Hot Deal On-US vs Off-US transactions (How to bypass Visa/Mastercard payment gateway and save our country's foreign reserve)

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On-US vs Off-US transactions (How to bypass Visa/Mastercard payment gateway and save our country's foreign reserve)

On-US vs Off-US transactions (How to bypass Visa/Mastercard payment gateway and save our country’s foreign reserve):

Visa and Mastercard are not the only networks through which transactions can be processed. There are, for instance, debit networks. Debit cards, issued by a bank, can be processed through these debit networks, thus, lowering the cost of transaction processing for the bank.

What is Off-US Transaction ?

OFF-US Transaction: where the issuing bank and acquiring bank are different entities.

when the acquirer and issuer bank is different. International or cross border transactions when the acquirer and issuer are from different countries.

Example - Card holder is Issuer bank is ICICI Bank and Merchant Acquirer bank different HDFC Bank, transaction route different network it is called to OFF-US Transaction.

What is ON-US Transaction ?

ON-US Transaction: where the issuing bank and the acquiring bank are the same entity

So the acquirer will send the transaction directly to the issuer with no involvement from the networks like Visa or MasterCard network.

Example - Card holder is Issuer bank is ICICI Bank and Merchant Acquirer bank also ICICI Bank all transaction route rame network it is called to ON-US Transaction.

Here is the definition as per RBI - https://www.rbi.org.in/Scripts/PublicationRepor...

If a bank issues its cards and processes transactions through its own technical platform, then it can avoid the fees completely. However, this solution is technologically problematic to implement. In order for transactions to be processed, the bank’s system has to be integrated with merchants’ software (POS, CRM systems, etc).

How to bypass Visa/Mastercard payment gateway and save our country’s foreign reserve ?

Note - When we use ON-US Transaction, bank avoid the Visa or Mastercard network and save interchange reimbursement fees.

How to know my transaction is On-US or Off-US transactions ?

When we use On-US transactions, you will see “Verified by Visa” or “Mastercard Securecode” logo will not showing on 3D secure otp/pin/password page.

Here are few example -

when we transaction on Amazon and enter our ICICI Credit/debit card or SBI credit/debit Card, you will see we get instant OTP payment page -

https://cdn0.desidime.com/attachments/photos/666132/medium/739605969hgG2i.jpg?1613565609

OTP payment page is not showing any “Verified by Visa” or “Mastercard Securecode” logo because here ICICI Bank Card and Amazon Acquirer bank also ICICI Bank all transaction route rame network it is called to ON-US Transaction. ICICI Bank Bypass “Verified by Visa” or “Mastercard Securecode” payment gateway.

but if we select “complete the transaction on your bank’s website using OTP or password.” our transaction now proceed through “Verified by Visa” or “Mastercard Securecode” payment gateway and banks pay a fee to Visa/Mastercard company.

https://cdn0.desidime.com/attachments/photos/666133/medium/7396059sO5swnu.jpg?1613565612

https://cdn0.desidime.com/attachments/photos/666134/medium/7396059k5Fs3d4.jpg?1613565614

I use my ICICI Visa Credit card on Paytm add money via Uber -

here you will see only ICICI logo showing on 3D secure page, this is called ON-US Transaction, ICICI bank bypass “Verified by Visa” network -

https://cdn0.desidime.com/attachments/photos/666135/medium/7396059bOBpAY9.jpg?1613565615

another example on Ccavenue payment gateway, Ccavenue sometimes give many bank selection option on debit card transaction (SBI, ICICI, PNB, IOB etc) -

here i select ICICI bank on ccavenue payment gateway and enter my ICICI visa card number and proceed for payment -

https://cdn0.desidime.com/attachments/photos/666136/medium/7396059fMUV4Cx.jpg?1613565617

3D secure payment gateway page, you will see ICICI bank bypass “Verified by Visa” network and save interchange reimbursement fees -

https://cdn0.desidime.com/attachments/photos/666137/medium/7396059zRgUA3d.jpg?1613565619

Same Payu payment gateway page, sometimes you will see “State bank of India Visa card” or “State bank of India mastercard” option showing under debit card option, if we select “State bank of India” option, you will see 3D secure payment page only “SBI” logo showing and most of the time “SBI” bypass “Verified by Visa” or “Mastercard Securecode” network and save interchange reimbursement fees.

