eli5: what do payment infrastructure companies do

Question

I recently learned about companies like Stripe and Terrapay, which are both payment infrastructure companies? What exactly do these companies do?

How do they differ from the banks or the likes of Visa and Mastercard?

In: 0

Answer 1

There are many many businesses who want to do card transactions.

There are many many banks who want to issue debit cards.

If every business had to have an agreement with every bank, there would be many many many many such agreements required.

Payment Infrastructure companies act as a man in the middle. They have many many businesses that use them, and they have agreements with many many banks, which basically simplifies everything for everyone involved.