You can’t go back. You are here, in front of the payment terminal in a small Japanese restaurant hidden in the backstreets of Tokyo. You didn’t really understand the menu and you ordered a dish at random. 🍣
You insert your Qonto card and type your PIN code. The seconds seem like hours and you can feel a small drop of cold sweat on your forehead: will the payment be accepted?
Then a message is displayed. Again, you can’t read the Japanese. But after the waiter smiles, it appears that the payment has been accepted! 🥳 And even if you feel relieved, a thought is repeating itself in your head:
What happened during those few seconds?
Good question. Let us explain it all to you.
The waiter (and his payment terminal) are suspicious of you
Even if you seem very nice, the waiter at this Japanese restaurant will check that you are not a fraudster. 👀 Don’t take it personally, he does it for everyone.
To do so, he will use his payment terminal. For example, he will check that the PIN code you have just entered is the PIN code for the payment card.
He can also compare your payment card with all the cards that have been used on the terminal network it is part of. In general, these are large networks, with tens of thousands of terminals. So if your card has already been used fraudulently with one of them, your transaction will be rejected immediately.
After having made these few checks, the transaction authorization request may be sent to your finance management solution. That’s us. 🙂
Mastercard, digitalized foreign-exchange broker and mailman
The role that Mastercard plays here is that of a mailman. But a very fast mailman because it all happens in a few seconds. Not like our good old Postal Service. 🤭
Its role is to forward the transaction authorization request (sent by the Japanese restaurant’s terminal) to your payment institution (in other words, us). Except there’s a small concern. Nothing serious, you’ll see.
It’s simply that you are going to have to pay for the dish you chose in Yen. 💴 And you only have euros in your Qonto account.
So Mastercard will take off its mailman’s cap for a second to become a foreign-exchange broker. It will convert the restaurant bill into euros. And like any foreign-exchange broker, it will apply a commission to pay itself (around 1%).
📌 We will pay this commission. And to offset the cost, we reapply this percentage to your foreign currency payments. We will explain this in detail at the end of this article.
Once this adjustment has been made, Mastercard will become the mailman it was before to continue its round and deliver the transaction authorization request. We take over from here.
Qonto, your cashflow guardian
When we receive the transaction authorization request, it will already have been a few hundredths of a second since it left from the Japanese payment terminal. We must therefore make a decision, and fast (otherwise you won’t eat).
Do we accept this transaction or not? 🤔
We first ask several questions: is your balance enough to perform this operation? Have you exceeded your spending limits? We also carry out a few anti-fraud checks: for instance, we check that your card has not been declared stolen.
Only after all these checks do we respond to the authorization request. If all the lights are green, we block the amount on your account (and ‘In progress’ status is displayed).
Mastercard then hurries to do the opposite procedure to inform the payment terminal that the payment authorization request has been approved. A few seconds after having entered your PIN code, your payment is then (finally) accepted.
📌 Even if your balance is updated, it does not mean that you have been debited: that depends on the seller themselves. They have to collect the payment to trigger the transfer from your account to theirs. But that’s another story.
Payments in foreign currency are not free, but who told you that you had to pay for them?
It simply depends on the Qonto card that you have in your wallet.
If you have the One card, it means that you only occasionally travel abroad. Then 2% fees apply to your foreign currency payments: 1% to offset the Mastercard commission and another % to cover the cost of the card (which is free to you).
To those who travel on business more frequently (even to Tokyo), we also offer the Plus Card. With this, the foreign currency payment fees are 1%, simply to cover the Mastercard commission.
For those of you who travel a lot - good news: we are going to reduce these costs to 0%. But we’ll get back to you about that very soon (you already know too much). 🤭