22 Comments  |  
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Great topic.. will read the whole

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Nice info
HA n KG

now I understand why some of the online txns directly take OTPs instead of redirecting to bank page for OTPs.

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Bro ..I have one doubt, why and how banks are interested in providing POS devices to merchants..
While processing the off-us transactions Visa/master card will take network fee from Merchants account..
Is there any additional fee for using POS devices?

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manikantaks4u wrote:

Nice info
HA n KG

now I understand why some of the online txns directly take OTPs instead of redirecting to bank page for OTPs.

some banks also use PIN debit transaction like Axis bank to lower the transaction cost

but Visa/mastercard also use PIN debit transaction to lower the transaction cost.

Suppose if OTP based Visa/mastercard transaction cost is 0.15% then PIN debit transaction cost maybe 0.10% or 0.05%.

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Vinod358 wrote:

Bro ..I have one doubt, why and how banks are interested in providing POS devices to merchants..
While processing the off-us transactions Visa/master card will take network fee from Merchants account..
Is there any additional fee for using POS devices?

POS Merchant Acquirer bank earn few % on every transaction.

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.

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Is it same for POS?

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B3A5T wrote:

Is it same for POS?

yes

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Thank you for sharing the knowledge. Good post.

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What about security and visa/mastercard responsibility is it too waived off and we are left at the mercy of bank

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In 2018 Amazon October sales, almost 90% transactions failed for ON-US payment gateway with SBI cards and also icici card. I always had to enter OTP on “verified by Visa” payment gateway to avoid payment failures. OFF-US transactions had high success rate back then. It might have improved now.

PS: I knew about different payment gateways but never knew these are called On-US and Off-US and banks are doing this to save transaction fees. I thought banks are doing this for convenience of user to save time in loading another page.  stuck_out_tongue_closed_eyes Thanks for new info. plus1

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So the op is partially right and partially wrong.
1. Its not in our hands to save our country forex because we can’t know before initiating the payment that our transaction will be settled in which bank. (Acquiring bank/Merchant bank acct)
2. OP said visa/master is not involved in ON-US transaction which is technically wrong. When we enter the card the BIN no. is used to identify the card type(master/visa/amex/diner/rupay) and bank. when transaction is initiated payment service connects to networl(visa/master) which then tells the issuer bank to approve a transaction coming from his bank user, becoz both Issuing and acquiring bank is same, so money is deducted from payer and added to merchant and whole authorization of owner card and approval of fund is handled by bank himself hence there is no need to involve the payment network for inter bank communication. In this case the payment network (visa/master/rupay) only takes a very little chunk as maintenance and service fee of network.

Whereas in OFF-US the payment netowork is involved in whole process from intiation to authorization to approval till confirmation of transaction. So here the fund flows between different banks via network it takes a big cut as the Interchange & service fee.

Reversal -
Incase when your transaction gets stuck during process if it was in ON-US the reversal will happen faster becoz no third party invloved for completion, but when its inter bank case(OFF-US), it takes longer time becoz again the payment network is used for reversal of transaction.

4. Big MNCs ask there developers to develop there own payment gateway service so they don’t have to pay extra for the same. See above example of Uber, amazon, flipkart use their own gateway which connects to payment networks which verifies and forwards to banks.
Small startups use third party payment gateway like paytm/ccavenue/razorpay . But here also the they rely on payment network for verification. After that ON-OFF case applies.

