168 lines
10 KiB
Plaintext
168 lines
10 KiB
Plaintext
Part 6 - Networks
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ACCESS NETWORKS
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For most credit card applications, the cost of the access network is
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the single biggest factor in overall costs, often accounting for over
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half of the total. For that reason, there are many different solu-
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tions, depending on the provider, the application, and geographical
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constraints.
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The simplest form of access network uses 800 service, in one of its
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many forms. Terminals at merchant locations across the country dial an
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800 number that is terminated on a large hunt group of modems, con-
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nected directly to the acquirer's front-end processor (FEP). The FEP
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is typically a fault-tolerant machine, since an outage here will take
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out the entire service. A large acquirer will typically have two or
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more centers for terminating the 800 service. This allows better
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economy, due to the nature of 800 service tariffs, and allows for di-
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saster recovery in case of a failure of one data center. An advantage
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of 800 service is that it is quite easy to cover the entire country
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with it. It also provides the most effective utilization of your FEP
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resources. (A little queuing theory will show you why.) However, 800
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service is quite expensive. It always requires 10 (or 11) digits di-
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aled, and in areas with pulse dialing it can take almost three seconds
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just to dial 1-800. The delay between dialing and connection is longer
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for 800 calls than many other calls, because of the way the calls get
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routed. All of this adds to the perceived response time at the mer-
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chant location, even though the acquirer has no control over it.
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Large acquirers prefer to offer some form of local access service. In
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this service, terminals at the merchants dial a local telephone number
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to gain access to the acquirer. Typically, the local number actually
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connects to a packet network, which then connects to the acquirer. If
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the packet network is a public network, the terminal must go through a
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login sequence to get connected across the packet network. Typically,
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local calls are much less expensive than 800 service calls, and local
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calls typically connect faster than 800 calls. The cost of those calls
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are absorbed by the merchants directly. In those few remaining areas
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where local calls are still free from a business line, this works out
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well for the merchant. Otherwise, the merchant can end up spending a
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lot of money on phone calls. Usually, the acquirer has to offer lower
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prices to accepters who use local calls, to help offset this. Even so,
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these networks are generally much less expensive for the acquirers.
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Such networks are difficult to maintain, due to the distributed nature
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of the access network. Since most packet networks are much more likely
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to experience failures than the phone network is, the merchant's POS
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terminal is usually programmed to dial an 800 number for fallback if
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the local number doesn't work. Also, it is generally not cost-effec-
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tive to cover every free calling area in the entire country with access
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equipment, so some 800 service is required anyway. There is also an
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administrative headache associated with keeping track of the different
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phone numbers that each merchant across the country needs to dial.
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When you have tens of thousands of terminals to support, this can be
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formidable.
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Acquirers are beginning to experiment with Feature Group B (FGB) ac-
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cess. FGB access was the method of access used to get to alternative
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long-distance carriers before "equal access" was available. The
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tariffs are still on the books, and they are favorable for this appli-
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cation. FGB access provides a single number, nationwide, for all mer-
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chants to dial in order to gain access to the acquirer. The call has
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simpler (hence, presumably, faster) routing than 800 service, and the
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call is charged to the acquirer, not the accepter. FGB access does
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have to terminate on equipment that is physically located in the Local
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Access Toll Area (LATA) where the call originated, so there is the
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problem of having distributed equipment, as above. This also implies
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that it is not cost-effective to deploy FGB access everywhere, as well.
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There are also some technical oddities of FGB, due to its original in-
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tent, that have made it difficult to implement so far.
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The other big switched access capability that is likely to have an im-
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pact in the future is ISDN. So far, this has been inhibited by limited
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availability and lack of adequate equipment on the merchant end, but it
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could be very beneficial when these problems are solved.
