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.

Financial Services: Learning the Business

I'm on a quest to find all the information I can about the Financial Service industry...specifically how it works.

I started with CardReport, which besides being pretty ugly, has some fairly useful information.

Of course it led me to much more reliable info sources.

First up, the Federal Reserve. That took me to the Government Printing Office (GPO) where I can then read in excruciating (and exciting!) detail all about Title 12, Banks and Banking.

That takes me to Regulations.gov, which I can then search through thousands of documents online (very nice). Sadly the material isn't all that exciting.

Finally, I found NACHA, The Electronic Payments Association. Here you can learn all about ACH (Automated Clearing House) payments. Joy.

I'm sure glad I've got this on my reading list. If I weren't a software developer, I'd probably go mad.

Master of My Domain

No, this isn't a reference to The Contest a la Seinfeld. It's a reference to knowing and understanding the industry you work in. So far I've worked in Pharmaceutical Manufacturing (blood bank), Social Services, government health care and now Financial Services.

I've actually worked in Financial Services before when I tried and failed to start up my own company a few years back. Tried to create gift cards that could be used with taxis. I lived in Gainesville, Florida at the time which is a pretty big party town. Let's just say it took me almost 10 years to graduate.

Anyway, I had no idea what I was doing back then (as if I really do now).

I didn't do a very good job of learning the business of blood and that definitely hurt me. I was trying to stay above water on the technical side.

Social Services was a bit better as I would spend a lot of time asking questions.

Government health care, Medicaid, Medicare, PDP, so on and so forth, there's a lot of information out there. I spent most of my time on the technical aspects and didn't have a lot of exposure to the business of government health care plans.

I'm trying to change that now. I think my experience of starting my own business helped me understand many of the (very) basics of credit card processing. But there is so much more I don't know. In that vain (sp?) I'm going to start linking up rules and regulations from the banking industry as well to help me better understand. Hopefully you'll get something out of it too.

So CardReport is my first go. It looks cheesy and all, but it's a start. I'm sure that will lead me to more authoritative sources in the future or maybe I'll find that despite the cheese factor, it's good.

Credit Laws and Banking Regulations

Consumer Credit Overview