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My Dearie, if the government wanted to save this shit, all it had to do is to issue only RuPay debit cards across all banks in India and Visa/MC on additional payment. Just my 2 takkas

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Current Ghotalebaazo see desh ko kaise bachaye wo bhi kabhi bata do , wo to lakho crore ka mamla hai
Cares fund ke audit ke liye kaise demand Kate wo bata do
Hume to deshi ne loota
videshi mein Kahan dum tha
Meri kashti wahi doobi Jahan pani Kam tha
Already purchasing petrol to fill corrupt pockets
Vijay Malta Nirav Moti jaise aapke aplog ke aadmi agar desh ko Paisa lota den to is faaltu ki notanki aur dikhawa karne ki koi zarurat nahi hai,

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Apun-hi-bhagwan-hai wrote:

So the op is partially right and partially wrong.
1. Its not in our hands to save our country forex because we can’t know before initiating the payment that our transaction will be settled in which bank. (Acquiring bank/Merchant bank acct)
2. OP said visa/master is not involved in ON-US transaction which is technically wrong. When we enter the card the BIN no. is used to identify the card type(master/visa/amex/diner/rupay) and bank. when transaction is initiated payment service connects to networl(visa/master) which then tells the issuer bank to approve a transaction coming from his bank user, becoz both Issuing and acquiring bank is same, so money is deducted from payer and added to merchant and whole authorization of owner card and approval of fund is handled by bank himself hence there is no need to involve the payment network for inter bank communication. In this case the payment network (visa/master/rupay) only takes a very little chunk as maintenance and service fee of network.

Whereas in OFF-US the payment netowork is involved in whole process from intiation to authorization to approval till confirmation of transaction. So here the fund flows between different banks via network it takes a big cut as the Interchange & service fee.

Reversal -
Incase when your transaction gets stuck during process if it was in ON-US the reversal will happen faster becoz no third party invloved for completion, but when its inter bank case(OFF-US), it takes longer time becoz again the payment network is used for reversal of transaction.

4. Big MNCs ask there developers to develop there own payment gateway service so they don’t have to pay extra for the same. See above example of Uber, amazon, flipkart use their own gateway which connects to payment networks which verifies and forwards to banks.
Small startups use third party payment gateway like paytm/ccavenue/razorpay . But here also the they rely on payment network for verification. After that ON-OFF case applies.

I think no, i already said Visa and Mastercard are not the only networks through which transactions can be processed. There are, for instance, debit networks. Debit/credit cards, issued by a bank, can be processed through these debit networks, thus, lowering the cost of transaction processing for the bank.

All Visa and Mastercard issuing in India or Asia, MEA, South America etc use dual network, when Issuer bank and Acquirer bank is same, banks use their own debit networks and bypass Visa and Mastercard network.

if visa/mastercard is involved in ON-US transaction then why RBI daily data publication post only domestic Off-Us card transactions data ?

I read some articles where clearly mentioned in some African or small Asian countries all banks are connected to their own local debit network, Visa/mastercard only use in foreign transaction. Ofcourse Visa/mastercards are not happy but banks use their own debit network.

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great article..one query why are banks hesitant to issue rupay cards?or also most of the credit card with higher rewards are on visa/master/diners not on rupay,why dont bank issue rupay cards with higher rewards…

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Informative bro.. thanks & kg+

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Ramta_Jogi wrote:

My Dearie, if the government wanted to save this shit, all it had to do is to issue only RuPay debit cards across all banks in India and Visa/MC on additional payment. Just my 2 takkas

RuPay card is ‘not for profit’ company and recently govt impose zero MDR on RuPay card transaction. No banks are interested to issue RuPay cards.

RBI now invited Indian private players for New Umbrella Entity license.

Who is applying for the NUE license ?

Domestic players:

> Tata Capital + TCS
> Infibeam + Sohum + Yes bank + IBA + PCI
> HDFC, SBI and BoB
> Jio, Paytm

some Global backend players -

> Google
> MasterCard
> Visa
> Amazon
> Facebook

NPCI has been a huge success and today accounts for a massive 64% of total volume of digital payments in the country. So why is there still a need for NUE ?

