Some financial institutions are both issuers and acquirers. The merchant has a written agreement with the acquirer to accept the bankcards as payment and to abide by the terms of the agreement. 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.