Payment card transactions follow a basic process when being authorised and when being later processed. This process includes five primary points of contact.

 

Cardholder (you)

A person who has an account with a financial institution and to whom a payment card (debit, credit or charge) has been issued.

The cardholder should check the transaction details, especially the amount of the transaction, before inserting a PIN or signing to indicate their agreement to proceed with the transaction.

Retailer/Merchant

The retailer is the organisation providing the cardholder with goods or services (this can be a retail outlet such as a supermarket, a service provider or other organisation selling products or services such as a telephone service provider).

The retailer sends the details of a card transaction to their Acquirer who will process it and send it on to the relevant card issuer.

Acquirer/Merchant Acquirer

An Acquirer is the bank that is retained by a retailer or merchant to process payment card transactions on their behalf.

Acquirers are responsible for receiving the details of card transactions from the retailer and passing them through to the card issuers (the cardholders bank or building society) for authorisation or processing.

Acquirers will also be responsible for seeking authorisation on a transaction, if required, prior to the delivery of goods and/or services.

Card Scheme

Card Schemes are organisations who manage and control the operation and clearing of card payment transactions. Examples of schemes are: Visa, MasterCard and Maestro.

The card schemes are responsible for passing card transaction details from the Acquirer to the Issuer and for passing payment back.

Banks and building societies must be members of the appropriate scheme to issue cards and to be acquirers for card transactions.

Issuer

The Issuer is the bank, building society or organisation that provides a payment card (debit, credit or charge) to their customer.

The Issuer is responsibility for transactions that are put through on cards that they have issued and will be responsible for debiting funds from the relevant cardholder's account.

(American Express - the transaction process is slightly different as they can act as card scheme, Issuer and Acquirer)

A transaction will not always be authorised through this full process before being accepted. In cases where the transaction is for an amount under the retailer's floor limit the terminal will usually accept the transaction immediately without dialling out for authorisation. However, new chip technology payment cards are more intelligent and, even if the transaction is for an amount below the retailer's floor limit, it may decide to request authorisation. This enables card issuers a greater opportunity to manage both fraud and debt risk.