Multiple reasons -
a. To reduce concentration risk
b. Diversification of market (getting in non-banking players)
c. Avoiding single point failure
d. Digitization outside metro cities
e. Need for more innovations in payments- offline, X-border, cap market settlements, etc.

Impact on existing participants -

Banks -

For the banks, this move is probably not that positive. They don’t stand to gain much whereas costs and operational complexities are going to go up.

NPCI -

NPCI will remain safe for at least next 3-4 years. The time to market for NUE players is that much. Lots of system-wide integrations need to be done.

RBI -

RBI’s load is expected to increase. Getting large incumbents to become NUE entities will be difficult to manage.

Fintechs -

Good opportunities to work with NUE; new business models. For e.g. : We still don’t have a good collections product with options for varying amounts, varying frequency and other flexibility.

Merchants -

Will see lower processing fees so that is good for them. However, reconciliation will get more complicated and difficult.

End Customers -

Better customer services and experiences; More choice in payment options. More embedded products will come up again increasing convenience.

What will it take to build a NUE ?

Time to market will still be longish. Take AAs for example. The licenses were given around 4 years back. They are still not live!

There seems to be a big incentive problem from the Banks’ POV. Why should banks connect and integrate with an NUE entity? There are high costs and little upside for them.

Something to the tune of $0.5 billion dollars will be needed to set up this system and create the market.

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Expand
abhishek012 wrote:

RuPay card is ‘not for profit’ company and recently govt impose zero MDR on RuPay card transaction. No banks are interested to issue RuPay cards.

RBI now invited Indian private players for New Umbrella Entity license.

Who is applying for the NUE license ?

Domestic players:

> Tata Capital + TCS
> Infibeam + Sohum + Yes bank + IBA + PCI
> HDFC, SBI and BoB
> Jio, Paytm

some Global backend players -

> Google
> MasterCard
> Visa
> Amazon
> Facebook

NPCI has been a huge success and today accounts for a massive 64% of total volume of digital payments in the country. So why is there still a need for NUE ?

Multiple reasons -
a. To reduce concentration risk
b. Diversification of market (getting in non-banking players)
c. Avoiding single point failure
d. Digitization outside metro cities
e. Need for more innovations in payments- offline, X-border, cap market settlements, etc.

Impact on existing participants -

Banks -

For the banks, this move is probably not that positive. They don’t stand to gain much whereas costs and operational complexities are going to go up.

NPCI -

NPCI will remain safe for at least next 3-4 years. The time to market for NUE players is that much. Lots of system-wide integrations need to be done.

RBI -

RBI’s load is expected to increase. Getting large incumbents to become NUE entities will be difficult to manage.

Fintechs -

Good opportunities to work with NUE; new business models. For e.g. : We still don’t have a good collections product with options for varying amounts, varying frequency and other flexibility.

Merchants -

Will see lower processing fees so that is good for them. However, reconciliation will get more complicated and difficult.

End Customers -

Better customer services and experiences; More choice in payment options. More embedded products will come up again increasing convenience.

What will it take to build a NUE ?

Time to market will still be longish. Take AAs for example. The licenses were given around 4 years back. They are still not live!

There seems to be a big incentive problem from the Banks’ POV. Why should banks connect and integrate with an NUE entity? There are high costs and little upside for them.

Something to the tune of $0.5 billion dollars will be needed to set up this system and create the market.

here you get your answer 👆👆

RuPay card is ‘not for profit’ company and recently govt impose zero MDR on RuPay card transaction. No banks are interested to issue RuPay cards.

@binod_babu

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abhishek012 wrote:

I think no, i already said Visa and Mastercard are not the only networks through which transactions can be processed. There are, for instance, debit networks. Debit/credit cards, issued by a bank, can be processed through these debit networks, thus, lowering the cost of transaction processing for the bank.

All Visa and Mastercard issuing in India or Asia, MEA, South America etc use dual network, when Issuer bank and Acquirer bank is same, banks use their own debit networks and bypass Visa and Mastercard network.

if visa/mastercard is involved in ON-US transaction then why RBI daily data publication post only domestic Off-Us card transactions data ?

