Household HSBC Watch

Payments over the Visa and MasterCard networks involve at least five parties. When a cardholder presents a credit card to a merchant for payment, the merchant swipes the card and transmits the information encoded on the magnetic strip on the back of the card to an acquiring bank (or, sometimes, a third party processor). This information can include card number, expiration date, cardholder name, and the card verification value. The acquiring bank transmits the information through Visa’s network to the issuing bank (which gave the credit card to the consumer). The issuing bank confirms the account, verifies the transaction is within credit limits, reviews the transaction for signs of fraud, and approves (or disapproves) the transactions. Actual payment is made when the acquiring bank and the issuing bank settle their accounts by wire transfer. (Discover and American Express simplify this arrangement: they operate the network, and act as issuing bank and acquiring bank.)