The term “bankcards” refer to credit card issuing and credit card acceptance (AKA Acquiring) as governed by Visa and MasterCard through the banking network system. These two entities provide memberships to financial institutions, who in turn, offer these services to consumers desiring an open-ended credit limit to purchase goods and/or services, and merchants wanting to accept credit cards presented by cardholders. Hence, for a credit card transaction to occur a consumer must present the Visa or MasterCard brand and a business must accept it as a form of payment. It is important to note that consumers or merchants don’t go to Visa or MasterCard to obtain either of these services. Rather, they contact a member bank.
Where does Card One fit into the mix? Both Visa and MasterCard authorize financial institutions to empower Independent Sales Organizations (a term used by Visa) or Merchant Service Providers (a term used by MasterCard), like Card One International, to act as intermediaries on behalf of member banks, but under specific guidelines. Card One is a full-service banking operations that provides merchant sales, underwriting, customer service, technical support, chargebacks & retrievals, and risk management, but under the bank umbrella.
Travel & Entertainment Card Associations (T & E’s)
T & E Providers such as American Express, Discover Card, and Diners Club, operate similarly to Bankcard Associations, except that they function independent from the banking network system. Hence, all issuing and acquiring is donein-house. However, T & E’s have created streamlined programs, for banks and independent card processors like Card One International, and make available their brands subsequent to the Visa and MasterCard sign-up. Specific facts merchants should know:
- Card One International has no control over T & E service levels or pricing
- Their approval process normally takes about 10-days
- Discount rates are traditionally higher than bankcards
- Each brand provides separate monthly statements
- Each offers a help desk specific to their brand
Bank issuers rely on network processors (Mainframe System Providers) to warehouse cardholder data and guarantee that funds are available at the Point of Sale. Also, they facilitate electronic funds transfer from issuing bank (cardholder account) to the merchant bank account.
Bank Acquirers too rely on processing networks to route cardholder transactions needing approval, and they initiate the clearing and settlement of funds.
The entire process works similarly to check processing. The numbering system on the bottom of a check has a routing number (bank ID) and an account number (accountholder ID). The numbering system on the Visa Card or MasterCard indicates the cardholder’s bank and account number. Subsequently, each merchant set up to accept credit cards receives a Bank Identification Number (BIN) and Merchant Identification Number (MID) to identify the acquirer and merchant. These two numbering schemes are programmed into a merchant’s Point-of-Sale terminal.
POS Equipment and Supply Providers
Many POS hardware terminals exist on the market today. Also, there are a myriad of POS supplies needed by merchants (e.g., printer rolls, sales drafts, ink cartridges, etc.). The fulfillment of POS equipment and supplies are handled by providers specific to the industry.
POS Equipment Leasing
Merchants needing POS hardware terminals can opt to lease the equipment. Terms and conditions vary among each provider. Leasing POS equipment is mostly beneficial to those merchants wanting to pay the initial cost over time. It is important to note that Card One International is independent from these providers and cannot control costs or service levels.