Fundamentals
The fundamentals. Unpacked.
The vocabulary of money, explained properly. No jargon, no hand-waving, no assumed knowledge. Each one takes about three minutes and leaves you able to hold your own in the room.
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The four you need before anything else makes sense.
What is a payment gateway?
A payment gateway is the translator between a checkout page and the banking system. Here is what it actually does, what it does not do, and the four words everyone confuses.
3 min readWhat happens when you tap a card?
A card payment is three separate events on three different clocks. The beep is a promise, not a payment. Here is the full sequence.
3 min readWhat is settlement?
Settlement is the moment money actually moves between institutions. T+1 and T+2 explain why your money is somewhere else for days. Here is what is really happening.
3 min readIssuer, acquirer, processor: who is who?
Four institutions touch every card payment and everyone confuses their names. Here is the four-party model, explained once, properly.
3 min read
The rails
The systems that actually move money between accounts.
What is UPI?
UPI is not a wallet. It is a public layer that lets any app move money between any two bank accounts instantly and for free. Here is how it works and who pays for it.
3 min readWhat is SWIFT?
SWIFT is a messaging network, not a payment network. It has never moved money. Here is what it actually carries and why cutting a bank off is so devastating.
3 min readWhat is a stablecoin?
A stablecoin is a digital IOU pegged to a currency and issued by a private company. Here is how it works, what it deletes, and the three questions that decide whether it is safe.
3 min readNEFT, RTGS, IMPS and UPI: what is the difference?
Four domestic payment rails, four different jobs. Here is which one moves your money, how fast, at what cost, and which one your bank quietly chooses for you.
3 min readWhat is a wallet (and what is a PPI)?
A wallet holds money; a bank account holds money differently. The difference is what protects you. Here is what a PPI actually is and where your balance sits.
3 min readHow do bank codes work? (IFSC, swift/bic, IBAN)
IFSC, SWIFT, BIC, IBAN, routing number. Different codes for different jobs. Here is which one you need and what each part of it means.
3 min readWhat are nostro and vostro accounts?
Your money never crosses the border. Nostro and vostro accounts are the reason, and understanding them explains almost everything about international transfers.
3 min readWhat is SEPA, and why is Europe different?
SEPA turned thirty-six countries into one domestic payment area. Here is what it actually did, what it did not do, and why it matters beyond Europe.
3 min readWhat is a QR code payment (static versus dynamic)?
A QR code is not a payment method. It is an address. The difference between static and dynamic codes explains most of what goes wrong at the counter.
3 min readWhat is a card scheme, and how do Visa and Mastercard make money?
Visa and Mastercard do not issue cards, do not lend, and do not hold your money. Here is what they actually own, and why it is a better business than banking.
3 min readWhat is a CBDC (and is the digital rupee different)?
A central bank digital currency is not the money in your bank account. The difference is who owes you, and it matters more than it sounds.
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The money
How value moves, gets priced, and lands somewhere.
What is interchange?
Interchange is the fee inside the fee: the slice of every card payment that flows back to the cardholder's bank. It is why rewards cards exist and why merchants wince at them.
3 min readWhat is reconciliation?
Reconciliation is matching what you think happened against what actually happened. It sounds boring and it is where money quietly disappears.
3 min readWhat is a payout?
A payout is money going out rather than coming in, and it is a completely different technical problem. Here is why marketplaces and gig platforms find it hard.
3 min readWhat is no-cost EMI, and who pays for it?
No-cost EMI is not free credit. Somebody funds the interest, and knowing who tells you a great deal about the deal you are being offered.
3 min readWhat is currency conversion, and what is DCC?
Every currency conversion has a real rate and a rate you were given. The gap is the fee. And DCC is the most expensive button on any card machine.
3 min readWhat is remittance, and why does it cost so much?
India receives more remittances than any country on earth. Here is the machinery behind them and why the cost has stayed stubbornly high.
3 min readWhat is MDR (merchant discount rate)?
MDR is the fee a merchant pays to accept your payment. Here is who it splits between, and why India made part of it zero.
