Brief explanation of important terms
3-D Secure is the worldwide security standard from Mastercard for online purchases that are paid for using credit cards. The cardholder identifies themselves using a personal password, similarly to signing at the checkout. A prerequisite for this application is that the relevant point of acceptance must be connected to the system.
Acquirers are companies who are licensed to acquire business partners (also: acceptance points) so that they accept cards from the relevant brand as a method of payment. The most important acquirers in Switzerland are Swisscard AECS GmbH for American Express as well as SIX and Aduno for Mastercard and Visa.
Additional charges (deposit, open voucher)
The cardholder is only obligated to make a payment if they personally signed the respective sales slip or authorized the transaction with a PIN. Exceptions apply to distance sales, such as mail order and online sales. In some sectors, for example the hotel industry or car rental, merchants reserve the right to debit additional charges retrospectively without another signature, if necessary. This may be the case for example if it was forgotten to charge for the mini bar or the rental car was returned with an empty tank. Rental car contracts include this additional clause as standard. The person renting the car consents to this by signing the rental car contract.
The issuer’s formal authorization to a point of acceptance to carry out a transaction for a specific amount for a certain customer. Authorization is generally done fully electronically using EFT-POS terminals or semi-automatically within a few seconds by phone.
Bonus programs are card features that allow cardholders to collect bonus points with every transaction. These points can be redeemed for air miles, hotel accommodation and other products and services. The most well-known programs are American Express Membership Rewards, Bonviva (Credit Suisse AG), Key Club (UBS AG), Pointup (Credit Suisse AG) and Miles & More from SWISS.
The umbrella brand under which a self-contained (worldwide) credit card system is marketed. The most famous brands are American Express, Mastercard and Visa. The brand owners are companies (e.g. American Express) or bank consortia (Mastercard, Visa).
Business cards are special products for companies and their business travelers. They have specific additional functions, in particular information management and the management of expenses. There are two types, business cards and corporate cards. Whilst business cards are designed more for small and medium-sized enterprises, corporate cards are aimed at international companies and major national companies and developed as expenses management systems.
Cardholders are people who have entered into an agreement with an issuer and have received a card in their name. In legal terms, the issuer is always the owner of the card.
These kinds of services are additional advantages of the card that go beyond its pure function as a method of payment (insurance, credit option, bonus programs and lifestyle service). They are primarily defined by the issuer which is why a brand’s cards may have very different services in one country and almost certainly internationally depending on the issuer.
Chargebacks are complaints that the card issuer is generally informed about within 30 days of the statement date. Depending on the clarification process, temporary credit is issued as soon as the complaint is received or any compensation is delayed until after the matter has been clarified.
A charge card is a card that does not have a credit limit or an installment facility. In everyday language it is still referred to as a credit card because in contrast to cash payments at least one credit is issued until the due date. Most American Express Cards are typical charge cards.
Co-branding cards are issued by a brand issuer in partnership with another company or association. They usually offer additional services and discounts but in return are linked to special conditions (for example, customer relationship or association membership). Swisscard AECS GmbH is a market leader in co-branding cards and among others, works together with SWISS and Coop.
Consumer Credit Act
The regulations in the Consumer Credit Act dated March 23, 2001 and associated Ordinance in force since January 1, 2003 apply to the consumer credit agreement.
Consumer Credit Information Office
The Consumer Credit Information Office is the Swiss information center for consumer credit supervised by the legislator. It registers data from credit and leasing transactions for private purposes in terms of the Consumer Credit Act dated March 23, 2001.
Corporate cards are special products that companies provide their business travelers with. They have specific services, in particular in terms of information management and the company-wide consolidation of billing.
Credit cards (revolve cards)
A credit cardholder can pay at all the card issuer’s contract partners and withdraw cash within a defined spending limit anywhere in the world at any time. The payment is only made at a later time and possibly in installments, which means the cardholder is issued credit. The largest credit card systems are Mastercard and Visa.
Credit card network
Global credit card networks ensure that transactions are forwarded from acquirers to the responsible card issuers. The payment of the transaction from card issuer to acquirer is also done via the credit card network.
Before issuing a card, the card issuer checks the applicant’s ability to pay in order to avoid any credit risks that may lead to unsustainable debt in the interest of consumer protection, other cardholders and the company. On the card application, the applicant provides the required information and consents to additional inquiries (e.g. from the Central Office for Credit Information ZEK). On average, 20 to 30% of card applications are rejected.
Since 2003, card organizations are legally obligated to check the applicant’s creditworthiness by making inquiries at the Consumer Credit Information Office for credit card applications with the installment facility.
DCC (Dynamic Currency Conversion)
For some time now, merchants have been offering Swiss credit card customers the chance to pay for transactions made abroad in Swiss francs straight away. This process is called “Dynamic Currency Conversion” (DCC) and is offered for the card brands Mastercard and Visa. American Express has no plans to offer merchants this kind of solution.
With DCC, the merchant automatically converts the purchase amount into the currency of the customer’s credit card account at the terminal. As a rule, the sales slip shows the exchange rate applied next to the purchase price (in local and Swiss currency).
