The pricing of credit card authorization services is usually bundled with the package of credit card services offered by financial institutions to retailers.

Bundled services include:

Credit card application evaluation and processing.

Plastic card issuance.

Credit transaction authorization.

Credit card transaction balancing, clearance, and settlement.
Statement preparaion, payment, and collection.

• The incentives to the retailer are increased sales (through customer convenience), advertising, elimination of handling accounts receivable and, to a large extent, loss liability.

• Financial institutions charge a percentage (2-6%) of the transaction dollar amount. The percentage is a function of dollar volume, number of transactions, and type of retail establishment.

• Few financial institutions provide the entire range of credit card services directly to retailers. Some contract virtually all of the program to one or more participating vendors.

Visa/MasterCard data networks are used for transaction interchange and are a primary source for settlement.