The Payment Card Trust Framework

From IIW

Session topic: Payment Card Industry Trust Framework (W5D)

Convener: Sid Sidner

Notes-taker(s): Sid Sidner

Tags for the session - technology discussed/ideas considered:

Discussion notes, key understandings, outstanding questions, observations, and, if appropriate to this discussion: action items, next steps:


  • Cards now make up over 50% of the the transactions in the USA.
  • The process of 4 party model of credit networks (Sid refers to the 5 party model "the evil pentagram" where he breaks out the Network and the Issuer) 
  • Acquirers, Networks, Issuers, Merchants, Consumer <-- see Sid's blog post for a 12 slide presentation on this topic

1. Merchants decide what types of cards they're going to accept (decrease the friction and outsourcing his credit-issuing processes, in exchange they pay the Acquirer a Merchant Discount Rate (1-3%)

2. Acquirers aggregate merchants on behalf of the Networks (and they generally mark-up the interchange fee, by layering on a Merchant Discount Rate)

3. Networks offer the foreign exchange, connectivity, standards, audit, etc. to the system (They make ~25% of the interchange fee charged to the merchant)

4. Issuers (generally banks) issue cards to customers (they and the Network charge interchange to the Acquirers, the issuers make ~75% of the interchange charged to the merchant)

5. Customers take cards from Issuers to get access to credit. Sometimes they pay a small fee for the card. This fee is insignificant to the fees generated by the card through the purchases, or through interest on balances.

  • "You have rights because of my duties"
  • Level of Assurance (ID Service Provider) , Level of Protection (RP), Level of Control (User)


Drummond Reed:

  • This Trust Framework was set up to move money.
  • The Respect Trust Framework was set up to protect the movement of data, exchange of value.
  • VISA: "the largest network to effect the transfer of value" see: "The Birth of the Chaortic Age"a book by Dee Hock, founder of Visa – google search of "Desmore Chaortic Age":  HYPERLINK "" \t "_blank" 
  • In PAYMENTS: Merchants can't all deal with us to sending cash to them directly, so the payment network acts as a broker/aggegator
  • The concept of the Respect Trust Framework is to allow you to manage the process of moving information (personal data) to various parties.
  • Using the Trust Framework, the data becomes more valuable, more manageable, 
  • Cardholders aren't stakeholders in the Payment Network Trust Framework, but they are in the Respect Trust Framework.
  • If you join the Respect Trust Framework, you're joining a mechanism for the orderly performing business using personal data. A set of rules, a set of principles, clarity of roles and responsibilities.
  • Discussion of the consumer representation / participation in the payment ecosystem vs the Respect Trust Framework. Self-governing aspects. The members of the network have control of the changes to the network.
  • Discussion of L3C entities:  A low-profit limited liability company (L3C) 
  • Discussion of how Respect Trust Framework will make money by brokering access to my personal data to entities like Facebook, etc. When challenged on the concerns of "whoever is paying, is the real customer", Drummond referred to free checking accounts generating revenues for banks by holding the cash, and what they can do with the cash.

Other reading: