The untold secrets to how the bank credit card processing center really works and how they handle your master card credit card application and visa credit card applications!
To make this clear, let’s examine what might hypothetically be called the bank credit processing center. When you apply for a credit card at your local bank, much more is going on than you realize.
Although the name of your local bank may be proudly displayed on your card, chances are your card was issued by another bank working behind the scenes.
Because banks are interconnected, they trade favors and reciprocate functions. Most often, however, banks hire each other to perform different services and, as a result, create economies and save themselves money.
The bank credit processing center is complicated. First there is the process of accepting the new applications, asking for credit reports, and setting up the approved accounts.
Then there is card printing and embossing, as well as ongoing paperwork encompassing year after year of statements, sales brochures, late payment notices, and countless other details that make a credit card program successful.
Most banks cannot afford to support all the functions required to issue and follow through on credit cards. Therefore, to avoid the complicated and costly process, smaller banks act as credit card agents for the larger banks.
In other words, smaller banks contract with larger banks for card-related services. Many service packages are available. The largest card-processing centers therefore do all the accounting, credit checks, mailings, statements, collections, and administrative details for the small banks. The fee that the smaller bank pays is a percentage of the annual credit volume.
Processing an application for a bank credit card requires a bank to perform many functions it normally cannot afford to do on its own,so it often seeks outside assistance by using other banks.
Most banks enjoy and benefit from this relationship. However, many more banks are now purchasing their own computer systems to cash in on the big profits that come from functioning as a large credit processing center.
The main advantage of the bank processing center is that it allows the smaller banks to stay in the game. Because there is fierce interbank competition, most banks must offer their customers the convenience of credit cards.
This is such an important part of bank promotion that many banks make their credit card package a major advertising tool to attract new customers from the competition.
The bank credit card processing center saves the small bank from having to invest in computers and more personnel to compete.
The larger banks also benefit from the credit card processing, because their overhead is partially subsidized by collecting the annual service fees from the smaller institutions using their card processing services. In fact, card processing centers often realize handsome profits.
Some bank networks link different parts of the credit card process in a kind of chain. One bank may offer the card while another does the credit checks and a third (or fourth) does the card embossing and monthly statements.
Some of these chains may be short and some may be surprisingly long. Interestingly, most major banks may have many lines of agent banks stretching out in chains under them. Some of these chains extend through as many as three or four successive agent banks.
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