Single and dual messaging seems to confuse a lot of people. It’s one of those topics which is fairly easy to understand, once it’s been explained. Before it has however, it can trip up even the most assured of Fintech professionals.
In the UK and in some parts of Europe, a dual messaging system is used. Meaning a card payment has two messages.
There’s a request and a response.
First, the authorisation request is sent from the merchant to the card issuer. Then, the issuer responds with an authorisation code or declines the transaction. Easy, right?
If the transaction’s approved, the merchant can proceed with the actual payment capture, in a separate message, usually referred to as a "capture" or "settlement" message. Thus, dual messaging. But there’s trouble afoot. Let’s say a business decided to expand their operation from the UK and start issuing cards in North America, and weren’t aware of the fact that in the USA, their messaging uses a single system. Well, in that case, they might leave themselves open to fraudsters. How? Because someone could make a transaction, knowing a line of credit wasn’t available, expecting the issuer to correctly refuse the transaction. But caught using an incorrect messaging system, also expect the company to mistakenly refund their own money into the fraudsters account. Which they could do again. And again. And again. Essentially emptying their accounts and profits to someone who likely expected all of this and headed to their nearest ATM.
The single life
Electronic payments are now far more mainstream than cash. We can thank COVID for the increased speed of their adoption.
The way payments are processed, going from cardholder, to merchant, to card issuer, and then payment scheme are either single or dual in nature.
In single messaging all the detail needed is carried over in one. In the vast majority of cases, this is done by the merchant. Once sent, the message travels down from the scheme and hits the card issuer. Once the issuer’s processed the transaction, it sends back a response to the store in the same message.
The benefits of being single
Ever had 4 huge supermarket bags in the car? You need to take them into the house, but they’re overflowing with a week’s worth of groceries for a family of 4. There’s tins, potatoes, cabbages and toiletries. It’s heavy.
But, you’ve been to the gym recently and decide to carry 2 bags in each hand. It might cut the blood from your hands but you’ll make it quicker and not need to do two trips.
In single messaging, the benefits are much the same. Because it’s a more simplified communication, all the information needed is in a single message, meaning the communication’s taken care of quicker and easier.
Like being able to check the contents of all 4 bags in the kitchen in one go, with the list you accidentally left at home, you equally have a real-time authorisation in single messaging.
And just as you save you energy not making two trips to the car, you also do in the lower latency single messaging, with a reduced transaction processing time.
There are drawbacks however.
Once you’ve authorised the transaction in single messaging, there’s less ability to communicate. Let’s say for example, you realise the cabbage is damaged just after you buy it, needing a refund might require a separate process.
There’s also a reduced flexibility in single messaging.
Should you decide you’d like to change or alter your system, doing so is a far more challenging process than dual.
And speaking of which…
We Dual at dawn
As mentioned above, in dual messaging you get an authorisation file and a clearing file.
Where single messaging gets all the shopping there in one go, the steadier, more careful dual messaging takes two trips.
The authorisation request’s sent to the card issuer, from the merchant, and the issuer responds with an authorisation code or decline. If there’s not enough money in the coffers, the issuer might refuse the request. Or it might be that the card’s out of date, or been reported as stolen.
Either way, the cabbage is staying where it is.
If the transaction’s approved however, the store can handle the payment capture in a separate message and it’s cabbage soup for everyone. Rejoice.
The Dual in the crown (the benefits)
Just as you have more flexibility to get your keys out the door carrying two fewer bags from the car, so greater flexibility comes with dual messaging too.
In this case post-authorisation flexibility. Like handling a partial refund, should just one of the cabbages have a worm wiggling through it.
It’s also far easier to track and reconcile the transactions, because they take place in two parts.
And finally, should you want to update either part of your process, you can modify one, without impacting the other.
Like anything in life however, it’s not all sunshine and lollipops.
Where single’s slightly faster, so dual is slightly longer. That means a delay, and is the unhappy equivalent of not enjoying your cans of chopped tomatoes quite as quickly as you’d like to.
It’s also a more complicated process. And that might mean you need more advanced systems in order to process them successfully.
If you’re launching a card programme, you need to be worldly
Basically, you need to know which regions use which system. And you need a card issuer that has the huge selling point of being able to help you handle both.
So, which regions are single? And which are in happy relationships with dual messaging?
Well, like many relationships in life, it’s complicated.
North America’s single. As mentioned. And that includes their southerly and northerly cousins Mexico and Canada respectively. But possibly for different reasons. Many in the European Union have moved to a single model, partly driven by SEPA (Single Euro Payments Area), essentially to make things easier for others. But others in mainland Europe and the UK are dual. Which again, is par for the course.
In APAC too there’s a desire to get things moving quick-sharp. With Singapore and Australia both single, and others around the world following suit like Brazil, South Korea, Saudi and UAE.
We did say it was complicated though.
Most companies are, or desire to be, global in today’s economy. Whether you’re in Fintech or Fish Fingers, the world’s getting smaller. But opening your business to those on far-flung shores makes sense.
But the BINs don’t work the same way in every country.
And the local rules and regs make a difference. While some countries are pushing for single messaging, it doesn’t mean neighbouring countries are, or that entire continent adoption is on the way.
So will single continue to mingle, with more countries joining the movement? Potentially.
But there’s nothing to say technology won’t evolve even further or fresh thinking will come to fruition by the time the UK looks up and reads the room.
Everything you need to know now for your pitch deck or programme There’ve been people aplenty in previous presentations, who’ve pitched their projects and presumed they know what they’re doing. You know what they say about assumptions? Your expansion plans won’t quite cut the mustard if the success of your project assumes fluency between regions running different systems. Or that you can simply use your current system in a new region seamlessly. The consequences of making this assumption involve having to fix the issue, in real time, and ‘plugging the dam while the gallons are gushing’ so to speak. Assuming you have the capability to do so. Or can pay someone who does. Once your programme goes live, it’s too late. Luckily for you however, help’s at hand, whatever stage you’re at. Your card programme’s better with Marqeta.
Not only are we experts in both single and dual messaging, we can set everything up you’ll need. We’ll get you using the appropriate BINs and hold your hand through the hard stuff. The stuff harder to understand than analogies about shopping bags.
To find out how we might help you in particular, click here and let’s chat.
