What Is a Major Credit Card and How Does It Work?
Learn the fundamental components that define a major credit card and the intricate global processes behind every transaction.
A major credit card serves as a fundamental financial tool in modern commerce, facilitating countless transactions daily. Understanding what defines a “major” credit card is important for consumers navigating the complexities of digital payments. These cards are widely accepted and reliable, making them a common method for purchases both domestically and internationally. This article clarifies the concept of a major credit card, highlighting its attributes, the networks that support it, and the process behind each transaction.
Defining Major Credit Card Attributes
Major credit cards are distinguished by their extensive global acceptance, allowing cardholders to make purchases and withdraw cash from automated teller machines (ATMs) worldwide. This widespread utility is supported by robust payment network infrastructure designed for rapid and secure transaction processing. These cards are issued by large, regulated financial institutions, such as established banks, contributing to their reliability and consumer trust. Standardized security features include embedded microchips (EMV chips), contactless payment capabilities, and comprehensive fraud protection measures.
The Core Major Credit Card Networks
Major credit card functionality relies on a few core networks that facilitate global transactions. Visa operates as a prominent global payment technology company, providing infrastructure to process transactions between consumers, merchants, and financial institutions worldwide. Mastercard functions as another leading global payment network, connecting cardholders with merchants. American Express (Amex) utilizes a distinct business model, acting as both a network and a direct card issuer. Discover also operates as both a network and an issuer, primarily within the United States but expanding internationally.
Major Credit Card Transaction Process
A major credit card transaction involves a sequence of steps, starting from the point of sale and ending with fund settlement. The process begins when a consumer initiates payment by swiping, tapping, or inserting their card at a merchant’s terminal. This action triggers an authorization request, transmitting data from the merchant’s terminal to their acquiring bank, then through the credit card network to the cardholder’s issuing bank. The issuing bank evaluates the transaction for approval or denial based on factors like available credit and potential fraud, sending its decision back through the network to the merchant. If approved, the transaction moves to settlement, where funds are transferred from the issuing bank to the acquiring bank, and deposited into the merchant’s account within one to three business days.