Credit Card Processing Method
Now and then we are being approached by people offering credit card. On the face of it, it’s quite tempting, as you need not carry cash. And not only that, one buy a product without paying for it at that point of purchase. Still, only a small percentage of people in India has availed credit card as they hardly know how a credit card works.
The following are the main stake-holders:
- Payment Networks
To understand the role of each, let’s consider a scenario :
Ramya went to buy a pen from a shop. She decided to pay through her credit card. She bought the pen for say Rs.500/-. She used her credit card issued by HDFC Bank to pay them. The shopkeeper was using a POS machine (Point of Sale Machine) which was installed by his banker ICICI Bank. The Card was having the emblem of a Visa.
In this case, HDFC Bank is the issuer. ICICI Bank is the Acquirer and Visa is the payment network. Say the MDR (Merchant Discount Rate) is 2.4%, then the shopkeeper will get Rs.97.6/-. The remaining Rs.2.4/- will be divided between the three stake-holders as per their agreed term.
The payment network links the two banks and confirms the genuineness of the transactions after getting it approved by the issuing bank.
In India, for most of the credit cards, the payment networks are VISA and Maestro.
Recommended Read :
- Methods to find The Best Credit Card
- What is a Credit Card?
- Who are Credit Card is suers?
- Who is a Credit Card Merchant?
- Secrets Behind Credit Card Numbers
- How does a Credit Card work?
- How to Compare & Find the best Credit Card?
- Use Credit Cards wisely – Avoid Heavy Debts
- Alert!! – Reswiping Credit Cards by Merchants
- Beware of Credit Card Thefts
- 10 Safety Tips – Credit Cards
- What are Credit Cards and Loans?
- Importance of Prompt Credit Card Payments