The process that begins when a customer presents a credit or debit card to pay for goods and services actually starts some time earlier, when the customer submits an application to a bank that issues Visa or MasterCard cards. The cardholder is an authorized user of Visa and/or MasterCard payment products.
Bankcards and Issuers MasterCard and Visa cards are sometimes known as bankcards because individual financial institutions issue them, banks for
example, instead of the credit card company itself, such as American Express® or Discover®. If the financial institution (or issuer) accepts the customer's application, it issues the Visa or MasterCard card. The card may be a credit card, which means that the bank has authorized a line of credit from which the customer may draw; or a debit card, which is tied to the amount of money actually on deposit for the customer, or
a commercial card, which is used for business credit charges. In most cases, the processing for these types of cards is similar. The issuer contracts with its cardholders for repayment of the transaction amount.
Merchant
Meanwhile, you or your business has opened a bankcard transaction deposit account with your bank, and your business has been approved for card acceptance. You are an authorized acceptor of cards for the payment of goods and services. Now you're ready for that first bankcard customer.
How the Transaction Process Works
Any bankcard transaction ultimately begins and ends with the cardholder. The illustration below shows the steps involved in an electronic payment transaction, and how the various organizations interact to create a smoothly executed process. The cardholder presents the card as payment for goods or services, either at the point of sale (POS), or via telephone, mail, fax or over the Internet.
