Let's talk about payment systems, which we have started hearing about more often since the internet entered our lives, and about the basic structures that make up payment systems.
The first credit card in the world was used in America in the 1920s. At that time in America, as fuel costs rose, car owners looked for a solution, and several fuel companies issued various cards that allowed their customers to buy fuel on more favorable terms. Among the companies that produced these cards, the first to stand out was "Western Union," which distributed free cards to its customers in 1921.
By 1934, this time the American Air Transport Association produced the "Air Travel Card," which began to be used by passengers. For the first time, these cards used a numbering system that showed the customer's account. By the 1940s, these travel cards had come into use by many companies and passengers.
In 1948, this card, named the "Air Travel Card," began to be used by members of the organization all over the world, going down in history as the "first card valid worldwide."
The first development outside of this flight card came about in America again in 1958, when Bank of America introduced the first implementation of the modern credit card, called "BankAmericard." In other words, BankAmericard is considered the first credit card in America. Bank of America, one of the pioneers of the credit card, began licensing other banks to issue "BankAmericard" starting in 1965.
By 1970, the first credit card application outside America (Barclaycard) was issued in England.
In 1974, International Bank Americard (IBANCO) was founded. In 1977, it changed its name to "VISA."
In 1992, Europay International was founded in Europe, giving rise to "MasterCard."
In Turkey, the first credit card was used in 1968, and the card called "Diners Club," introduced the same year, was distributed to a few thousand people.
Later, "American Express" cards began to be used in Turkey.
After 1975, credit card use became widespread, and "Eurocard, Mastercard, and Access cards" entered the market.
After 1980, banks in Turkey also began offering credit cards, and credit card usage in Turkey spread rapidly, reaching figures in the millions today.
ATMs, an important tool in the use of credit and debit cards, were first used in Turkey in 1987.
The first POS terminal came into use in 1991.
In 1994, the first "chip card" application was launched in Turkey.
In 1999, installment credit cards came into use.
On April 28, 2016, TROY, Turkey's first national payment scheme, was officially launched and the first transaction was carried out. This is quite significant, since it is our first national payment scheme and shows our own payment scheme on cards instead of foreign logos.
Let's list the terms that come to mind when we talk about payment systems:
POS (Point Of Sale)
Virtual or electronic authorization devices that connect to a bank and are used for card payment transactions at merchants.
Virtual POS
The virtual equivalent of a physical POS device. It is the software through which a merchant sends and receives payment requests for payments made over the internet.
Authorization
The general term for transactions made with a credit or debit card through an ATM or POS device.
Pre-authorization
A transaction that allows a certain amount of a credit card's limit to be blocked for a period of time, due to the nature of the product or service being sold.
For example, when a 100 TRY authorization takes place, 100 TRY is charged to your card, and your card limit decreases by 100 TRY. In a pre-authorization transaction, the corresponding amount is not charged to the card; instead, the card's available limit is reduced by 100 TRY. It is used for purposes such as checking whether the user has a sufficient limit, whether the card is open to authorization, and so on. If the pre-authorization transaction is successful, the related amount is later reflected on the card account through a pre-authorization closing transaction. If a pre-authorization closing transaction is not performed after a pre-authorization, the block on the card is released within 7-10 days, and the card's limit returns to its previous state.
Batch (end of day)
The general term for sending the day's transactions to the bank in a batch and carrying out reconciliation.
3D Secure
Developed by Visa under the name "Verified by Visa," and later joined by MasterCard with "SecureCode," the common name given to this system is 3D Secure. 3D Secure is a platform that takes security for payments made over the internet one step further, regulating the responsibilities among the merchant, the bank, and the cardholder. Unlike the normal payment process we know, where the transaction is completed right after the user enters their card details, during a 3D Secure payment the user's card-issuing bank displays an additional screen (via browser redirection), asking the user to enter the SMS password sent to their registered mobile phone and/or their CVV2 information. Because the user is also asked for the SMS password and/or CVV2 information, the cardholder's identity is verified, preventing the card from being used by anyone other than its owner.
Fraud
Fraud means carrying out a transaction, offline or online, using a credit or debit card belonging to someone else, causing financial loss to the cardholder and the bank. Such transactions, carried out by a fraudster (or fraudsters), can take place in a physical or virtual environment.
Installment
Installment is the process of paying off a credit card payment to the bank month by month. Since the bank receives the money from the cardholder in monthly installments rather than all at once, it typically passes this financing cost on to the merchant, who in turn passes it on to the customer. For example, while the cash/single-payment price of a product may be 100 TRY, its price in 3 installments might be 105 TRY. There are exceptions to adding installment costs on top of the cash price.
Bitcoin
A digital currency not controlled by any central authority, which we will likely hear much more about in the future, even though it is not yet recognized -- and is even banned -- by many countries. Since all users have a digital wallet, it provides payment convenience and privacy.
OTP (One-Time Password)
Passwords generated and/or sent for one-time use to verify transactions. The password sent to your mobile phone by the bank during the 3D Secure process, or the one-time keys generated when logging into internet banking, are examples of this. OTPs are also used to verify transactions in mobile payments.
Points
The general term for the reward that banks give to cardholders for transactions made with their cards.
Chargeback
A dispute raised by the cardholder with their bank, claiming either that a payment transaction made with their card is not theirs, or that there is an error relating to the amount, the service, or the transaction.
Digital Wallet
The general name given to solutions that store card information in the cloud on their own systems and generally allow payments to be made online without entering card details. In Turkey, BKM Express, Masterpass, and similar services fall into the online wallet category.
