The Participants

In this section you will learn about the participants in card payment processing.


A cardholder is a person to whom a payment card has been issued by a card issuer.


A merchant is a business (for example a shop, online store, restaurant, hotel, airline) that accepts a payment card as a method of paying for goods or services. A merchant sends the details of a card transaction to their acquirer(s).


An acquirer is a financial institution that receives transactions from a merchant (it “acquires” the transaction from the merchant).

Each time a merchant submits card information for a transaction, an acquirer forwards the details to a card issuer for payment authorisation. If an acquirer does not have an agreement with a particular issuer or cannot identify the source of the card, it forwards the card details to a card scheme network which directs them to the required card issuer. This is referred to as “open loop” system. In all cases, a card issuer sends an authorisation response to the merchant.

An acquirer also forwards details of transactions for payment to a card issuer at the same time as reimbursing the merchant for the sale. The card issuer reimburses the acquirer and then recovers the transaction amount from the cardholder.

American Express and Discover Card operate “closed loop” systems where the card issuer pays the merchant's bank account directly.

Card Issuer

A card issuer is a financial institution, usually a bank or building society, that issues a payment card to a cardholder and administers their account.

A card issuer usually manufactures and issues a card that belongs to a card association which is an organization owned by its member financial institutions. The main card schemes are Visa and MasterCard.

American Express and Diners Club are card schemes that issue cards directly.

Card Association

A card association is a network of issuing banks and acquiring banks that process payment cards of a specific brand. Familiar payment card association brands include Visa, MasterCard, American Express, Discover, Diners Club, and JCB.

Payment Service Provider

A payment service provider (PSP) enables merchants to process payment card transactions; it is an interface between a merchant and its acquirer(s). PXP is a PSP.