How does a MasterCard work? Credit cards, such as MasterCard, are an everyday part of life. No one can do without them. They are ubiquitous throughout the modern world. However, for some, they remain quite mysterious.
Not issued by MasterCard MasterCard credit cards, similar to Visa credit cards, are not issued by MasterCard themselves. Instead, the cards are issued by a bank who pays for the right to use the MasterCard logo on their cards and use the MasterCard computers to process transactions. Therefore, each bank will have their own particular rules regarding the usage of the cards, including what they charge for their services and how much you can charge at one time.
Transactions processed by MasterCard The banks do not process transactions. Instead, that’s done by MasterCard. When you present your card at a store intending to make a purchase, the store will swipe your card through a machine which reads the magnetic strip. The information the strip is transmitted to their bank, who in turn sends it to MasterCard. MasterCard contacts the bank which issued your MasterCard card and asks them if your card is valid. Assuming all is well, your card is charged and a receipt will be printed.
Bills sent by your bank When you pay for your purchases, you never pay directly to MasterCard. Instead, the bank will send you a bill and ask you to send a check or use direct debit from your bank account.
MasterCard makes a profit on the transaction fee If you’re wondering how Mastercard makes their money, it’s simple. Every time a computer contacts MasterCard’s computers to ask if the card is valid and MasterCard sends the query to the bank that issued the card, MasterCard takes a small fee for providing this service. In essence, they are the middle man.