card business model

Card Business Model

Typical Card Business Model

When you use your card, the card business model comes into play,( whether it is a debit, credit or prepaid card,) a merchant discount is paid to the card company. A merchant is where the Point of sale device has been placed by the card company. The merchant commission is paid for the convenience of not having to deal with cash and the risks associated with cash.

card business model

card business model

The fee is split among three parties which make up the card business model

Card business model -Acquiring Bank

An acquiring bank is the bank that processes transactions when a card is used. The acquiring bank also credits the merchant’s account for the amounts spent by card owners less the commissions and fees. The acquiring bank is responsible for negotiating eh commissions with their merchants.

Card business model –issuing bank

Issuing bank is the bank that gives the card to the cardholder. The bank is responsible to settle all their cardholder bills either by debiting the cardholders account or taking cash payments from the cardholders. The issuing bank also gets to share on the merchant commission and this income is known as interchange fees.

Card business model – network connectivity

Network connectivity is the links that are used to connect issuers and acquirers. The banks do not have direct relationship with each other but rather they share a network. This allows a transaction from a card issued in Kenya to be accepted and used in a Tanzanian shop. The two largest networks in the work are Mastercard and Visa.

Typically the average merchant discount is approximately 3% of the purchase price. The amount is divided among the three players, issuers, acquirers and network

ATM usage fees for card business model

Whenever you use an ATM a fee is charged for the transaction. The fee charged is share between the Acquirer of the ATM (owner), the Network and the card issuer, just like the usage of cards at Point of Sale. Some concessions may be given to cardholders who use their banks ATM or the fess are less than when another banks ATM is used.

The major credit cards are mastercard, visa and JCB. The major debit cards are mastercard, maestro and Visa electron. American express and diners club are major charge cards. China union pay and discover are major regional cards.all these have a card business model in place to be successful.


  • I understand magstripe cards arre not very secure is any bank in kenya issuing chip cards

    • Thank you for your query – there are Banks issuing Chip cards but the chip is not active. this is set to change as soem banks introduce Chip cards and activate them in the market before the close of 2011

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