Banks

Question 1

Banks serve three primary functions

Answer 1

1. Issue debit and credit cards to cardholders
2. Serve as Acquiring Banks to merchants
3. Facilitate movement of money

Question 2

Issuers take on the inherent risk of…

Answer 2

issuing credit to customers

Question 3

BIN

Answer 3

Bank Identification Number

• First 6 digits of the PAN
• Offered by Visa or MasterCard to a bank

Question 4

Acquirer Definition

Answer 4

An Acquirer is a licensed member of the card network. They connect to the card networks and are in the money flow to acquire settled transactions and push those funds to the merchant

They are members of the card networks and are liable for their merchants actions and transactions

Question 5

Are ISOs Acquirers?

Answer 5

No

They are sponsored to sell merchant accounts on behalf of the member banks

Question 6

Financial Responsibility

Answer 6

As entities that are licensed to enable merchants access to the payment systems, acquiring banks must follow regulations from the card networks

• They bear financial responsibility for their merchants’ credit card transactions
• They are responsible for underwriting and performing ongoing due diligence on their merchant customers

Question 7

Processor vs. Acquirer

Answer 7

A processor is, in a way, a technical arm of an acquirer. It provides a technology, authorises transactions and, potentially, receives transaction settlement information

Processors manage technical merchant services such as the process of moving funds, but do not take on financial liability for this – that stays with acquiring banks