Stage 1 of 10
The bill
A restaurant at Marina Bay, Singapore
Dinner for 1 is S$56.00 on the menu, marked “++”. In Singapore that means a 10% service charge and then 9% GST on top, and GST is charged on the service charge too. So the bill comes to S$67.14: about €46.64, or US$52.48.
What’s going on
- The menu price is before service and tax: that is what “++” means.
- 10% service is added to the food: S$56.00 becomes S$61.60.
- 9% GST is then added to food and service together: S$5.54.
- The restaurant keeps the tax for now and pays it to IRAS, Singapore’s tax office, later.
Why it works this way
Showing prices before service and tax keeps menus simple; the tax law treats the service charge as part of what you buy, so it is taxed too.
In everyday terms
Like a US menu price before tax and tip, except the tip here is fixed, and taxed.
- Menu
- S$56.00
- Service
- S$5.60, 10%
- GST
- S$5.54, 9% of food plus service Check
- Total
- S$67.14 Calculated
Sources: IRAS, current GST rates, IRAS, GST for hotels and food and beverage, ECB euro reference rates, SGD and USD, 16 October 2026
Stage 2 of 10
Euros, dollars or Singapore dollars?
The card terminal
Because the card is foreign, the terminal may offer to charge it in US dollars. That is dynamic currency conversion, and the restaurant’s bank sets the rate, usually with a markup of several percent. Choose Singapore dollars and your own card network converts the amount at its daily rate instead. The rules say the choice must be yours.
What’s going on
- The terminal reads the first digits of the card and sees it was issued in the US.
- If the restaurant’s bank offers it, the screen shows the bill in Singapore dollars and in US dollars.
- Pick US dollars and the restaurant’s bank converts it now, at its own rate, and sends the payment in dollars.
- Pick Singapore dollars and the payment goes in Singapore dollars; Visa converts it when it clears, at its daily rate.
Why it works this way
Whoever converts the money earns the margin. With dynamic currency conversion that is the restaurant’s side, which is why the terminal offers it. The card rules say it must be your choice.
In everyday terms
Like changing money at an airport kiosk instead of at the bank.
- In SGD
- S$67.14, converted later by Visa at about US$52.48
- In USD
- About US$55.10 with a 5% markup Estimate
- Rule
- The merchant must offer the choice and get your agreement
Sources: Wikipedia, dynamic currency conversion, Visa core rules and product and service rules
Stage 3 of 10
The tap
Your phone or card, against the terminal
The card number never leaves your phone. Apple Pay and Google Pay send a token, a stand-in number tied to that device, plus a code that only works for this 1 payment. A physical card does the same with its chip. Under the contactless limit, no PIN is needed.
What’s going on
- Phone and terminal talk by radio over a few centimetres.
- The terminal sends the amount, the currency, the date and a random number.
- The chip in the phone or card mixes these with a secret key that never leaves it, and produces a one-time code.
- It sends back the token, the card’s expiry date and that code. On a phone, your face or fingerprint counts as the check, so no PIN is needed.
Why it works this way
The code proves a genuine chip made it, for this exact amount, at this moment. A copy of it would not work for any other payment.
In everyday terms
Like a wax seal made for 1 letter only.
- Sends
- Token, amount, currency, a one-time code
- Limit
- About S$200 per tap without a PIN on a card Check
- Time
- Under half a second at the reader Estimate
Sources: Apple, Apple Pay security and privacy, Visa Token Service, Wikipedia, contactless payment
Stage 4 of 10
The restaurant’s bank
The acquirer, Singapore
The terminal sends the request to the bank that signed the restaurant up to take cards, the acquirer, or to the processor it uses. The acquirer reads the first digits of the card number, sees a Visa card from a US bank, and passes the request to Visa.
What’s going on
- The terminal sends the message over the internet or the mobile network to its processor.
- The processor puts it into the standard format and hands it to the acquirer.
- The acquirer looks up the card’s first digits in a routing table: Visa, issued in the US.
- It adds the restaurant’s IDs and its category, 5812 for restaurants, and passes the request to Visa.
Why it works this way
A restaurant cannot connect to Visa itself: Visa only deals with member banks. The acquirer vouches for the restaurant, and pays up if it cannot, for example if customers win disputes and the restaurant has closed.
In everyday terms
Like an agent who represents the seller in a deal.
- Who
- The acquirer, a Singapore bank or payment company
- Adds
- Merchant ID, terminal ID, the restaurant’s category: 5812, eating places
- Time
- Tens of milliseconds Estimate
Stage 5 of 10
VisaNet, Singapore
Visa’s data centre in Singapore
Visa runs its network, VisaNet, from 4 main data centres: 2 in the US, 1 in the UK and 1 in Singapore. Their exact sites are not public, so the one on the map is placed for illustration. The request enters the network here and is routed towards the bank that issued the card.
What’s going on
- Visa receives the request and checks it is well formed.
- Because a phone sent a token, the Visa Token Service swaps it back for the real card number, which only Visa and your bank can do.
- Visa looks up your bank and sends the request on towards it.
Why it works this way
Without a network, every bank in the world would need a direct link to every other. Visa sits in the middle, so each bank needs only 1 connection.
In everyday terms
Like a telephone exchange.
- Network
- 329 billion transactions a year, available 99.9999% of the time
- Routes by
- The card’s issuing bank
Sources: Visa, VisaNet, Visa fact sheet, Baxtel, VisaNet data centres
Stage 6 of 10
Across the Pacific
Submarine cable, Singapore to California
The message crosses the ocean as light in a glass fibre on the sea floor, through cables such as the Asia-America Gateway, which lands in Hong Kong, Guam, Hawaii and California. About 16,036 km takes light about 80 milliseconds.
