How a credit card transaction works
Credit card transactions are complex and require the involvement of various market participants:
1. The cardholder pays the merchant using their credit card
Merchants (also called acceptance points or business partners) are companies who accept credit cards as a method of payment. They indicate this to the cardholder with a logo at the checkout or entrance.
2. Merchants are managed by acquirers
Merchants reclaim the invoice amount from the issuer via acquirers. Acquirers connect merchants to international credit card networks using agreements (American Express, Mastercard and/or Visa) and forward the merchants’ invoices to the responsible issuer. Acquirers also ensure that the issuer’s money reaches the merchants. The most important acquirers in Switzerland are Swisscard AECS GmbH (American Express), Aduno (Visa, Mastercard) and SIX Multipay (Mastercard, Visa).
3. Credit card networks provide the infrastructure for processing transactions
Global credit card networks such as American Express, Mastercard and Visa ensure that transactions are forwarded from the acquirers to the responsible issuers. The payment of transactions from issuers to acquirers is also done via the credit card network.
4. The cardholder pays the issuer’s bill
Issuers (e.g. Swisscard AECS GmbH on behalf of Credit Suisse) bill the cardholder for credit card transactions that were made using the credit cards issued by them.