Payments - Four Party Model
The four party model explains how a card payment works by identifiying the four main actors involved in the transaction. From when the card is used to when the merchant recieves the money.
Used in Most open-loop card networks like visa & mastercard.
The four party model and what they do
| Actors | Who | Example |
|---|---|---|
| Card Holder | The customer who initiates the payment using a card | You, me, any shopper using credit/debit card. |
| Merchant | The business that sells the goods/services and wants to receive payment | Starbucks, amazon e-commerce, salon owner |
| Issuer | The cardholder bank that issues the card and decides to approve or decline the payment | Chase, Capital one, Wells fargo |
| Acquirer | The merchant bank or payment processor that helps accept the payment | Stripe, Square |
How money flows in four party model
