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Card scheme
Card schemes are payment networks linked to payment cards, such as debit or credit cards, of which a bank or any other eligible financial institution can become a member. By becoming a member of the scheme, the member then gets the possibility to issue cards or acquire merchants operating on the network of that card scheme. UnionPay, Visa and MasterCard are three of the largest global brands, known as card schemes, or card brands. Billions of transactions go through their cards on a yearly basis.
The card schemes come in two main varieties - a three-party scheme (or closed scheme) or a four-party scheme (or open scheme).
A three-party scheme consists of three main parties, as described in the adjacent diagram.
In this model, the issuer (having the relationship with the cardholder) and the acquirer (having the relationship with the merchant) are the same entity. This means that there is no need for any charges between the issuer and the acquirer. Since it is a franchise setup, there is only one franchisee in each market, which is the incentive in this model. There is no competition within the brand; rather, you compete with other brands.
Examples of this setup are Diners Club, Discover Card, and American Express, although in recent times these schemes have also partnered with other issuers and acquirers in order to boost their circulation and acceptance, and Diners Club now operates as a four-party scheme in many regions.
In a four-party scheme (also referred to as Four Corners Model), the issuer and acquirer are different entities, and this type of scheme is open for other institutions to join and issue their own cards. This is the type of card scheme used by brands such as Visa, Mastercard, Verve Card, UnionPay and RuPay. There are no limitations as to who may join the scheme, as long as the requirements of the scheme are met.
The card scheme uses the respective guidelines to process the card exchange data from the acquiring to the issuing bank, and vice versa, until the payment is fully completed (or denied). Credit and debit cards work with a four-party scheme, completing an open-circle framework that permits consistent flow of transactions; thus, allowing the banks to handle the whole process.
Card schemes aim to make the transaction convenient and automated for all parties involved in the loop, with the core belief that clients end up spending more than intended when the payment process is simple.
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Card scheme AI simulator
(@Card scheme_simulator)
Card scheme
Card schemes are payment networks linked to payment cards, such as debit or credit cards, of which a bank or any other eligible financial institution can become a member. By becoming a member of the scheme, the member then gets the possibility to issue cards or acquire merchants operating on the network of that card scheme. UnionPay, Visa and MasterCard are three of the largest global brands, known as card schemes, or card brands. Billions of transactions go through their cards on a yearly basis.
The card schemes come in two main varieties - a three-party scheme (or closed scheme) or a four-party scheme (or open scheme).
A three-party scheme consists of three main parties, as described in the adjacent diagram.
In this model, the issuer (having the relationship with the cardholder) and the acquirer (having the relationship with the merchant) are the same entity. This means that there is no need for any charges between the issuer and the acquirer. Since it is a franchise setup, there is only one franchisee in each market, which is the incentive in this model. There is no competition within the brand; rather, you compete with other brands.
Examples of this setup are Diners Club, Discover Card, and American Express, although in recent times these schemes have also partnered with other issuers and acquirers in order to boost their circulation and acceptance, and Diners Club now operates as a four-party scheme in many regions.
In a four-party scheme (also referred to as Four Corners Model), the issuer and acquirer are different entities, and this type of scheme is open for other institutions to join and issue their own cards. This is the type of card scheme used by brands such as Visa, Mastercard, Verve Card, UnionPay and RuPay. There are no limitations as to who may join the scheme, as long as the requirements of the scheme are met.
The card scheme uses the respective guidelines to process the card exchange data from the acquiring to the issuing bank, and vice versa, until the payment is fully completed (or denied). Credit and debit cards work with a four-party scheme, completing an open-circle framework that permits consistent flow of transactions; thus, allowing the banks to handle the whole process.
Card schemes aim to make the transaction convenient and automated for all parties involved in the loop, with the core belief that clients end up spending more than intended when the payment process is simple.