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FDIC Banking Review

Figure 3 is a flowchart that shows a basic illustration of the multiple card issuer model with an example of the flow of payments in a sample $100 credit card purchase. The beginning node represents the cardholder making a purchase for $100. The flowchart shows the account information being sent to the second node representing the merchant. The merchant transmits the cardholder's account number and the amount of the transaction to acquiring bank represented in the third node. The flowchart shows the card association sending an authorization request to the issuing bank represented in the fourth node. The issuing bank sends back an authorization response to the card association. If the issuing bank approves the transaction, it will send $98.00 to the card association. Next, the flowchart shows that the card association sends the authorization response to the acquiring bank along with $98.00 to the merchant's bank. The acquiring bank then sends $97.50 to the merchant, subtracting 50 basis points for its services. At the end of the billing cycle, the flowchart shows that the issuing bank will send a monthly statement to the cardholder and receive payment of $100 from the cardholder.

Last Updated 11/17/2005 Questions, Suggestions & Requests