We use debit or credit everyday and we see either Master or Visa written on it. It can be any bank which could be private or government, big or small bank etc ,but still the common part is that all of these banks have cards which are either Visa or Master .
But why ? And do we the know meaning and use of it ?
Visa and MasterCard are international settlement & clearing houses that help transfer of funds from one entity to the other. For example: You might have a credit card from ABC Bank. If you need to use your credit card at a shop, that shop would need to have a machine provided by ABC bank installed. Only then the shop keeper can accept your payment using the ABC card.
We have dozens of banks and each bank could very easily offer credit or debit cards to its customers. By the time the shopkeeper gets machines from all those banks to deal with its different customers - You can Imagine what could possibly happen .
This is where Visa and MasterCard come into the picture. They are settlement networks which banks can enroll with. Now the shopkeeper just needs to get either a Visa or MasterCard compatible machine and any banks credit or debit card that is endorsed by that group would be accepted.
When you swipe your card, your bank will pay Visa or MasterCard and they in turn will pay the bank with which the shop owner has an account.
This is where Visa and MasterCard come into the picture. They are settlement networks which banks can enroll with. Now the shopkeeper just needs to get either a Visa or MasterCard compatible machine and any banks credit or debit card that is endorsed by that group would be accepted.
Visa and MasterCard are basically payment network operators.The networks consist of banks that help consumers make payments (issuing banks) and help merchants accept payments (acquiring banks).
