You are about to buy your friends some ice cream. With a grin, you open your wallet: Oh no! You only have a few coins left. Luckily you have your credit card.
Cash is not the only way to pay. Payment methods have changed a lot with the rapid progress of technology. You can now transfer money using a mobile phone, smart cards such as the Octopus, or the internet.
Most payments - apart from cash - imply having a bank account and going through a bank to be processed: cheques, credit cards, debit cards, bank transfers.
What happens when you pay with a credit card? The shop, also called the merchant, makes you sign a payment slip. The shop sends all the payment slips for the day to the credit card issuing bank.
The bank checks the card number and the amount, and authorises the payment. The transaction is then processed and settled by the credit card association. The most famous credit card associations are Visa, MasterCard and American Express.
The credit card issuing bank receives the money and transfers it to the shop's bank account. The shop does not get 100 per cent of the price though: the credit card issuing bank takes a 'merchant fee' for processing the transaction.
