December 18, 2017 | 3:19 am
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Functionality of the Credit Cards

Technological innovations have led to the emergence of paperless cash methods such as credit cards. A credit card is used for paying for goods and services. These cards are a secure form of payment and less bulky compared to carrying cash. The history of the cards can be traced back to 1887 when Edward Bellamy wrote about the concept of the card. The first cards were however issued in 1921 by Western Union. The world is changing to paperless transactions thus the need for consumers to have these cards.
Say you would like to purchase a refrigerator using your Master card, which was issued by Barclays bank. The store attendant will present a card reader where you will swipe your card. The card has a magnetic stripe that has your data and the attendant adds information regarding the value of the item and the merchant. A message is immediately delivered to the computer of the acquirer who belongs to the MasterCard association and it notifies the master cards machine, which then verifies with the bank that your account has enough balance for the purchase.
In case you have the sufficient amount, the banks computer will send a confirmation message to the master card computer and authorize the purchase. MasterCard sends the message to the store and a receipt is printed out and you sign it. The payment request is submitted to the acquirer and the master card computer. The transaction is posted to the users account with the bank in question and the transfer of funds is completed.
Normally, the merchant will receive a small percentage less than the amount paid for the item. The deducted percentage is paid to the acquirer who retains an amount for the services rendered and offers a percentage of the purchase amount to the issuer, which is the bank. The percentage given to the bank is usually called an interchange fee. Card issuers like American Express do not have an interchange fee because they are the acquirer and the issuer of the card. Therefore, they retain the merchant discount.
Credit Cards are beneficial to the consumers. They are a convenient form of payment because they are accepted all over the world. In case you get an emergency and you run out of cash, the card will help you cover the expenses incurred. For those who travel frequently, you can use your card to book flights or accommodation easily. Purchasing goods online is safe because the transactions done by the card are closely monitored to avoid cases of fraud. In case someone uses your card to pay for a service without your knowledge, by notifying your issuer, you will be exempted from paying the transaction. Issuers have been known to reward their customers with points, cash backs and discounts.


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