What is Credit Card

First Credit Card

The use of Credit Card first commenced in 1920 in United States of America for promoting the gas to the automobile owners. Later, it reached the clients whilst while Diners Club become launched in early Fifties. In 1958, the Bank of America issued the BankAmericard within the California state and this is regarded to be the primary a hit modern credit score card.

• The cardholder is the authorized consumer of a credit or debit card.
• Merchant Point of sale is any commercial enterprise entity this is authorized to accept playing cards for the fee of products and services; it can be a brick and mortar store or a website.
• Merchant Bank or Acquirer is a economic institution that gives card processing offerings to the merchant.
• Card Issuer is a economic organization that troubles fee playing cards and contracts with its cardholders for billing and price of transactions.
• Further, there's a Credit Card Network or Association, which is a club employer of financial institutions that problem charge cards and/or signal merchants to just accept such cards for payment of goods and offerings. There are two Credit Card Associations – Visa’s and MasterCard.
• How the Credit Card transaction works?
• The technique can be divided into two parts viz. Authorization and Clearing & Settlement

Authorization

A credit card holder finalizes the products to be offered and presents his card to the merchant. Merchant strategies the card and whilst processing it seeks authorization from the Merchant Bank giving it data on transaction facts. Merchant Bank submits the authorization request to Credit Card Network  (MasterCard or VISA). Credit Card Network sends the request to the Card Issuer which is ICICI financial institution. Card Issuer either approves or declines the transaction. If it authorizes, the Credit Card Network forwards this authorization to merchant bank. Merchant bank forwards this reaction to the Merchant and Merchant as soon as receiving this authorization completes the transaction.

Clearing and Settlement

The service provider deposits the transaction receipt with the merchant bank, which credits the Merchant’s account and submits this transaction to Credit Card Network for agreement. Credit card Network pays the Merchant Bank and debits the account of Card Issuer. The Card Issuer posts the transaction to the account of Card holder. The cardholder acquired monthly declaration from the Issuer. The Cardholder can pay as in step with the conditions.