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Posts Tagged ‘Credit Card Associations’

While the associations do not provide credit card services directly to cardholders or businesses, they establish the operating standards that define the policies, roles, and responsibilities of their member institutions and provide the data processing and telecommunications systems that transfer transaction data between members. The member institutions issue the credit cards to customers, acquire (sign up) merchants to accept credit cards, or both, along with providing other services directly to the cardholders and merchants. Member institutions generally fall into two categories:

Issuing banks that solicit potential customers, approve applications, and issue credit cards. These banks extend credit to cardholders, establish the terms of cardholders’ accounts (for example, credit limits and treatment of delinquent accounts), collect debts, and maintain accounts and cardholder records.

Acquiring banks that solicit potential merchants and approve and license merchants to accept credit cards. These banks, also known as merchant banks, enter into agreements authorizing merchants to accept the association’s credit cards, submit their merchants’ transactions into the association’s system for payment from issuing banks, and maintain accounts and related records on their merchant clients.

Third-party processors are also part of the industry. They contract with acquiring and issuing banks to provide transaction processing and other services. As part of the services they provide for their banking clients—members of the credit card associations—processors block Internet gambling transactions and ensure that Internet gambling sites do not become approved merchants.