Day 1: Types of Credit Cards & Key Entities Involved

In the world of banking and payment systems, credit cards play a central role in everyday transactions. Today, we’ll explore the types of credit cards and the main entities involved in processing credit card payments.

🔹 Types of Credit Cards

Credit cards can be categorized based on their features and the audience they serve:

1. Standard Credit Cards
   • Basic cards with a revolving credit limit and minimal features.
   • Used for everyday purchases.
2. Reward Credit Cards
   • Offer cashback, points, or travel miles for every transaction.
   • Ideal for users who pay their balances in full regularly.
3. Secured Credit Cards
   • Backed by a cash deposit from the user.
   • Designed to help build or repair credit history.
4. Charge Cards
   • No preset spending limit but must be paid in full every month.
   • Often used by businesses or high-net-worth individuals.
5. Business Credit Cards
   • Tailored for small and medium businesses.
   • Help manage business expenses and offer business-related perks.
6. Co-branded Credit Cards
   • Offered in partnership with retailers, airlines, or other brands.
   • Provide specific benefits like discounts or exclusive offers.

🔹 Key Entities Involved in Credit Card Processing

Each credit card transaction involves multiple parties working together:

1. Cardholder
   The individual or business authorized to use the credit card.
2. Merchant
   The business that accepts credit card payments for goods or services.
3. Acquirer (Merchant’s Bank)
   The bank that processes card payments for the merchant and settles funds.
4. Issuer (Cardholder’s Bank)
   The bank or financial institution that issues the credit card to the customer.
5. Card Network (Visa, MasterCard, etc.)
   Facilitates the flow of information and funds between the acquirer and issuer. They also set rules and charge fees.
6. Payment Processor
   The technology provider that connects merchants to acquirers and handles transaction routing.

✅ Summary

Understanding the types of credit cards and the roles of each party is essential before diving into transaction flows, risk management, and compliance topics. This forms the building block for deeper topics like authorization, clearing, and settlement — coming up next!