How card-to-card money transfers work

[CarderPlanet]

Despite the fact that the popularity of this type of translation is growing every year, there is very little information on the Internet about how they work "from the inside" and in this article I will tell in simple language what p2p translations are, what they are and how they work ...
Card-to-card transfers (aka p2p, card2card, c2c) are a way to transfer money on the Internet between individuals using bank card details. To transfer, you must have your bank card (and preferably money on it) and know the recipient's card number.

You can transfer money from card to card in almost any Internet banking, but if your bank does not have such a function, then you can use third-party services (google "transfers from card to card").

Advantages:

• There is no need to physically deliver money to the recipient or to the branches of money transfer systems - saving your time;
• Round-the-clock work of services 24x7;
• Fast crediting, in 99% of cases money is credited within 1-2 minutes, but according to the law, money can go up to 5 days.

Disadvantages:

• A commission is charged for the transfer (on average, 1.5% min. 50 rubles, however, some banks do not charge a commission in certain areas, for example,
  when transferring between their cards or when transferring from another's bank card to their own);
• Transfers can be tracked (eg tax);
• Limits. On average, the maximum amount of a single transfer is up to 150,000 RUB, per day up to 300,000 RUB, per month up to 1,500,000 RUB;
• There is a possibility (albeit insignificant) that the money may not be credited to the recipient's card due to technical problems on the bank's side and you will have to spend time communicating with the bank and looking for your money, this process may take a long time and all this time the transfer amount will be unavailable.

Types of p2p transfers​

Internal - transfers from a bank card issued by a Russian bank to a bank card issued by a Russian bank.

Cross - border - transfers from a bank card issued in a Russian bank to a bank card issued in a foreign bank (for example, in Ukraine). Few banks provide such a service, the commission for transfers abroad is usually much higher (on average 2% + 150 RUB and plus currency conversion), and the transfer limits are lower.

With cross-border transfers, money is debited from your card in rubles, converted at the rate of the international payment system VISA \ Mastercard (as a rule, the MPS rates do not differ much from the Central Bank, you can find out the exact MPS rates using calculators: Mastercard, VISA) into the currency of the payment system (euro or dollar), after which another conversion takes place into the local currency at the rate of the bank that issued the recipient's card (here you will lose somewhere 0.5%, but you can even more, it all depends on the greed of the bank). For example, when transferring from a Russian card to a Ukrainian one, there will be two conversions - RUB-> USD \ EUR-> UAH.

You cannot make a transfer on Russian services using a sender's card issued abroad. Also, you cannot make a transfer from a Russian card to cards of local payment systems, such as the Belarusian "Belkart" or the Chinese "UnionPay", i.e. the recipient's card must be either VISA or Mastercard.

How it works?​

To begin with, let's consider the participants in the process:

The issuing bank of the sender's card and the recipient's card, i.e. the bank that issued the card.

Acquiring bank - a bank that accepts bank card details and processes the transfer - interaction with payment systems, checking for fraud, etc. The issuing bank and the acquiring bank can be the same bank.

Payment system. When we make a transfer from card to card and enter the details of the sender's and recipient's cards, the acquiring bank does not know what kind of cards they are and which banks they belong to and applies to the PS (since the PS has a legal relationship with all PS member banks and all the information about which cards were issued by which banks).

PS also performs clearing functions; money actually comes to a bank account only the next day - it is a guarantor that the money will definitely come, which allows money to be credited to a physical card. persons instantly without waiting for the completion of the calculations.

PS are international (VISA, Mastercard, etc.) and local (Belcard, Elcard, etc.).

Service Providers (IPSP). Imagine that you are not a very large bank and want to provide your customers with the ability to transfer money from card to card in your Internet banking. To do this, you will need:

• pass PCI DSS certification
• get VISA \ Mastercard licenses
• make improvements on processing
• develop interfaces, etc.

All this costs quite substantial money, which a small bank will beat off for a very long time on commissions from transfers, and probably will never beat it off. In this case, service providers come to the rescue - these are companies that have integrated with acquiring banks, which have all the necessary licenses, which have developed an interface and provide a ready-made service in various formats: API, widget (iframe \ webview), branded mobile application, etc. They provide the service for free, and earn on commissions from transfers (SaaS) and part of this commission is given to the site / bank that hosts the service.