DCC is an optional service provided by the merchant. Therefore, the customer can decide whether they want to make use of this service or not. Customer feedback from Swiss card issuers shows that immediate conversion (DCC) is more expensive than paying in the local currency in most cases.
Generally, EFT-POS (Electronic Fund Transfer at the Point of Sale) systems are understood to be the fully-electronic authorization and booking of card transactions at a point of acceptance.
Fraud is the term for deception intended to result in financial or personal gain. It is mainly used for the misuse of services (manipulation in business, manipulation of technical equipment, misuse of internal knowledge and the company’s resources).
Issuers issue and sell a specific brand’s credit cards. Normally, issuers have a national license (exclusive or non-exclusive) from the brand owner to issue all or certain card types. The most important issuers in Switzerland are Cornèr Bank AG, Credit Suisse AG, UBS AG and Viseca Card Services SA.
The Lifestyle Service is an exclusive customer service for American Express Centurion and Platinum Cardholders. Professional, specially trained lifestyle agents assist cardholders in all situations, whether they want to buy tickets for a sold-out concert, need a babysitter or would like a reservation at a fully booked top restaurant.
Merchants (also: points of acceptance or business partners) are companies that have concluded a contract with an acquirer and accept the relevant brand’s cards as a method of payment at their sales outlets. They indicate this to the cardholder with a logo at the checkout or entrance.
No-frills cards do not have any additional functions or very few and are offered at a much cheaper price or even without an annual fee. Important no-frills cards are the Coop SUPERCARDplus and the M-Budget Mastercard. There are premium products at the other end of the scale.
Credit card statements are sent by post every month and must be paid by the usual deadline using a payment slip or direct debit (DD).
Credit cardholders can make use of the installment facility by signing a special credit agreement and therefore benefit from even greater financial flexibility. When using the installment facility, a minimum payment of 5 to 10% of the statement amount as of the statement date or 50CHF is all that has to be paid. Interest is charged on the outstanding amount. The installment facility is more attractive to customers than consumer credit due to flexible repayments and the sometimes low rate of interest.
Please note: The starting point for calculating payment deadlines, spending limits, interest on credit, etc. is generally the statement date printed on the statement that is not necessarily the end of the calendar month.
PayPass is a contactless method of payment for credit cards that is currently in a trial period. Users of PayPass credit cards hold their card up to a specially equipped checkout terminal that wirelessly transmits the transaction data and therefore means the card does not need to be inserted into the reading device. This new payment system is particularly aimed at areas where one traditionally pays in cash.
Phishing is the word for attempts to acquire an Internet user’s data using fake URLs. Phishers pretend to be trustworthy people and attempt to gain access to sensitive data such as usernames and passwords for online banking or credit card information through fake electronic messages. Phishing messages are usually sent by e-mail or instant messaging. They prompt the recipient to disclose confidential access data on prepared websites or over the phone.
Using a PIN code (Personal Identification Number) credit cardholders can withdraw cash at ATMs all over the world round the clock. In certain cases, entering the PIN code replaces the signing of a sales slip (e.g. at gas stations). The PIN code can be requested from the card issuer. It is recommended that it is changed immediately. For security reasons, the PIN code should not be an easy to guess combination of numbers, for example your date of birth.
Point of acceptance
Points of acceptance (also: business partners) are sales outlets where you can pay using cards from the relevant brand.
Premium products offer numerous additional advantages beyond their pure function as a method of payment, such as lifestyle offers, insurance, services and bonus programs. American Express is a pioneer in this field with its Centurion and Platinum Cards.
The prices, product features and additional services are always defined by the card issuer. That is why cards from the same brand may have very different profiles in one country and almost certainly internationally depending on the issuer: For example, Visa is not automatically Visa!
Principal and additional cards
Principal cardholders have the option of applying for additional cards, depending on the card product one or more people can benefit from this. Additional cards offer the same services as the principal card: For example, points can also be collected for bonus programs using the additional card and every card has its own card number (for cash withdrawals with its own PIN code). Additional cards are either offered at a specially reduced price or without any additional costs. Generally, spending on the principal card and additional card are billed with just one statement that is addressed to the principal cardholder. The principal cardholder is always liable for payments.
Private cards are aimed at people who use the card to pay for their private spending. Various credit cards are offered for individual customer needs that include different service packages.
Processors are companies who deal with the technical processing of card transactions. This function is often outsourced to external companies by issuers. There are several processors worldwide who work for several brands at the same time.
The amount available to the cardholder for card transactions every month. Amounts that have not effectively been spent but are “reserved” by a point of acceptance are also booked (e.g. with hotel check-ins). American Express is an exception, it does not have a pre-set spending limit.
SET (Secure Electronic Transaction)
SET (Secure Electronic Transaction) is a safety standard for the electronic transmission of transactions via the Internet (e-commerce) that has not really taken off.
Skimming is the word for the process when criminals use special devices to copy a bank or credit card’s magnetic strip in order to produce duplicates of the card.
VBV (Verified by Visa)
VBV (Verified by Visa) is the worldwide security standard from Visa for online purchases that are paid for using credit cards. The cardholder identifies themselves using a personal password, similarly to signing at the checkout. A prerequisite for this application is that the relevant point of acceptance must be connected to the system.