What’s going on
- The request is data, sent over Visa’s private network.
- Between continents that network uses capacity on submarine cables: pulses of light in glass fibre on the sea floor, boosted by repeaters along the way.
- The Asia-America Gateway route used here runs about 16,036 km via Hong Kong, Guam and Hawaii to California.
- Then it crosses the US over land to Virginia.
Why it works this way
The yes or no has to come from your bank, because your bank is lending you the money, and its systems are in the US.
In everyday terms
Like a phone call to the US: the line goes under the sea.
- Distance
- About 16,036 km along the cable route drawn Calculated
- Speed
- About 200,000 km a second, two thirds of light in a vacuum
- Time
- About 80 ms Calculated
Sources: Wikipedia, Asia-America Gateway
Stage 7 of 10
Your bank decides
VisaNet, Ashburn, Virginia, and your bank
Across the US to Visa’s main data centre in Virginia, and on to your bank, the issuer. In milliseconds it checks the one-time code, your available credit and its fraud models: is this card usually in Singapore, is this a normal amount for dinner? Then it says yes or no.
What’s going on
- Visa delivers the request to your bank’s systems.
- Your bank checks the one-time code with its own copy of the key: is the card genuine?
- It checks the account is open and has at least about US$52.48 of credit available.
- Its fraud model scores the payment: a new country, a restaurant, a normal amount for dinner, your phone just used Face ID.
- It answers “00”, approved, with an approval code, and holds US$52.48 of your credit.
Why it works this way
Your bank carries the risk: it pays the restaurant even if you never pay your bill. So it decides.
In everyday terms
Like the restaurant ringing your bank to ask: is this person good for US$52.48?
- Checks
- The code is genuine, the credit limit, fraud signals
- Answer
- 00, approved
- Converts
- S$67.14 is about US$52.48 Calculated
Sources: Visa, VisaNet, Forbes, Visa moves at the speed of money (2015)
Stage 8 of 10
Approved
Back to the restaurant
The answer makes the same trip in reverse, about 19,861 km. Light alone needs about 199 ms for the round trip; the rest of the wait is checks and handovers. The terminal beeps, and the money has not moved yet. Your bank has only set aside US$52.48 of your credit.
What’s going on
- The answer goes back the way it came: your bank, Visa, the acquirer, the processor, the terminal.
- The terminal shows Approved and prints the receipt.
- No money has moved. Your bank has promised to pay if the restaurant sends the payment through properly.
Why it works this way
Splitting the promise, which takes seconds, from the payment, which takes days, lets millions of payments be added up and paid as a few large transfers.
In everyday terms
Like an IOU that is guaranteed by your bank.
- Round trip
- About 39,722 km Calculated
- Light alone
- About 199 ms Calculated
- Tap to beep
- About 1 to 2 seconds Estimate
Stage 9 of 10
Clearing and settlement
Overnight, through Visa
At closing time the restaurant’s terminal sends the day’s payments as a batch. Visa clears them, works out what every bank owes every other bank, and settles the net amounts once a day. Your bank pays Visa in dollars, Visa pays the acquirer in Singapore dollars, and the acquirer pays the restaurant, keeping its fee.
What’s going on
- At closing time the terminal sends the day’s payments to the acquirer: “closing the batch”.
- The acquirer sends them to Visa: this is clearing. Visa passes each one to the right bank and converts Singapore dollars to US dollars at its daily rate.
- Visa adds up what every bank owes every other bank, and each bank pays or receives 1 net amount for the day: this is settlement.
- Your bank pays for the dinner less the interchange it keeps, S$1.33. The acquirer pays the restaurant less its fee: about S$65.13.
Why it works this way
Netting turns millions of payments into 1 transfer per bank per day. Interchange is the issuer’s fee for the risk and the free credit it gives you.
In everyday terms
Like friends settling up a shared trip at the end, instead of after every coffee.
- Restaurant gets
- About S$65.13 after a 3% fee Estimate
- When
- About 1 to 3 days after the dinner Estimate
- Rate
- Visa sets its conversion rates daily
Sources: Visa, merchant dispute management guidelines, Visa, inter-regional interchange rates (Asia Pacific)
Stage 10 of 10
Your statement
Your bank, in the US
The charge appears as about US$52.48. Many US cards add a 3% foreign transaction fee, US$1.57 here, of which about 1% goes to Visa. Travel cards often charge nothing. If something is wrong, US law gives you 60 days from the statement to dispute it, and Visa’s own rules allow a dispute for longer.
What’s going on
- Your bank replaces the hold with the final charge, at Visa’s conversion: about US$52.48.
- If your card has a foreign transaction fee, it is added: 3% is common, US$1.57 here.
- The charge appears on your monthly statement. Pay in full by the due date and a credit card charges no interest.
- If something is wrong, you dispute it with your bank, which can take it back from the restaurant’s bank through Visa: a chargeback.
Why it works this way
Your bank lent you the money for up to about a month. It is paid by the interchange, your fees, and interest if you do not pay in full.
In everyday terms
Like a bar tab you settle once a month.
- Dinner
- US$52.48 Calculated
- Foreign fee
- US$1.57 at 3%, or nothing on a travel card
- Total
- US$54.05 Calculated
- Disputes
- 60 days from the statement, Fair Credit Billing Act
Sources: The Points Guy, foreign transaction fees, Capital One, foreign transaction fees, CFPB, Regulation Z, 12 CFR 1026.13, billing error resolution