The credit card issuing banks also have their own associations. When a merchant account is opened, it can draw upon this larger association of financial institutions for services, capital and risk management. Here is more information on the Credit Card Association.
A merchant has a number of different options in the modern financial arena. A business owner can sign up to accept certain credit cards or he can open a line of credit through an acquirer bank merchant account. Acquiring banks will be licensed and registered by the credit card companies that oversee them.
As part of the Visa or MasterCard Association, a member bank must adhere to all of its rules. These could apply to acceptable levels of risk or upgrading technology, such as EMV chips. The credit card issuing banks determine association policies.
Why does a credit card association matter?
An association is a proprietary creation that has the best interests of its members at heart. The National Basketball Association (NBA) is an example of an association; it can fine member owners for rules infractions. The credit card association has the same powers. Associations might also qualify for certain tax benefits.
Associations will work with their member banks to find online merchants. The merchant account line of credit can draw upon the financial asset base of the association as a whole. When the financial institutions combine their resources as associations, they can better manage risk and offer a fuller range of services.
Associations can assist with money payment device development and manufacturing also. A credit card processing manufacturer can appeal to the association for adoption of its technology. This helps him attract capital since the technology is supported by the top credit card banks. Likewise, governments and professional organizations (i.e. ANSI) can encourage the credit card association to adopt new standards, rules, regulations and laws.
Processing fees are also determined by the association. Each credit card brand has its own corporate philosophy, technology and market niche. It also has its own pricing formula. All members of the association can offer variations of the credit card association pricing plans for the merchant account.