Credit: Flickr<\/a><\/p><\/div>\nAcquirers or Payment Processors\u00a0<\/strong>that market card acceptance services to merchants, obtain transaction authorization, and clear and settle card transactions for the merchant.<\/p>\nConsumers or Cardholders<\/strong>\u00a0that use payment cards to purchase goods and services.\u00a0Issuers<\/strong>\u00a0that market and issue payment cards to consumers and set the terms and conditions for their use; Merchants<\/strong>\u00a0that accept payment cards for the purchase of goods and services;\u00a0Network Operator<\/strong>\u00a0that oversees the system and coordinates the transmission of information and the transfer of funds between issuers and acquirers.<\/p>\nSince the network operators revenue depends on the value of transactions that flow through its network, it tries to ensure the widest possible acceptance among consumers and merchants. In order to increase use and acceptance, the networks use marketing techniques to gain brand recognition, create products that encourage consumer usage and merchant acceptance, and set fees and impose rules on system participants including:<\/p>\n
Interchange Fees<\/strong> \u00a0they are set by the network but are generally paid by acquirers to issuers and are usually reflected in the merchant service fee paid by merchants to acquirers. Interchange fees can be calculated either as a flat fee per transaction, as a percentage of the transaction value, or a combination of both.<\/p>\nMembership Requirements<\/strong> MasterCard and Visa require issuers and acquirers to be regulated financial institutions or be sponsored by a regulated financial institution. Interac also requires issuers to be regulated financial institutions.<\/p>\nNetwork Switch Fees<\/strong> these fees are charged to acquirers and\/or issuers, and are set and collected by the network. They can be calculated either as a flat fee per transaction or as a percentage of the transaction value.<\/p>\nMerchant Acceptance Rule Includes:<\/strong><\/p>\nNo Discrimination <\/strong>Rules\u00a0which prohibit merchants from encouraging consumers to consider (or steering consumers toward) lower cost payment instruments.<\/p>\nNo Surcharge <\/strong>Rules\u00a0which prevent merchants from charging consumers a fee for the use of a credit card rather than some other credit card or method of payment;<\/p>\nHonour-All-Cards <\/strong>Rules\u00a0which require merchants that accept any of the networks credit cards to accept all of that networks credit cards (core, high spend and premium high spend in the case of MasterCard), regardless of the applicable interchange fee. The networks have also expanded this rule to include debit cards (i.e. if a merchant accepts one debitcard, they must accept all of that networks debit cards).<\/p>\nWith four-party card networks, such as Visa and MasterCard, the card networks seek to maximize the transactions following through them by attacting more card issuers. The networks do this by offering the prospect of interchange income to issuers, thus creating an incentive to increase interchange as much as the market (i.e. the parties paying the interchange fees) will bear.<\/p>\n
The ability to use credit cards and debit cards to purchase goods and services rests largely on a behind-the-scenes architecture of procedures, rules and technology that govern how funds and information are transferred between people and institutions in the process of settling accounts, i.e., of ensuring that merchants that sell goods and services get paid by the people who purchase them.<\/p>\n","protected":false},"excerpt":{"rendered":"
A payment card transaction involves some or all the following participants: Acquirers or Payment Processors\u00a0that market card acceptance services to<\/p>\n
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