deeply accustomed to using local rails like iDEAL, SEPA, SOFORT, and Swish. 🔸 Trust & reliability. These LPMs are often backed by domestic banks or governments, earning a level of trust that global cards don’t always match. 🔸 Cost efficiency. For merchants, LPMs typically come with lower transaction fees than cards. 🔸 Higher conversion rates. Payment flows are optimised for local users, leading to smoother checkouts and fewer abandoned carts. _________________________ 🚀 Enter Wero – Europe’s answer for the Digital Wallet age Wero, the new pan-European digital wallet backed by the European Payments Initiative (EPI), aims to unify this fragmented landscape even further. It’s designed to offer: ✔️ Seamless account-to-account payments ✔️ Instant P2P transfers ✔️ Cross-border functionality ✔️ A real alternative to non-EU wallets like PayPal or Apple Pay If it gains real traction, Wero has the potential to strengthen European payment sovereignty and further reduce reliance on non-EU card networks. That’s a big deal for merchants, banks, and consumers alike. As a merchant looking to expand across the EU in 2025, understanding and enabling local payment methods isn’t optional, it’s essential. I for one am going to be keeping a very close eye on Wero as it rolls out further afield this year. ➡️ Where do you see Wero fitting in? ➡️ Will it gain ground or struggle to take off?

The Global Payments Report 2024 Consumers have more payment options than ever before and it is the choices they make that drive the payment landscape. Explore this new choice era in the 9th edition of Worldpay's Global Payments Report, your expert guide to payments across 40 markets. Understand how consumer choices become trends and understand what these trends mean for the future of your business. 1 ) A2A Payment - Despite increasing dominance in markets like Brazil and India, A2A remains challenged in card-heavy markets such as the UK and USA. A2A’s lower cost of payment acceptance makes it popular with merchants. 2) Buy Now Pay Later (BNPL) Companies faced well-documented headwinds in 2023 including rising interest rates, looming regulation and souring investor sentiment. Consumers countered those headwinds by choosing BNPL more than ever. 3) Global E-Com Global e-commerce surpassed $6.1 trillion in 2023 and is growing at more than twice the rate of global POS value. E-com growth is projected for 9% CAGR (versus 4% for POS) through 2027. 4) Cash vs Digital Although cash fell -8% globally in 2023 and is expected to decline at -6% CAGR through to 2027, it remains relevant amid economic uncertainty. It is still a vital payments tool for billions of consumers. In 2023, cash accounted for 16% ($6 trillion) of global transaction value, including double-digit share in 30 of 40 markets in this report. 5) Prepaid Card Prepaid cards will exceed $1 trillion in global transaction value. Versatility drives prepaid cards’ success: as gift cards, reloadable stored value cards, for payroll, business-to-consumer payments and as government benefits. 6) PostPay Although it remains popular in cash-heavy LATAM and Japan, where it accounted for 5% of e-commerce transaction value in 2023, an upturn in financial inclusion and overall shift away from cash is signalling post-pay’s sunset. 7) Digital Wallets - Digital wallets are the most popular and the fastest-growing payment method globally, however consumers shop. In 2023, they accounted for 50% of global e-com spend (> $3.1T) and 30% of global POS spend (> $10.8T). 8) Card Vs Digital Payment Consumers turning to digital wallets isn’t a turn away from cards. In card-dominated markets, card spend is simply shifting to “pass-through” and “staged” digital wallets like Apple Pay, Google Pay and PayPal. Taken as a whole, card transaction values are at an all-time high and continue to rise. Feon Ang 洪雍华 | Sopnendu Mohanty | Navin Suri   | Oliver Turn | Tony Moroney | Theodora Lau Chris Gledhill   | Linas Beliūnas  | Bradley Leimer  | Huy NGUYEN TRIEU | Arjun Vir Singh   | Umar Farooq | Paolo Sironi | Chia Hock Lai 谢福来, CFtP | Tony Craddock | Dr. Martha Boeckenfeld | | Panagiotis Kriaris |Spiros Margaris | Dr Ritesh Jain   | Tamara McCleary  |Francesco Burelli | Ram Rastogi 🇮🇳 | Abhishant Pant  |Victor Yaromin | Sam Boboev | Nicolas Pinto 

Forget one size fits all, local payment methods are the new consumer favorites in markets round the world Local Eats Global, as global card schemes lose ground to local favorites like digital wallets A2A, carrier billing and BNPL in Ecommerce These are some findings from a The 2024 Global Ecommerce Report which analyses data from 37 major markets, highlighting global, regional and country specific trends. Key Findings ▸ Local payment methods will reach 58% of all ecommerce transaction value globally by 2028, reflecting a major shift within the ecommerce payments market. ▸ By 2028, almost 37% of all individuals globally will actively use local payment methods, reflecting massive growth and expansion of the ecommerce market across the world. ▸ Card values will decline to 20% of transaction value by 2028, from 31% in 2023, reflecting a major shift as the ecommerce market expands. ▸ BNPL is steadily growing its share of ecommerce values, from 4% in 2023 to 5% in 2028, reflecting steady progress outside of key, already highly saturated markets, such as Australia, Germany and Sweden. ▸ A2A payments are seeing strong growth, from 8% of ecommerce spend in 2023 to 16% in 2028, a dramatic increase, reflecting major shifts in this market. Why Going Global Needs Local Payment Solutions As someone who knows payments, I'll explain why understanding local preferences matters for success worldwide. Thinking Globally, Acting Locally: ▸ One-size-fits-all no longer works: Countries have very different ways to pay. If you ignore this, you'll lose sales. ▸ Welcome local favorites: Give your customers the payment methods they like. This shows respect for their choices and helps build trust. ▸ Give a variety of payment options: People enjoy choices when shopping online! In some places, folks use several ways to pay. Don't stick to just one. ▸ Make the user experience smooth: Cost might not be the main factor. An easy and familiar way to pay is crucial to get more sales. Keep in mind, a global outlook means changing how you do things in each market. When you cater to local payment likes, you'll open up a whole new world of chances. Source: Boku (Link in comments) #DigitalPayments #Fintech #Payments #Ecommerce #Cards

