Four-Party
Card Schemes
or Four-Party Schemes
means
The Personal Credit Card Market in
Australia: Pricing over the Past Decade
by Iris Chan, Sophia Chong and Stephen Mitchell from RBA's
Payments Policy Department notes "In four-party card schemes (such as MasterCard and Visa),
rewards programs are, for the most part, funded by
Interchange Fees. Four-Party
Schemes are so called because four parties are typically involved in
the payment process:
*
Cardholder;
*
Credit Card Issuer;
* Card Acquirer; and
* Merchant.
By contrast,
Three-Party Schemes, American Express, Diners Club
'et al' generally act as sole issuer and acquirer,
resulting in three parties in the payment process:
*
Cardholder;
* Merchant; and
* Scheme (American Express, Diners
Club 'et al' generally act as sole issuer and acquirer)..
One of American Express, Diners Club 'et al' constitute the Scheme by performing the joint functions of Credit Card Issuer and Card Acquirer that exist under a Four-Party Scheme.
The Cardholder makes payments.
The Merchant receives payments from the Cardholder.
The Card Issuer provides banking facilities to the Cardholder which includes the card itself, along with regular statements and facilities to deal with fraud or card loss.
The Card Acquirer provides banking acceptance facilities to the Merchant which includes the hardware and systems to receive payments, fraud detection, and arranging the appropriate net transfer of funds from Card Issuers.
See Payment Card Networks, Three Party Schemes, Credit Card Payment Schemes, eftpos Cards and eftpos