At the top-level, the transfer process is as follows:
1. The sender enters the transfer details (card data, amount, etc.)
2.3. The details are transmitted to the acquiring bank (either directly or through a service provider)
4. The acquiring bank initiates the transfer by contacting the payment system and sending the transfer details to it
5. The payment system identifies the issuing bank of the sender's card by the card number and sends a request to the bank for transfer
6. The issuing bank authorizes - redirects the sender to the 3DS input page (SMS or push notification with a code)
7. The sender enters the verification code
8. The issuing bank of the sender's card sends a response to the payment system that the authorization was successful
9. The payment system sends a request to the issuing bank of the recipient's card for crediting funds to the recipient's card
10. The issuing bank of the recipient's card credits the money to the recipient's current account

But there is a nuance
When you saw the inscription about the successful transfer (and the money was debited from you, but the recipient was credited), in fact, the money has not gone anywhere, only authorization has passed successfully. The money will leave the next day after the PS clears at the end of the transaction day and informs the issuing bank of the sender's card that it needs to send money to the issuing bank of the recipient's card, and also issues a separate invoice to pay the commission in favor of the PS. That is why sometimes transfers are delayed, as some banks are waiting for the completion of the actual settlements, which take place only the next day.

Bank clearing is an offset, as follows:

• Vasya transferred 200 rubles from bank "A" to bank "B"
• Olya transferred 100 rubles from bank "A" to bank "B"
• Kostya transferred 400 rubles from Bank B to Bank A

Instead of making 3 different transfers during the day, banks wait for the end of the day and make only one in the amount of 100 rubles from bank "B" to bank "A".

Legal artifacts​

An offer is an agreement between an individual and an acquiring bank for a p2p transfer. When you make a transfer, you check the box that you agree to the terms of the offer (sometimes it is checked by default). If you have any problems with the transfer, then de jure you need to contact the acquiring bank using the details specified in the offer. De facto, first of all, it is better to try to use the technical support contacts of the service in which you made the transfer.

I draw your attention to the fact that if you transfer money, for example, on the website of bank "A", then in the offer, especially in small banks and financial services, another bank may be indicated - "B", and legally you will not be able to present anything to bank "A" , since the transfer service was provided to you in this case by Bank B.

FZ-161 "On the National Payment System" - this FZ, which must be observed by all acquiring banks, monitors the observance of this law by the Central Bank of the Russian Federation. If you as an individual were offended by a bank, for example, you made a transfer from card to card and it did not reach the recipient within 5 calendar days and the money was not returned (this is the maximum term for this Federal Law), and the bank refuses to help you in solving this issue, then you can write a complaint to the Central Bank - this can help.

Payment system rules (VISA, Mastercard, MIR) - all banks issuing cards are members of the PS, and are obliged to follow the rules of the PS, if these rules are violated, the bank may receive a large fine. In general, for general development, the rules can be read to understand what the banks are guided by. However, individuals cannot apply to the PS with a complaint about the bank's violation of the rules, since individuals. persons are not members of the PS. As it was said in the movie Pirates of the Caribbean - "The pirate code and our laws are written for us"

What do we pay commission for​

The commission for a p2p transfer consists of:

1. PS commissions - the commission charged by the PS for acting as a link between all banks and for clearing. But if the transfer is carried out between clients of the same bank (or in some cases of the same processing), then the request for authorization in the PS does not go and, accordingly, for the bank such transfers are free (but this does not mean that they will be free for customers).
2. Acquiring bank commissions - the acquiring bank receives its share of the PS commission for directly providing a transfer service, supporting infrastructure, etc. Thus, the development of the market for cashless transfers is stimulated.
3. Commissions of the site on which the p2p transfer service is located. If you transfer money, for example, on a conditional site "perevodmoney.rf" or some small bank that is not an acquirer, then, as a rule, the site / bank also earn a small percentage on each transfer.
4. Service Provider Mediation Fees (if any).

In order to save on commissions, carefully study the services of the banks whose cards you use. For example, some banks on their website allow transferring from someone else's cards to their own for free (thus attracting money to the bank), and using the service of the bank that issued the recipient's card may be more profitable than transferring from your Internet banking.

You can also save on commissions by using the Quick Payments System, but this is a topic for a separate article.