The issuer is responsible for the cardholder account program which encompasses nearly all aspects of cardholder account activities ranging from acquiring new customers to billing current ones. Maintaining authorization file Providing customer service Processing payments and handling settlement and income Interchange Establishing collections operations. Managing a credit card program is expensive. Smaller banks can issue cards without becoming an issuing member by being an agent. This allows small banks to retain customers who want a credit card program.
Clearing refers to the exchange of financial information.
Settlement refers to the exchange of the actual funds for the transaction and the associated fees. Clearing and Settlement Occur Simultaneously. A financial institution can be both an issuer and an acquirer. MasterCard and Visa send the transaction to the issuer overnight, credits the acquirer and debits the issuer for the transaction. In essence, the issuer pays the acquirer for the transaction, via the Mastercard or Visa interchange system.