Tuesday, March 17, 2009

Financial Services: Credit Card 101

As I stated before, I'm trying to become the Master of My Domain. Actually, I think I just get a kick of writing that down.

Anyway, I've been reading up on Credit Card processing. There is some pretty good information out there, though nothing that has really jumped out at me. Most of it is from the consumer point of view. I understand how a credit card works. You sign up or apply, the issuing bank gives you credit based on your credit history, part of that being your credit score.
A credit score, in the United States, is a number representing the creditworthiness of a person, or the likelihood that person will pay his or her debts. A credit score is primarily based on a statistical analysis of a person's credit report information, typically from the three major American credit bureaus: Equifax, Experian, and TransUnion. Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Using credit scores, lenders determine who qualifies for a loan, at what interest rate, and to what credit limits.
You buy things (a loan), and pay back the loan when you are billed. Unfortunately, many of us carry a balance which incurs fees and interest over time. If you don't read your card holder agreement you really should.

Anyway, I've been looking for a big picture overview to start with and this is the best I can find to this point:

[ link ]

I want something a bit more granular, this is too high level.

I did find this .doc file (and if you don't like opening .doc files, you can view my Google Document of the same here). From there I can get some basic definitions:

The Acquirer
The acquirer is a member of MasterCard and Visa, and is contracted with merchants to accept merchant sales drafts, provide authorization terminals, instructions, and support, and handle the processing of credit card transactions. The key responsibilities of the acquirer are:

* Sales
* Investigation Procedures
* Pricing
* Merchant Acceptance
* Support Services
* Risk Management
The Issuer
The issuer is responsible for the cardholder account program which encompasses nearly all aspects of cardholder account activities ranging from acquiring new customers to billing current ones. The Issuer’s responsibilities include:

* Acquisition and marketing of new accounts
* Processing application; establishing credit credit limits and policies
* Overseeing design, manufacturing, and embossing of inventory cards
* Handling of issuing and reissuing of cards
* Overseeing PIN Numbers
* Maintaining authorization file
* Providing customer service
* Processing payments and handling settlement and income Interchange
* Establishing collections operations.
I'm on the path. The more exposure I get the easier this will become.

If you've got any good links or articles, send them on.


Anonymous said...

Hey, the link to the .doc file is broken in your post.

Unknown said...

Well, Chet turns out I was in a play last year with a guy that used to own his own credit transaction processing company. I've sent out a lifeline (a la "Who Wants to be a Millionaire?") via e-mail for some resource references. Hopefully he'll get back to me ... or you here.

oraclenerd said...


Link is fixed.


Thanks man. That would be awesome!

Unknown said...

FIS is the issuer then.