Africa quietly processed 64 billion instant payment transactions worth nearly 2 trillion dollars in 2024. That is not a fintech headline. That is economic infrastructure hiding in plain sight. This week on the Unlocking Africa Podcast, I sat down with Sabine F. Mensah, Deputy CEO of AfricaNenda Foundation and co-author of the State of Inclusive Instant Payment Systems in Africa 2025 report, one of the most comprehensive studies ever produced on Africa’s real time payments ecosystem. What stood out most in this conversation was how clearly it reframed payments, not as a niche fintech topic, but as core economic infrastructure driving trade, productivity, and inclusion. As Sabine explained… “Digital payments mean more people are accessing and using digital payments and leveraging them to contribute to productive activities that can drive the economy.” Drawing on insights from 31 countries, we explored why Nigeria has emerged as Africa’s first fully mature instant payment system, and why this success was not accidental. In Sabine’s words… “It is not just about speed. It is about who is included and how systems are designed from day one.” We discussed: • Why scale alone does not guarantee inclusion • How interoperability transforms SME cash flow and liquidity • Why instant payments are foundational to AfCFTA success • How real time settlement changes growth outcomes for African businesses • Why trust, consumer protection, and recourse mechanisms matter as much as infrastructure One line that stayed with me throughout the episode… “There is no trade without payment. Digital payments are as important as ports and customs.” And a reminder that inclusion is deeply human... “It is not just one consumer with a bad experience. It is my family, my village, my community.” This episode is essential listening for policymakers, investors, founders, and anyone serious about doing business in Africa. Payment systems are no longer background infrastructure. They are central to growth. ⬇️ Listen now, link in the comments below ⬇️ #AfCFTA #DigitalPublicInfrastructure #PaymentsInfrastructure #AfricaTrade #InclusiveGrowth #Podcast

The rise of pay by bank: How merchants can reduce costs and grow revenue Key drivers of PBB adoption 🔹 Growth in account-based payments The introduction of account-based payments allows PBB solutions to facilitate funds transfers directly to merchant accounts, offering an advantage in terms of cost and liquidity management. This is true for merchants that sell slow-moving goods or fast-moving goods: real-time confirmation and funds availability are real advantages for all types of merchants. Access to account-based payments is rapidly growing in the UK and the US. In the UK, the BACS and Faster Payments systems have more than 61,330 and 435 total participants as of 2022, respectively. In the US, the ACH network is ubiquitous whereas instant payment methods, such as The Clearing House’s RTP and Federal Reserve’s FedNow systems, continue to expand. While the ACH network covers all depository accounts in the US, RTP reaches 65% of all demand deposit accounts and FedNow has 700+ financial institutions participating. 🔹 Customer willingness and merchant desire For merchants, PBB offers numerous advantages compared to other payment methods: ● Accepting a PBB payment is cheaper than card payments in the US, despite recent changes to card-based interchange. Current savings range between 20% and 70% ● PBB supports automated account reconciliation, reducing costs for merchants. ● As discussed before, using instant payments offers great liquidity management improvements, depending upon the merchant’s needs. ● Many cards expire every 4 to 5 years, so the churn on stored card information is much higher than with account numbers, which is around 17 years according to a Bankrate study. Consumer willingness to use a new payment service depends on various factors. Pricing is crucial, which is why all successful PBB solutions are free for consumers to use. Merchants can also incentivize consumers to use PBB, nudging them to use the cheapest payment method for merchants. These incentives can take a number of forms, such as UX optimization or a small discount if the consumer is willing to pay via a PBB solution rather than card. Plaid’s internal research revealed that an improved user interface design could lift pay-by-bank selection during a bill pay check-out flow from 39% to 72%. Plaid also studied the impact of a 1% incentive at checkout for high-value e-commerce purchases, finding that this increased pay-by-bank adoption from 20% to 67%. The use of incentives is expected to increase after a recent settlement with a group of merchants related to antitrust issues with interchange fees and other card scheme regulations in the US. The settlement, if enacted, would remove all restrictions related to “tender steering,” i.e., the nudging of customers by merchants to use one payment type over another. 👉 Subscribe for more insights https://lnkd.in/d94JgWBU Source Lipis Advisors / Adyen / Plaid #payments #banking Thomas Leda Timothy Alex Ali Carlos

What do alternative payment methods look like in emerging markets? The high adoption rates signals might just be a hint of how important these payment methods are for ecommerce success. This report takes a look at how local and alternative payment methods are changing in Africa, Asia, and Latin America. Here are my main takeaways: 🔶 In Southeast Asia, digital wallets are super important. In the Philippines, for example, 33% of ecommerce payments are made using eWallets. 🔶 In Africa, mobile money systems like Kenya’s M-Pesa have expanded quickly. It offers a simple way to manage money where banking options are limited. 🔶 Brazil’s Pix system has achieved 87% adoption in just three years. 🔶 In emerging markets with lower internet access like Nigeria, bank transfers are still an important payment method, especially for large transactions. 🔶 Despite the digital shift, cash is still widely used in countries like Egypt and Morocco, where it makes up a large portion of transactions because of economic and infrastructure challenges. 🔶 Mobile money and digital wallets are helping more people in Sub-Saharan Africa access banking services. The growing use of alternative payment methods is simplifying cross-border transactions. This makes it easier for international businesses to enter these markets. #Fintech #Payments #Digital