- Banking
 - Cards
 - General
 - Insurance
 - Lifestyle
 - Loans
 - NRI
 - Real Estate
 - Taxation
 - Travel

Why the bank name is irrelevant

Larissa Fernand

Next time you walk past a store that says 'Citibank cards accepted here', don't walk away dejectedly with your HSBC or Stanchart card. They too will be more than welcomed.

Or if a bank claims that their card is accepted in the most number of locations, that certainly is not true. Take a look behind the scenes to be convinced.

An issuer is the one who issues the credit card. An acquirer is the bank who approaches the merchant establishment (which could be a hotel, a restaurant, a bar, a pub, a disco or a store) and requests them to start accepting credit cards.

The acquirer will earn a small commission from the merchant establishment every time a transaction is done via the card. And the merchant establishment will attract more customers since they offer the credit card option of payment.

Now the acquirer, assume Citibank, may tell the merchant establishment to accept Visa cards. That means all Visa cards (be it HSBC, Stanchart, Cancard, BoB Card) will all be accepted here. And Citibank, Visa and any other card issuer whose card was used there share the commission that would have been earned by Citibank. But since Citibank was the one who got the business in this case, it's commission will be higher than the one going to the other bank.

Sometimes, the issuer and the acquirer are one and the same.

So if Visa cards are accepted at an outlet, it does not matter which bank you have got the card from. Neither does it matter whether it is a Gold or Classic or Executive. All that matters is if it is a Visa card. Similarly, with MasterCard. Most acquirers make sure that they acquire the business for both, MasterCard and Visa. So chances are both cards will be accepted here. What you have to ask for is whether charge cards (Amex and Diners) or debit cards (Citibank and HDFC Bank) are accepted.

As for payments, the merchant establishment will collect it from the acquiring bank, which in turn will collect it from the issuing bank (if they are not one and the same). The issuing bank will then bill the customer. And this entire transaction will be routed via Visa or MasterCard.

Tell us what you think of this information