ABSTRACT
A key principle in the value proposition of payment cards is what is known as the 'honor all cards rule'. Debit card purchases are deducted from funds on deposit with the bank, and credit or charge card purchases are billed to us at the end of the month. Purchase transactions made with bankcards operate in a four party payment system. Each party plays a key role in the completion of a payment transaction and together they ensure that card transactions are undertaken in a safe and satisfactory manner. Each participant provides a number of critical elements to the bankcard transaction process. The issuing bank contracts with the cardholder who uses the card to purchase goods and services. In many markets, especially for debit card products, the merchant service commission is a flat fee per transaction. Interchange fees are set by the card associations and vary by type, manner, and timing of the completion of the transaction.
