Who is processing credit and debit cards?

Credit and debit card purchases accounts for 30 percent each of retail transactions in the U.S.  Visa and Master Card dominates the retail sector credit and debit purchases while American Express, Discover Financial Services and VeriFone fills the remainder.  Both Visa and Master Card are much popular in overseas and international transactions generate more than 60 percent of Master Card revenue and about 45 percent of Visa revenue.  Ample growth opportunities exist in the overseas markets for all card processors because more than 85 percent overseas transactions are still in cash.

Visa and Master Card gets about 10 cents of each $100 transaction.  They do not hold any credit risk and collects fixed per-transaction fees, service fees based on transaction size and cross-border transaction fees.  Banks who issue cards under Visa and Master Card licenses collect funds from the customer accounts.  However, American Express and Discover provide financing to their customers and therefore, hold more risk.

In the U.S., most cards still use the magnetic strips which are more prone to fraud.  Both Visa and Master Card are pushing retailors to use the global standard, a “chip and pin” system.  With the “Chip and pin” system it is harder to steal card numbers.

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