Demystifying the payments landscape: How Astra and you fit into it

Key takeaways

• The payments landscape is full of confusing jargon. Figuring out how everything fits together can be confusing.
• While you can build payment infrastructure in-house, this option is costly and time-consuming.
• Astra’s full-stack solution comes bundled with a banking relationship, fraud control, and fast implementation.
• In contrast to payment gateways and processors, a full-stack payments solution is your growth partner — not just an integration.

Facilitating payments for your customers is a great way to grow your platform. After all, if you are helping them organize their business and simplify their financial lives, adding instant payments to your offering makes sense.

There’s just one problem: The payments world is confusing. Like really confusing.

Acquirer, issuer, processor, gateway, sponsor bank, card network, card program, etc. The list of jargon is endless. At Astra, we think of ourselves as a key player in the payments world, and you might be wondering how we fit into all of this.

In this article, we lift the veil off the payments ecosystem and explain how we fit into it and how we connect you to the right entities to get your payments program up and running quickly.

Here’s what we’ll cover:

• Where Astra (and you) sit in the payments ecosystem
• How Astra brings you a banking relationship out of the box
• The compliance and security boxes Astra checks
• How soon you can get up and running with Astra

Where Astra sits in the payments ecosystem

So, who does what in the payments ecosystem, and where do you fit into that picture? 

Let’s dive in.

Defining the entities in the payments landscape

The payments landscape is filled with several entities as you’ve seen. Here is the role each entity plays:

• Acquiring Bank

This is the bank that administers the Merchant’s payments. It collects funds due and disburses them to the Merchant’s bank account. The Merchant may not necessarily know or care who their Acquiring Bank is because of the next entity — the SaaS platform.

• SaaS Platform

This is you. You are either a vertical SaaS or a payroll platform. Merchants (or people who need to get paid) sign up on your platform and expect to receive funds. 

The Acquiring Bank gives you an account to hold those funds and disburse them to your Merchants. You and the Acquiring Bank are a combination as far as your Merchants are concerned. They think of you as the entity that stores their funds.

• Acquirer Processor

A “processor” in the payments world handles payment messages, checks their validity, and passes them to downstream entities.

We’re using the word “Acquirer” here to indicate that this processor sits on the Merchant’s side of the payments world. The Acquirer Processor connects you to Payment Networks.

• Payment Networks

A Payment Network (like Visa, Mastercard, Discover, American Express, etc.) is usually a card company. The Network validates payment messages and passes them to the “Issuer’s” side of the payments ecosystem.

• Issuer Processor

The Issuer Processor sits on the card issuer’s side, hence the name. Like the Acquirer Processor, the Issuer Processor screens incoming payment messages, ensures they are valid (not fraudulent), and initiates a debit request to downstream entities.

Note that the Issuer and Acquirer processor do pretty much the same thing. The difference is that the Issuer does so on behalf of the card issuer—which is the next entity we’ll look at.

• Sponsor/Issuer Bank

The Issuer Bank issues credit cards and bank accounts. 

Just as the Acquiring Bank backs you, the Issuer Bank backs a fintech, Neobank, or crypto platform. It administers Customer accounts and works in partnership with them. 

The Issuer Bank maintains the Customer’s account and processes any payment requests that arrive.

Connecting your platform to the payments ecosystem

Now that you’ve gotten to know the players in the payments world, let’s dive deeper. Imagine a scenario where your merchants have received payments from customers and your dashboard shows this money.

How can you give them instant access to these funds? Transferring these funds to your Merchant’s bank account usually takes a few days, creating working capital issues.

Alternatively, if you’re a payroll platform, how can you deliver wages quickly to your customers, in any channel they prefer?

Briefly, you have four options:

1. Build infrastructure in-house
2. Use a payment gateway to transfer funds
3. Use a payment processor to transfer funds
4. Use a full-stack payment solutions provider

For most companies, the costs of building infrastructure in-house and executing all the processes necessary to get up and running are prohibitive. 

Take a look at what you need to get started with payment facilitation:

• An Acquiring Bank relationship

You will need a bank account to hold and disburse merchant/customer funds. Banks conduct thorough due diligence processes that can last months. 

You must demonstrate operational readiness, fraud controls, and risk policies to pass this step. 

Furthermore, banks prefer businesses with high funding levels, runway, and a business plan that aligns with the bank’s program goals — barriers that stretch due diligence times.

• Sophisticated infrastructure

You will need the latest infrastructure to orchestrate payments (push and pull funds), connect to different payment rails (ACH, cards, etc.), and install daily fund settlement processes.

Installing and administering these costs money and demands expertise beyond your core product capabilities.

• Fraud handling

The payments ecosystem takes fraud seriously and has to adhere to several regulations. Monitoring fraud and staying up-to-date with the latest measures consumes significant resources.

In short, you’re better off choosing between a payment gateway, processor, and full-stack payment solutions provider like Astra. 

While payment gateways and processors can get you up and running quickly, they create more work for you. Even if you leverage a payment gateway, you’ll still have to build fraud and compliance infrastructure, set up sponsor banking relationships, etc.

In short, payment gateways and processors do not cut it for growth-oriented platforms.

Here’s why Astra is the best choice for growing vertical SaaS platforms and fintechs keen on facilitating instant payments for their customers.

Astra brings you a banking relationship

Landing a sponsor bank relationship is one of the most critical parts of your payments program. Unfortunately, it is also the most time-consuming portion of the process.

Astra removes this hurdle by coming bundled with an established banking relationship. We work with Cross River Bank and several other sponsor banks to get you up and running quickly.

The banking relationship is a big part of Astra’s plug-and-play solution. You don’t pay anything extra and can focus on integrating our API into your platform.

Astra comes with built-in compliance and security

As a payment facilitator, you must monitor your merchants’ transactions for fraud. This is where solutions like payment gateways and processors fall short.

A gateway is just an API that integrates into your platform. All it does is provide a pathway for the payment to occur. The rest of it? You’ll have to orchestrate it yourself.

Astra solves this problem by offering built-in compliance. Your Astra dashboard helps you monitor your users, user intent, payment routines, and chargebacks. Our solution even offers automated chargeback handling.

With our webhooks, you can monitor transactions and statuses and protect your merchants at all times. Managing risk with instant transfers has never been easier.

Astra gets you up and running quickly

Astra is a full-stack payments solution. Reading that, you might think implementation will take months. Far from it.

You can get started with Astra in our sandbox environment and test all the functionality you want without signing a contract. Our extensive documentation will guide you through our SDK.

The upshot of all this? You can get started in as little as a few weeks. Whether you’re looking for more control over your payments program or want to offer accelerated ACH and instant payments to your merchants, implementation is a breeze.

A note: You can probably get up and running faster with a payment gateway than Astra. However, that speed comes at a price — payment gateways don’t offer anything beyond transaction facilitation — while Astra delivers speed and the additional tools you need to get going quickly.

Astra transforms payments into growth

The words “full-stack payment solution” might seem like a mouthful at first glance. However, a full-stack solution like Astra differs significantly from payment gateways and processors.If payments are a growth driver for vertical SaaS platforms, then Astra is your growth partner. Get in touch with us to learn how we can help you solve payments.