PROCESS ANALYSIS FOR CARDS AND MOBILE PAYMENTS (SQUARE)
Square is a prominent Digital Payment Company that
deals with several hardware and software products. It is based in San
Francisco, California. It caters to the needs of merchant by providing them lucrative
options depending on their business size and industry type.
as a Merchant on Square
Merchant: An entity engaging in business who is
registered on Square and allows card payments for transactions.
website or mobile application: A platform that uses third party application to
promote digital transaction.
server: Stores and validates data of any transaction that takes place on the
Square website or mobile application.
1. To register as a Merchant on
Square website he needs to enter the following details: E-mail address,
Password, Country name, Business type, Annual revenue, Address, Employment
Identification Number (EIN), Social Security Number (SSN) or Individual
Taxpayer Identification Number (ITIN) along with other details. He must also
agree to the company’s terms and conditions.
2. Square server verifies the
identity of the merchant using the last four digits of SSN. In case the
verification fails, the merchant is asked to enter the full SSN or ITIN. If the
system is unable to verify the identity of the merchant, then the registration
fails. However, if the verification is successful then the merchant details are
stored in the Square server.
3. The Square server then generates
a request for the bank account details of the merchant. The merchant then
provides his bank account details to Square server via Square website or mobile
4. Square server then stores the
bank account details of the merchant and intimates the merchant via Square
website or mobile application. After this stage, the merchant account is
or Rejection of customer’s payment
Customer: Any entity who is a registered
Square user and initiates a transaction on the Square website or mobile
Square POS: A mechanism that reads
customer data and enables the customer to complete his transaction with the
merchant using Square.
Acquiring Bank: A financial institution
that takes care of the merchants transactions.
Card Network: A network of issuing bank
and acquiring bank that processes card payments.
Issuing Bank: A financial institution
that provides different payment products to the customer and takes care of
initiate the transaction, the customer swipes his card on the Square Point of
Sales (POS) device which reads the card information and checks the card type.
If the card type is invalid the transaction fails and the customer is intimated
about it. However, if the card type is valid then an authorization request is
sent to the acquiring bank.
acquiring bank forwards the authorization request to the card network. The card
network then checks the card information of the customer. If the card
information is invalid the request is rejected and the Square POS is intimated
about it and then the transaction is cancelled. However, if the card information
is valid then the authorization request is sent to the issuing bank which then
processes the request.
processing the request, the authorization response is sent back to the Square
POS via the card network and acquiring bank.
POS then requests the customer for approval of the transaction by providing his
digital signature via Square website or mobile application.
the customer denies approving the transaction then the transaction is
cancelled. However, if the customer approves then the transaction is completed.
POS then provides an E-receipt of the transaction to the customer.