The Issuing Bank
The issuing bank extends a credit card account to a customer after verifying the applicant’s creditworthiness and “issues” the consumer a credit card (bankcard). The merchant’s payment will eventually come from this bank. The Issuing Bank who gave (issued) the consumer a credit card actually ends up with a good part of the discount fee that the Merchant pays for the privilege of accepting credit cards. See “Interchange Fee” in the Glossary. This is why we get calls during your dinner hour to sell you another consumer credit card.

The Consumer
The consumer makes the purchase by presenting their credit card at the Merchant location. They use a bankcard (credit card) from an issuing bank and provide this information to the Merchant by the Merchant swiping the card on a credit card terminal, or in the case of a phone / mail order by the Merchant keying the transaction.

The Merchant
The Merchant offers goods or services for sale. A Merchant needs both a Merchant Account (which means they have been approved for the chargeback risk) and a method of communicating the credit card information with a credit card terminal, PC based software, or internet based software. The days of taking batched credit card slips to your bank are essentially over.

The Merchant Bank
The merchant bank provides merchants with an online Merchant Account (to accept “card present” transactions with a terminal or “card not present” transactions). This bank may contract with an Acquiring Processor to move the credit card transaction through the payment process, or it may function in this capacity itself. The Merchant Bank and the Acquiring Processor may also contract with an Independent Sales Organization (ISO) to find the Merchant in exchange for a part of the processing fees.

ISO (Independent Service Organization)
A firm or organization which solicits offers to process non-cash and credit card transactions, usually in exchange for transaction fees or a percentage of sales.

The Acquiring Processor
The Acquiring Processor routes the transaction through the electronic financial networks for processing and settlement, delivering the payment to the merchant’s online account once it has been obtained from the credit-card holder’s account with the issuing bank.

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Corey
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