Loans, credit, insurance & investment

These are the banks that process the payments made to a merchant. They ensure that the funds are remitted to the merchant’s bank account on the agreed date. In the early years when payment was made using paper slips the processing was highly manual but it is now highly automated.
For this service the bank changes the merchant a fixed transaction fee. This fee is negotiated between the merchant and the bank. For small retailers it is often in the region of 3%–4% of the transaction value. For large retailers, such as Wal-Mart and Carrefour, with huge bargaining power, pricing is both much lower and negotiated.
The fee charged to the merchant is split three ways between the merchant processing bank, the network provider and the issuing bank.

In the early days most issuers were banks but over time the number of non-bank institutions issuing credit cards has risen sharply. A small number of these issuers manage their own credit card business and finance the receivables. Many other cards, commonly called affinity cards, are issued in the name of a particular organization or association with a large membership base but the business is actually run by a bank. The association is able to negotiate better terms for its members in terms of pricing and supplementary features.