MasterCard is not just another card type, it is an institution that has a peculiar relationship with banks. Many people don’t know that MasterCard is a different entity from the banking institution that issues the card. It’s like a synergy where the two are combining to achieve a common goal. Mastercard Incorporated works with financial institutions to issue credit cards.
Their primary duty is to process payments between the banks of merchants and the card issuing banks.
MasterCard has really made life easier since inception. The Card can be used to perform all kinds of transactions internationally and locally regardless of the issuing financial institution or card type. So, you don’t have to stand on endless queues in a particular bank for your transactions.
You can just plug in the MasterCard or its details where appropriate to complete your transactions on various channels. MasterCard also removes the time barrier, you can use it any time of the day even if banks are on holiday.
Anybody can obtain a MasterCard, just approach your financial institution and make enquiries. Cards are available to individual customers as well as small, mid-size and large businesses with a variety of needs and credit history.
How MasterCard works
You need to understand that MasterCard Incorporated Company does not actually issue any of their cards directly; they rely on banks in various countries to issue cards that utilize these payment methods. Therefore, the interest rates, rewards, annual fees and all other charges are issued by the financial institutions, thus any bill paid goes directly to the issuing financial institution.
In other words, MasterCard is neither an issue nor an acquirer; the corporation’s role is to provide the technology and the network that powers the transactions. This is how it works:
- When a customer purchases goods/services from a merchant e.g Amazon, the customer pays with the credit or debit Card, the point-of-sale system captures the customer’s account information and securely sends it to the merchant bank, an authorization is gotten from the customer’s issuing bank.
- MasterCard submits the transaction to the issuer for authorization, an authorization for the transaction is given by the issuing bank, and the response is routed to the merchant.
- The issuing bank wires the payment to the merchant’s acquirer who deposits the payment into the merchant’s account.
- Notification is sent to your email account as transactions are made.