What’s The Difference Between A Credit Card Processor And A Credit Card Issuer?
Posted June 27th, 2010Learn the varying definitions between a ‘Credit Card Processor’ and a ‘Credit Card Issuer’
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It can be quite confusing figuring out the difference between a credit card processor and an issuer. It is important to know the difference so that you can understand any documentation that has been provided with your credit card. The more you understand your card, the more you will be able to use all the features associated with it and avoid any future problems.
Credit card processor
To keep things simple, Visa and MasterCard are both a credit card processor, and the bank or financial institution that gives out the card is the credit card issuer.
The financial institution or bank that issues a card plays the most important role in the process of running the card. The processor, however, also has a significant role. The credit card issuer sends out the monthly statements, gives out the credit and issues the card itself. They can be considered the main party and they collect the majority of the money.
Credit cards began as store cards with a revolving line of credit. The store was completely in charge of these cards since they were the issuer, and the financier of the cards and the store was the only place that the card could be used. Only the owner of the card and the story itself had any involvement in the credit card.
The first credit cards came out in California in the 1950s to replace store cards. At this point, different roles were taken on, such as a card processor being introduced, since the process was much more complicated.
Both Visa and MasterCard are a credit card processor that used to be run as a cooperative model, but have now become a profit-making companies. They can both be found on the stock exchange, and are both incredibly profitable.
Now that you know the difference between a credit card processor and a credit card issuer you will be able to understand more about your card. If you ever have any questions about your credit card or want to learn more about it, you will be better prepared and will have a better grasp of the terminology being used.
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