MasterCard is a US multinational financial services company based in New York City. The main business of company is the transaction processing card between the recipient banks (sellers) and the issuing banks of the card issuers who use bank cards or credit cards with this brand. In this article, we will cover the way the company operates, different types of cards it offers and more details.
A regular transaction on the MasterCard system
In the process of making each transaction in this system, there are 4 different factors. Cardholder, Merchant (usually seller), Card issuer and Recipient.
A cardholder who who is the owner of the bank account may not even have a physical card and is the person who purchases a product or service from an acquirer.
When the transaction is authenticated by the issuer of the card, the issuer pays the amount equal to the transaction value to the acquirer (may be the same as the merchant). Of course, a transaction fee is deducted and the transaction confirmation ends.
One point you must consider here is that the fees are deducted from the total amount of transaction and from the acquirer.
MasterCard connects each and every one of the parties in a transaction no matter where the transaction occurs (in a physical location, at the bank, via the Internet or connected device).
The structure of MasterCard bank system
MasterCard bank network
MasterCard network is behind every transaction to ensure that payments are made quickly, securely and with confidence. The MasterCard network has a smart structure that is compatible with the needs of each transaction, and has two distributed processing structures (peer to peer) and a central (connected point). As an example, each and every transaction requires these points:
Fast processing – No contact cards or a fixed device in a place – We can use a distributed structure, in which case we can be sure that these transactions are done near the place where the payment is made.
Value control processing – such as instant access to transaction data for counterfeiting – we can use a central processing structure, in which case it can be assured that advanced processing services have been applied to the transaction.
MasterCard also offers point-to-point card solutions and services. For example, this service offers credit card and prepaid card issuers a designed platform for processing that can provide different products and services. In this case, online shoppers can benefit from a single user interface that allows secure transactions.
Transaction steps in the MasterCard system
Step One – The customer pays an amount with the MasterCard which can be for a product or a service from a seller.
Step Two – Payment will be validated. At this time, the sales system accepts the customer’s account information and sends the acquirer the amount securely.
Step Three – The transaction is registered and the merchant asks the MasterCard to obtain confirmation from the issuing bank of the customer card.
Step Four – Validation is required and the MasterCard submits the transaction for card issuer and for validation.
Step Five – The result of validation is determined and the issuing bank verifies the transaction and returns the response to the merchant.
Step Six – The issuing bank directs the payment to the merchant of the acquirer, which is the place where the amount is deposited to the target account.
What are different types of MasterCard?
You can use a credit card for daily purchases in a physical store or online and in places where cash and checks are not accepted. One of the biggest advantages of using MasterCards is that you can refund money up to 60 days, even if the product store sold for sale does not return your money.
But the most important feature of credit cards is that you can buy even more than your account balance. Of course, for this purpose, you must specify your purchase limit on your contract and in advance. The credit card issuer calculates the interest of the purchases you have made. However, if you can pay your debt before 30 days after the purchase, no interest will be added to the purchase price. The longer it takes for you to pay for your purchases, the more you need to pay. Visa and Master Card are two main credit card issuers, but aside from these two, PayPal also issues cards.
The basis of these types of cards is that we can use the money exactly as much as our account holds, with the difference that the Debit Card is connected to your account or your savings account. You can buy with your debit card or withdraw money from ATMs. The point here is that paying a vendor through a debit card may take a few days and will not immediately be deposited to the seller’s account.
Prepaid cards, as their name suggests, can be used when you pay for it and charge your account at your own expense, and you can not buy more than your card balance. Like a regular bank card, the prepaid card is not connected to any bank account, but it can be recharged to the desired amount.