The key Players in Credit Card Processing

Detailed knowledge about the inner working of a bank card system isn’t necessary at all, but it is a good idea to have a general understanding about the whole thing of card processing. In this article, we focus on the key players who facilitate card processing.

The cardholder

If you have a credit or debit card, then you are familiar with this player. A cardholder is one who acquires a bank card from the issuing financial institution. The cardholder presents the debit or credit card to merchants as a way of paying for goods and services.


A merchant simply refers to any business involved in buying and selling of goods and services. In our context, only merchants that accept credit and debit cards fit in our explanation. In credit card processing, a merchant is any enterprise which keeps a merchant account that allows them to accept bank cards as a form of payment from customers for goods and services offered. Some dealers tend to classify the credit card processing as high risk merchant services.

Acquiring Bank/Merchant bank

Any registered member of the card associations including Visa cards and MasterCard can be referred to as an acquiring bank. The term merchant bank comes in because quite often, the banks partner with merchants in creating and maintaining accounts which allow enterprises to accept credit and debit cards.

The acquiring banks provide the merchants with the necessary equipment and software to aid in the processing of cards. The acquiring bank plays a crucial role in transferring funds from the customer’s bank account to that of the merchant.

Issuing Bank

As the name suggests, an issuing bank only issues debit and credit cards to customers. The issuing bank must also be a member of the card association. In the card processing cycle, the issuing bank pays the acquiring bank for any purchases made by the client. It is the responsibility of the credit/debit cardholder to repay the issuing bank under the terms and conditions of the credit or debit card agreement. Many issuing banks look at enterprises that accept credit cards as high risk merchant services .

Card Associations

Many people tend to think that Visa and MasterCard are banks. These two aren’t banks, and they don’t issue any credit or debit cards neither do they issue merchant accounts. The two parties act as custodians of vital card information, and they act as clearing houses for the respective card brand.

They are governing institutions that regulate acquiring and issuing banks. The banks work closely with the two institutions to facilitate smooth and seamless card processing. Visa has deployed Visanet to securely transmit data between the association members while MasterCard has their Banknet network. The primary responsibility of MasterCard and Visa is to govern their members, set and regulate interchange fees and spell out qualification guidelines.