3 min readWhat is float, and who earns it?
Between the moment you pay and the moment the money arrives, it sits somewhere. Float is what that waiting is worth, and it funds more of finance than most people realise.
3 min readWhat is a rolling reserve?
Your payment provider is holding back a percentage of your revenue. It is not a penalty and it is not a scam. Here is what it is protecting against.
3 min readWhat is BNPL, and who is actually lending?
Buy now pay later looks like a payment method and behaves like a loan. Here is who funds it, who takes the risk, and why merchants agree to pay for it.
3 min read
Trust and risk
Who is allowed to pay, and what happens when it goes wrong.
What is KYC?
KYC is not paperwork. It is the checkpoint deciding whether the financial system will trust you, performed on behalf of the regulator. Here is what it checks and how to pass first time.
3 min readWhat is a chargeback?
A chargeback is not a refund. It is your bank reaching through the card network to reverse a payment, whether the merchant agrees or not. Here is how the machine works from both sides.
3 min readWhat is card tokenization?
Tokenization replaces your card number with a meaningless substitute so merchants never store the real thing. Here is how it works and why India mandated it.
3 min readWhat is 3D secure, and why do I get an OTP?
That OTP screen is 3D Secure, a protocol that shifts fraud liability from the merchant to the bank. Here is what it is really doing and why it costs merchants sales.
3 min readWhat is PCI DSS compliance?
PCI DSS is the security standard every business touching card data must meet. Here is what it actually requires, what the levels mean, and the shortcut most businesses take.
3 min readRefund, void, and reversal: what is the difference?
Three different ways money comes back, on three different timelines. Here is why your refund takes days and how to tell which one you are waiting for.
3 min readWhat is a credit score, and what is CIBIL?
A credit score predicts one thing only: whether you repay. Here is what it measures, what it ignores, and the two behaviours that move it most.
3 min readWhat is a fraud engine?
Every transaction you make is scored in milliseconds before approval. Here is what the fraud engine looks at, and why it sometimes declines you at your own grocery store.
3 min readWhat is AML, and how is it different from KYC?
KYC asks who you are, once. AML watches what you do, forever. Confusing the two is the most common mistake in financial compliance.
3 min readWhy do payments fail?
A failed payment has one of about five real causes. The message on screen almost never tells you which, and that is a design choice.
3 min readWhat is an authorisation hold?
The petrol pump blocked more than you spent. Here is what an authorisation hold is, why it exists, and why it takes days to disappear.
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Building on it
Pieces you assemble when you build a payments product.
What is a payment aggregator?
A payment aggregator lets thousands of merchants accept payments without each getting their own bank relationship. Here is how it works and why it needs a licence.
3 min readHow do recurring payments actually work?
Subscriptions run on mandates: standing permissions you grant once. Here is how eNACH, UPI Autopay, and card mandates differ, and why Indian subscriptions break more often.
3 min readWhat is an escrow or nodal account?
When a platform holds money between buyer and seller, it must hold it somewhere specific. Escrow and nodal accounts are that somewhere, and the rules are strict.
3 min readWhat is open banking (and India's account aggregator)?
For a century your transaction data was visible only to your bank. Open banking changes who holds the key. Here is how it works and what India built differently.
3 min readWhat is payment orchestration?
One payment provider is a single point of failure. Orchestration is the layer that routes intelligently between several. Here is when you need it and when you do not.
3 min readWhat is a webhook, and why do payments need them?
A webhook is how a payment provider tells your system that something happened. Get them wrong and you ship goods for free. Here is how they work.
3 min readWhat is a merchant of record?
The merchant of record is whoever is legally selling to the customer. Getting this wrong is the most expensive structural mistake a marketplace can make.
3 min readWhat is a virtual account?
A virtual account is a real account number that is not a real account. It is the most elegant solution to reconciliation anyone has invented.
3 min readHow does a fintech actually get licensed?
Building the product is the fast part. Here is what actually happens between having a payments product and being allowed to switch it on.
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