credit card industry

Part 6 - Networks ACCESS NETWORKS For most credit card applications, the cost of the access network is the single biggest factor in overall costs, often accounting for over half of the total. For that reason, there are many different solutions, depending on the provider, the application, and geographical constraints. The simplest form of access network uses 800 service, in one of its many forms. Terminals at merchant locations across the country dial an 800 number that is terminated on a large hunt group of modems, connected directly to the acquirer's front-end processor (FEP). The FEP is typically a fault-tolerant machine, since an o...

Part 5 - Debit Cards EVOLUTION OF DEBIT CARDS The debit card originated as a method for bank customers to have access to their funds through Automatic Teller Machines (ATMs). This was seen as a way for banks to automate their branches and save money, as well as a benefit for customers. A secondary intent was for the card to be used as a method of identification when dealing with a human teller. Although that idea never really caught on, it has seen renewed interest from time to time. One problem with using cards to access bank accounts is that federal regulations required a signature be used for each withdrawal transaction. After much deb...

This is part four of a planned six-part series on the credit card industry. It will be helpful if you have read parts one through three, as I use a lot of terminology here that was introduced earlier. Enjoy. WARNING This installment describes various methods of perpetrating fraud against credit and charge card issuers, acquirers, and cardholders. Legal penalties for using these methods to commit fraud are severe. The reason for sharing this information is so that consumers will be aware of the importance of security and be aware of the procedures used by financial institutions to protect against fraud. Neither I nor my employer advocate u...

Here's part 3 in my six-part series on the credit card industry. This part discusses how authorization and settlement work. This is a long one. It will help if you have read parts 1 and 2, since I had to leave out a lot of overlap to keep this from getting ridiculous. Enjoy. THE ACCEPTER An important fact to note is that a card accepter does not have to get approval for any purchases using credit or charge cards. Of course, a merchant is usually interested in actually getting money, and so must participate in some form of settlement process (see below). Usually, the most acceptable (to a merchant) forms of settlement are tied (by the ...

This is part two in a planned six-part series about the credit card industry. It would be best if you read part one before reading this part. Enjoy. DEFINITIONS Some more new terms that are used in this posting. ABA - American Bankers Association ACH - Automated Clearing House - an organization that mechanically and electronically processes checks. ANSI - American National Standards Institute Embossing - creating raised letters and numbers on the face of the card. Encoding - recording data on the magnetic stripe on the back of the card. Imprinting - using the embossed information to make an impression on a charge slip. Interchange - sendi...

Part one in a series of postings about the workings of the credit card industry. DEFINITIONS First some terms, along with the meanings they have in the industry: Cardholder - an individual to whom a credit card is issued. Typically, this individual is also responsible for payment of all charges made to that card. Corporate cards are an exception to this rule. Card Issuer - an institution that issues credit cards to cardholders. This institution is also responsible for billing the cardholder for charges. Often abbreviated to "Issuer". Card Accepter - an individual, organization, or corporation that accepts credit cards as payment for merch...