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Private-line networks are pretty straightforward applications of
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point-to-point and multipoint private lines. Since private lines are
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quite expensive, engineering of the networks is challenging. Usually,
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sophisticated software is used to determine the optimum placement of
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concentrators in order to minimize costs. Since tariffs, real estate
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prices, and business needs change frequently, maintaining a stable,
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cost-effective network is hard work. A typical asynchronous private
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line network will have multiplexers at remote sites, with backbone
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links to companion multiplexers at a central site. Synchronous private
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line networks may use multiplexers, or remote controllers, or remote
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FEPs, depending on the application and the availability of real estate.
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INTERCHANGE NETWORKS
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Interchange networks physically consist mostly of point-to-point pri-
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vate lines. In many of the large interchange networks, there is a cen-
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tral "switch" that takes transactions from acquirers (thereby acting as
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an issuer), and routes them to issuers (thereby acting as an acquirer).
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Often the switch provider will actually be an acquirer or issuer as
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well, but this is not always the case. Usually, the provider of the
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switch defines standard message formats, protocols, and interchange
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rules. These formats and protocols usually comply with national and
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international standards, but sometimes do not. Often the switch will
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provide translation between different message formats and protocols.
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The switch provider is generally very concerned that settlement com-
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plete successfully. Failure to settle with one or more large issuers
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can leave the switch provider with an overnight deficit of a couple
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million dollars. Even though this is a temporary situation, it has
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significant financial impact.
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In some current networks, authorization and settlement take place on
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completely separate facilities, with separate hosts in some cases.
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This is mainly due to the history of the industry in this country. Re-
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call that authorizations were originally done by voice calls, and
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settlement was done by moving paper around. These two processes were
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automated at different times, by separate means. Thus VISA has a BASE
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1 network for authorization, and a BASE 2 network for settlement.
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Likewise, MasterCard has INET and INES, one for authorization and one
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for settlement. These functions are becoming less and less separated
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as communication and computer facilities evolve, and will probably be
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completely integrated over the next five to ten years.
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Interchange networks are probably the most volatile part of the ATM
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market right now. There is currently a shakeout going on in much of
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the market, with larger, more aggressive regionals buying out
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standalone networks and smaller regionals. This causes local banks to
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change local and national network affiliation from time to time. So a
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card may work in a given ATM one day, but fail in that machine the
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next, which confuses many consumers. Most large regional and national
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networks have operating regulations requiring labeling of ATMs and
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cards, so that if you see the same logo on your card and the ATM, you
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can be pretty sure it will work.
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Some regionals are interconnected, and others are not. The two biggest
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nationals, Cirrus and Plus, have operating regulations that effectively
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prohibit a member of one network from connecting to the other. But a
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regional on Cirrus could be connected to a regional on Plus. In that
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case, whether a machine will take your ATM card depends on the routing
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algorithm used. In most cases, the acquirer will have a table of issu-
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ers that are directly connected, and will send anything else to the re-
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gional switch. The regional switch will have a table of each issuer
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it is directly connected to, and tables of which cards are acceptable
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to other regionals it interchanges with. Anything else goes to the na-
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tional switch. The same process happens in reverse from there. Often
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the order of search in the routing tables is determined by fee scales,
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not geography, so transactions can be routed in completely non-obvious
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ways.
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So the easiest way to tell if your card will work in a given ATM is to
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stick the card in and try. I don't know of any machine that will eat a
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card just because it can't route the transaction - it will generally
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give some non-specific message about being unable to complete the
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transaction and spit the card back out. Of course, if the transaction
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is completed from a machine that you're not sure of, you also aren't
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sure what the fee is going to be if your bank passes those fees on to
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you. Sometimes the fee will be printed on the receipt, but usually it
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isn't. If you do the transaction in a foreign country, you may not
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know the exchange rate used. (I once couldn't balance my checkbook for
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a month until I got a statement with the transaction I did at Banc du
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Canada in Montreal.) But if you need the money and are willing to pay
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the fee, you have little to lose by trying out just about any ATM.
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This completes the course in Credit Card 101. Hope you all found it
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enjoyable and informative.
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Joe Ziegler
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att!lznv!ziegler
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