The purposes of routing services is to determine route of transaction to a multiple networks and associations feed information into the routing service database.

In other words, to facilitate application of common routing logic to all financial transactions being processed and to reduce duplicate routing data and logic.

Routing services should support routing profiles - which networks are available for routing and which routing factors most influence routing:-

• Card and account relationship
• Institutions
• Institution and customer relationships
• Routing costs

Routing services

Routing Service provides a common location to determine the transaction routing from the acquirer (originator) to the authorizer (receiver/beneficiary) of each transaction.

Multiple networks and financial institution membership associations feed information into the routing database.

Behind the Routing Service are utilities to support loading of routing data from the retail payment networks (card networks), national and international payment networks (ACH, wire).

Providing common Routing Service facilitates application of common routing logic to all financial transactions being processed and reduces the duplicate routing data and logic that currently exists in multiple financial applications across retail, ACH and wire payment applications.

Routing Service implementation should support routing profiles that can be used to define the routing scheme and networks available for routing based on the acquiring channel.

Routing logic should also evaluate the institutions, institution business relationships, customer relationships, routing costs, card, account relationships as well as customer specific scripted routing logic when determining the routing of a transaction.

The routing profile provides configuration to determine the routing scripts to execute and which routing factors most influence the routing decision.

Non-functional requirements that are most important to the Routing Service include the following:

• Scalability, Availability: As described in Channel Services above.
  
  
• Flexibility/Configurability: The architecture of the Routing Service must deliver the Flexibility/Configurability customers require to achieve the desired routing of financial transactions.
  
  To support the Flexibility/Configurability non-functional requirement the architecture of the Routing Service must support determination of the routing based on configurable routing preferences that allow for ordering of routing schemes (least cost, relationship, network, payment path preference) and invocation of user defined routing script logic rules.

Non-functional requirements of Routing services

• Availability
  • Provide Gateways of the shared services processing environment
  • It must be available 99.9999% of the time
• Linear scalability - Constant per transaction processing cost maintained as transactions volumes increase.
  
  
• Flexibility/configurability - Architecture must support determination of routing based on configurable ordering of route schemes.
  
  
• Scalability
  • Horizontal scalability - the ability to increase number of processes
  • Linear scalability - Constant per transaction processing cost maintained as transactions volumes increase.

Routing of financial transaction

Routing of financial transactions within the current retail transaction processing environment is performed by the acquiring institution.

Routing links together the acquirer of the transaction with the card issuing institution to perform authorization based on the card prefix.

Transactions where the processing institution is the acquirer as well as the card issuer remain within the institution for processing.

Transactions where the acquirer is different than the card issuer; are routed via a retail payments network (Visa, MasterCard, JCB) to gain access to the issuing institution for authorization.

Retail payment networks support the completion of transactions in a two-sided market between two groups of agents: cardholders and merchants.

The value of participating in a network for one group depends on the number of members in the other group.

Without a sufficient number of merchants accepting a network’s transactions, few cardholders will apply for the cards.

Likewise, without a sufficient number of cardholders, merchants will not be willing to accept networks cards.

When routing to the primary network is not possible, an alternate network or stand-in processing of the acquiring institution is utilized to complete the transaction.

An emerging trend in retail payment routing is the ability to route transactions acquired by mechanisms other than card prefix; such as customer identifier, mobile phone number or some other non-card based customer identification.

The ability to route retail transactions by non-card based mechanisms will be necessary in the future to support non-card based retail payments.

For instance, supporting the initiation of payments by unbanked customers represents a large market segment and opportunity in several regions of the world including Asia and Europe.

network routing service

The routing companies and the routing rules is the process of picking and directs messages to the proper endpoints through transitional.

The core functionality of the Routing Service is the ability to route messages based on message content, which allows a message to be forwarded to a client endpoint based on a value within the message itself, in either the header or the message body.