A typical Visa transaction actually involves four distinct players:
- A retailer is the store, restaurant, online retailer, hotel, airline or other entity that accepts Visa as payment.
- An acquirer is a financial institution that signs up retailers to accept Visa payments and makessure those retailers get paid for those transactions as a result.
- An issuer is a financial institution that provides consumers with Visa-branded cards or other Visa-branded products. When a Visa credit card is used, the issuer actually "lends" the consumer the funds to make the transaction.
- A cardholder is the consumer who chooses to use their Visa card or other Visa-branded payment product to make purchases.
When a cardholder uses a Visa card to pay, the cardholder, retailer, acquirer and issuer all play a role. For example, a cardholder uses a Visa card to buy a pair of shoes. It's actually the retailer’s bank, or the acquirer, that reimburses the retailer for the pair of shoes. The cardholder's bank, or issuer, then reimburses the acquirer, usually within 24 to 48 hours. And finally, the issuer collects from the cardholder, whether through funds from the cardholder's bank account if a debit card is used, through billing if a credit card is used or from a prepaid account if a gift card is used.
The system works because all participants get value from the transaction, whether it's convenience, worldwide acceptance, a more secure way to pay, stronger customer loyalty or business efficiencies, among others.