Card company / Acceptance of cards

Card companies are companies that actually process and settle bank card payments and cash withdrawals in the background.

Card companies are international giants whose names we come across several times every day, yet we know very little about them. This is not surprising, since they perform background work such as the actual handling and settlement of bank card payments. 

Card companies are connected to banks and acceptance points. After card payments, a commission is collected, but not from the buyer, but from the banks, which they pass on to the sellers in the form of a commercial commission. 

During the payment process, communication takes place between the card and the accepting terminal via an encrypted channel, let's talk from a POS terminal, even from a banknote dispensing machine (ATB). As the first step of the encrypted communication , the POS terminal reads the data from the bank card and transmits the amount to be paid to the seller's bank. This mandates the card company to obtain authorization from the issuer bank to accept the card and payment. 

Based on the data received, the card company identifies the authorizations associated with the card (that is authorisation), and forwards the message to the buyer's bank, where they check whether everything is OK with it, whether the owner uses the card (authentication), whether there is as much money in the account as they want to pay out of it. 

In the best case, the buyer's bank accepts the transaction and communicates this via the card company to the seller's bank, which sends a message back to the terminal that everything is fine, payment has been made. However, the payment has not yet taken place at this time, the banks will arrange it among themselves later, so the seller actually gets his money several days late.

The same story takes place in the case of ATB, and it is very similar online bank card purchase also, only there the identification of the card owner is not a PIN code by specifying, but otherwise - with multi-factor identification - happens.

It's a minor miracle that all this takes place in seconds. It makes sense that it is only worthwhile to maintain such large systems if many transactions take place on them, so it is not surprising that the global market is ultimately dominated by two gigantic card company, Visa and Mastercard, followed by American Express, far behind in terms of turnover.

However, many people do not like this, especially those who overestimate the commissions they charge, which is why smaller card companies dealing exclusively with domestic transfers operate in many countries. People living in such countries typically use the domestic card for domestic transactions, but they also have a Visa or Mastercard card for travel. 

Recently, there are challengers to the big card companies because there are many of them fintech company is riding on their laurels, but even more so to use digital solutions to bypass the card companies in the payment process, and to make a living from their automated solutions with a much smaller commission.