Which statement defines a network (or scheme)?

Which statement defines a network (or scheme)?

• A. An association of merchant banks.
• B. An association of member banks that facilitates the payment transaction between the merchant and issuing bank; e.g., Visa & Mastercard.
• C. A system used only for online payments.
• D. A single bank authorizing payments.

Answer: (B)

A payment network or scheme is a collaborative infrastructure created by banks to route card payments between the merchant’s bank (acquirer) and the cardholder’s bank (issuer). It defines the rules, data formats, and settlement paths that make it possible for a transaction to be authorized, cleared, and settled across multiple institutions. The statement that best describes a network is that it’s an association of member banks that facilitates the payment transaction between the merchant and issuing bank, with Visa and Mastercard as examples. This captures the essence of a network: it connects many banks to enable cross-institution card payments, rather than being just a group of merchant banks, limited to online use, or a single bank.

A payment network or scheme is a collaborative infrastructure created by banks to route card payments between the merchant’s bank (acquirer) and the cardholder’s bank (issuer). It defines the rules, data formats, and settlement paths that make it possible for a transaction to be authorized, cleared, and settled across multiple institutions. The statement that best describes a network is that it’s an association of member banks that facilitates the payment transaction between the merchant and issuing bank, with Visa and Mastercard as examples. This captures the essence of a network: it connects many banks to enable cross-institution card payments, rather than being just a group of merchant banks, limited to online use, or a single bank.