A. Relationship among card issuers, cardholders and merchants

A. Relationship among card issuers, cardholders and merchants

1. Insofar as a cardholder is concerned, a typical credit card transaction involves three parties:

• The bank that issues the credit card to the cardholder;
• The cardholder who uses the credit card to buy goods and services from the merchant; and 
• The merchant who sells the goods and services to the cardholder. 

2. There are other parties “behind-the-scenes” which support the entire operation relating to credit cards including the clearing and settlement of card transactions. Key parties are credit card associations such as Visa, MasterCard, UnionPay, etc.

3. As for a cardholder, use of the credit card and its rights and obligations with respect to the bank are governed by the credit card agreement and other terms and limits set by the bank. Some major terms and limits include the credit limit of the card, interest rate, repayment arrangement, and fees and charges. The purchase of the merchant’s goods and services by the cardholder is governed by a separate contract between the cardholder and the merchant.