Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Bank Card Association

What it is:

A bank card association is a company owned by one or more financial institutions that licenses credit card programs.

How it works (Example):

The two most popular bank card associations are Visa and MasterCard. They license their names to banks that want to launch, say, the "McDonald's Visa Card" or the "Donald Trump Fan Club MasterCard." The banks get the right to use the Visa or MasterCard logo on the card, and the bank card association authorizes the cardholders' transactions, settles transactions between people with different cards, and collects the interchange and processing fees.

Why it Matters:

The bank card association is a credit card company that essentially handles all the back-office work involved with processing transactions, fees, fund settlements and other tasks. Visa and MasterCard aren't the only associations.