Author Question: In one or two paragraphs, explain the difference between an open loop and a closed loop payment card ... (Read 84 times)

Garrulous

  • Hero Member
  • *****
  • Posts: 686
In one or two paragraphs, explain the difference between an open loop and a closed loop payment card processing system.

Question 2

Write a paragraph in which you identify the types of companies that might offer a store-branded charge card.



Andromeda18

  • Sr. Member
  • ****
  • Posts: 336
Answer to Question 1

In some payment card systems, the card issuer pays the merchants that accept the card directly and does not use an intermediary, such as a bank or clearinghouse system. These types of arrangements are called closed loop systems because no other institution is involved in the transaction. American Express and Discover Card are examples of closed loop systems.
Open loop systems add additional payment processing intermediaries to the structure of a closed loop system. Suppose an Internet shopper uses a Visa card issued by the First Bank of Woodland to purchase an item from Web Wonders, whose bank account is at the Hackensack Commerce Bank. The banking system includes one or more intermediaries (banks or other types of payment processing companies) that coordinate the transfer of funds from the First Bank of Woodland to the Hackensack Commerce Bank. Whenever additional parties, such as the intermediaries in this example, are included in payment card transaction processing, the system is called an open loop system.

Answer to Question 2

In the United States, many retailers, such as department stores and oil companies that own gas stations, issue their own charge cards.
Cards issued by a specific retailer, such as Exxon fuel stations or Kohls department store, are sometimes called store charge cards or store branded cards.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Limit intake of red meat and dairy products made with whole milk. Choose skim milk, low-fat or fat-free dairy products. Limit fried food. Use healthy oils when cooking.

Did you know?

Disorders that may affect pharmacodynamics include genetic mutations, malnutrition, thyrotoxicosis, myasthenia gravis, Parkinson's disease, and certain forms of insulin-resistant diabetes mellitus.

Did you know?

Human stomach acid is strong enough to dissolve small pieces of metal such as razor blades or staples.

Did you know?

In inpatient settings, adverse drug events account for an estimated one in three of all hospital adverse events. They affect approximately 2 million hospital stays every year, and prolong hospital stays by between one and five days.

Did you know?

Opium has influenced much of the world's most popular literature. The following authors were all opium users, of varying degrees: Lewis Carroll, Charles, Dickens, Arthur Conan Doyle, and Oscar Wilde.

For a complete list of videos, visit our video library