What is a Card Scheme?
If you accept card payments online or through a POS terminal, you may have come across the term "card scheme" and want to know what it is.
A card scheme is a payment network that provides payment transactions with debit and credit cards. Visa, MasterCard, American Express, and UnionPay are the largest examples of card schemes. There are several main participants in the card scheme process:
- The bank that issued the card;
- The acquiring bank servicing the merchant account of the seller.
The card scheme transmits transaction data from the acquirer's bank to the issuer's bank (from the seller to the buyer), and then the payment is transferred back to the acquirer.
In practice, it works like this:
- A client makes a decision to pay for a service or product and initiates the payment process through the payment system with their debit or credit card (online or using a POS terminal);
- As soon as the card details are entered, or the card is tapped, a special channel is opened within the card scheme between the issuing bank and the acquiring bank.
- When the debit/credit card system makes sure that there are enough funds on the buyer's card and all the data is correct, the money is transferred to the acquiring bank and goes to the seller's merchant account.