Open-Loop vs Closed-Loop
Open-loop payments (Visa, Mastercard) work across millions of merchants globally. Closed-loop payments work only within a defined ecosystem.
Definition
The distinction between open-loop and closed-loop payments is fundamental in payments architecture. Open-loop payments use external networks (Visa, Mastercard, Amex, UnionPay) that are widely accepted, allowing customers to spend anywhere the network is accepted. Closed-loop payments operate within a defined ecosystem — a single merchant, a chain, a coalition, or a specific program — where the operator controls all aspects of the transaction. Each has advantages: open-loop offers acceptance, closed-loop offers control, lower fees, better data, and customized customer experiences.
Examples
Open-loop: Visa credit card (accepted everywhere)
Closed-loop: Starbucks Card (only at Starbucks)
Open-loop: Apple Pay (uses underlying Visa/Mastercard)
Closed-loop: Disney MagicBand (only at Disney)
How 7Konto uses this
7Konto is purely closed-loop. Businesses that want general-purpose payment acceptance use their existing bank-issued terminals for open-loop transactions. When they want to offer gift cards, prepaid balances, or employee benefits — closed-loop through 7Konto is the right tool. Most businesses use both: open-loop for main revenue, closed-loop for specific programs.
Learn more on 7Konto
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