I read some articles where clearly mentioned in some African or small Asian countries all banks are connected to their own local debit network, Visa/mastercard only use in foreign transaction. Ofcourse Visa/mastercards are not happy but banks use their own debit network.

I am not aware of any such debit networks which you are talking about, As far I know in India all banks follow governance rules set by RBI and issue a payment network card. Never seen any issued by bank card. If you have any article providing the info plz do share.

If a card is issued by payment network(visa/master) the verification of card via encrypted hashing solely done by the depending network which includes (card no.//exp//cvv//zip//city//etc) and then the network connects to the issuer for authorizing the payment (which verifies card is blocked or not // have sufficient funds // verifies identify via otp/pin ) and appoves the transaction and sends the encrypted transaction data back to network(including transaction no.// date and time// amount)

If you want to check the above statement just enter wrong visa card details during payment it will be declined by network before connecting to bank no matter you try to do ON-US or OFF-US. If you have did any ON-US transaction earlier do the same again and this time change the last 4digits of card and see when the card is declined by the bank or by the network.

Every country have rights to decide how they wants to process their transacion. Visa/master evolved becoz they had the best services and kept upgrading.
Earlier bank used to issue Mastro card which is european but it got outdated becoz they didn’t upgraded themselves timely.

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Thank you for the copy/paste useless information.For a start, RuPay is not a company. RuPay is an international card payment service conceived and launched by the National Payments Corporation of India.Also, I’d suggest you to understand what “On-Us” and "Off-Us’ transactions are. An on-us transaction is the one where issuing and acquiring bank is the same and hence there is no need to involve the payment network for inter bank communication. If the transaction is an Off-us transaction, the acquirer passes on the transaction and card information to the network.I can keep on ranting about it but it’s no use. I’d still use whatever way is convenient to me without bothering about the foreign exchange reserves headache.

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Apun-hi-bhagwan-hai wrote:

I am not aware of any such debit networks which you are talking about, As far I know in India all banks follow governance rules set by RBI and issue a payment network card. Never seen any issued by bank card. If you have any article providing the info plz do share.

If a card is issued by payment network(visa/master) the verification of card via encrypted hashing solely done by the depending network which includes (card no.//exp//cvv//zip//city//etc) and then the network connects to the issuer for authorizing the payment (which verifies card is blocked or not // have sufficient funds // verifies identify via otp/pin ) and appoves the transaction and sends the encrypted transaction data back to network(including transaction no.// date and time// amount)

If you want to check the above statement just enter wrong visa card details during payment it will be declined by network before connecting to bank no matter you try to do ON-US or OFF-US. If you have did any ON-US transaction earlier do the same again and this time change the last 4digits of card and see when the card is declined by the bank or by the network.

Every country have rights to decide how they wants to process their transacion. Visa/master evolved becoz they had the best services and kept upgrading.
Earlier bank used to issue Mastro card which is european but it got outdated becoz they didn’t upgraded themselves timely.

Bank use their own internal debit network and banks dnt need any RBI issue payment network license.

when you use ICICI ON-US transaction in Amazon, you will see your transaction statement start with IIN/I-debit and ICICI OFF-US transaction in Amazon, transaction statement start with – VIN

same thing you will see any other bank like SBI card etc transaction statement (ON-US & OFF-US transaction statement are different).

ICICI bank also use their own Instant fund transfer service. when you send money ICICI to ICICI bank (ON-US), you will see your transaction statement start with – INF or INFT but when you use Instant fund transfer to any other bank. ICICI bank use NPCI’s IMPS network (OFF-US).

Internal transactions, Banks dnt need any payment network license or Instant fund transfer license from RBI.

by the way when you enter wrong card number, Acquirer bank try to connect with both Issuer bank and payment network. you can’t say your transaction declined by network before connecting to bank. Everything happens in backend system.

and last Maestro card was discontinued because Mastercard acquired Maestro card and rebranded “Maestro card” to “Mastercard debit card“. Maestro card is American company.

Missing