Credit Card Industry

Credit card processing is a collaboration of many different groups working to support a quick, simple, and secure way for customers to purchase products from businesses around the world.

Unless you have accepted credit cards at a business before you many not realize all the different aspects of the credit card industry.  Beyond the card holder and the merchant accepting the payments there are three main parts that work together to complete the transaction.  They are the acquirer, the issuer, and the card network.

The acquirer is a financial institution that has obtained licensing from the different card processing networks to issue merchant accounts.  They are responsible for connecting the merchant to the network and insuring proper funding of all transactions.

The issuer is the bank or other financial institution that issues the card to the customer.  They provide the line of credit and the physical plastic card to the consumer.

The card network is the path through which the information about the transaction travels between the acquirer and the issuer.  MasterCard, Visa, Discover, and American Express are all card networks.

When a payment is processed the merchant takes the information from the card and sends it to their acquirer.  The acquirer uses the network to ensure that the transaction can be processed and informs the merchant when the ability to process the transaction is confirmed.  The acquirer then submits the transaction to the issuer.  The issuer then pays the amount of the payment to the acquirer who then pays the merchant.  The issuer is then responsible for collecting the funds from the cardholder.