Which card model is used by Visa and Mastercard?

The correct answer is the four-party model, which is the foundational structure used by Visa and Mastercard. In this model, there are four distinct participants involved: the cardholder (consumer), the issuer (the financial institution that provides the card to the consumer), the acquirer (the financial institution that partners with the merchant), and the merchant (the business that accepts card payments).

This model facilitates the effective processing of card transactions, ensuring that all parties have clear roles and responsibilities. The issuer handles the cardholder's account and credit, while the acquirer manages the merchant's account and processes transaction payments. The clear delineation of these roles helps streamline the transaction process, enhances security, and enables the various players to operate efficiently within the payment ecosystem.

In contrast, other models like the three-party model, which features only the card issuer, cardholder, and merchant (without an intermediary acquirer), are employed by organizations like American Express. The single-party model is typically not applicable in the context of credit card transactions, and the hybrid model combines elements from different structures but does not represent the standard used by Visa and Mastercard. Thus, understanding the intricacies of the four-party model is crucial in grasping how Visa and Mastercard operate within the payments