*Short version. A longer, more detailed article exists for Premium Members.*

Transactions are inherently complex by design as they involve numerous components working together to create what appears to be a seamless experience on the front-end. One-click payments, mobile wallets, and other similar payment methods simplify checkout processes by prioritising convenience and ease of use. They achieve this through streamlined payment interfaces, while also maintaining a critical balance to uphold security standards on the backend.

Payment systems are built on complex backend architectures made up of multiple interconnected layers, each playing a specific role:

◾Physical layer, i.e. the foundational hardware and infrastructure components such as servers, data centres etc…

◾Network layer, that manages the pathways through which data travels, using encryption and tokenisation to secure transactions and ensure efficiency and reliability in data transfer.

◾Endpoint layer, typically referring to the devices that initiate and receive payments, like a computer, smartphone, ATMs, Point of Sales systems etc.

◾Application layer, which hosts the software applications that power the transaction processes and user interfaces.

◾Data layer, which handles the storage and management of data, be it at rest or in transit, as well as the data retrieval and processing.

◾User access layer, which governs how users authenticate and authorise payments through passwords, biometrics, and multi-factor authentication.

◾Security and compliance layer, which handles all aspects of security across the system, using fraud detection tools like real-time analytics, AI, and machine learning. It also involves compliance with standards like PCI DSS and GDPR to protect data integrity and user privacy.

◾Operational layer covers additional processes and systems that integrate into a merchant’s infrastructure, such as ERP, CRM, PMS, loyalty, transaction monitoring, reporting, and system maintenance.

Traditionally, payments were centralised, with a few key providers managing the overall process (e.g. banks, acquirers). Over time, specialised models emerged, introducing niche solutions (e.g. core processing, fraud, authentication), hence creating a more ‘specialised’ offering in the ecosystem.

Today, the lines between specialised providers and broader platforms are increasing blurring, as not only many non-traditional players are entering the payments space but established players are also continuously expanding and diversifying their offerings.

👉🏽#Paymentexperts, any perspectives to share🎤?

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