In the UK, the majority of cards issued to UK cardholders incorporate chip and PIN security. However, other parts of the world do not use chip and PIN, and issue cards with a magnetic stripe only, a chip or a combination of both. These can still be processed, and a merchant’s acquiring bank will advise how to process these types of transactions.
The card types listed below can, generally, be processed as either a card present or card not present transaction. However, special card processing rules for certain card types have been set by the card schemes.
Click on the links below to view more information about each of the card types:
Credit Cards
A credit card is a payment card that can be used to pay for goods. The card’s issuer will keep a running total of how much has been spent, by the cardholder, on the credit card account.
The amount of money outstanding on the card account may be settled in full by a set date or may be repaid over a period of time, subject to minimum monthly repayments being made. Interest will normally be charged on the outstanding balance.
Credit cards are, primarily, issued by MasterCard and Visa and will show a ‘start’ or ‘valid from’ date and an ‘end’ or ‘expiry date’ on the front of the card, along with the card security code on the reverse in the signature line. Although not often seen in the UK, certain UK acquiring banks also accept JCB cards.
Customers can use their credit cards to spend up to the limit agreed with their card issuer. If the latest transaction takes the total spend above the credit limit, the card issuer may reject the transaction.
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Debit Cards
A debit card is linked to the cardholder’s bank or building society account and can be used to pay for goods at shops and withdraw cash from an ATM. A cardholder can spend up to the value of funds in their bank account and any unused overdraft.
There are three card schemes offering four types of debit cards in the UK. Some have different product features depending on how the card scheme wants them to function. For example, Visa Electron card transactions can only be accepted electronically i.e. they cannot be used with paper vouchers or PAN key entered (PKE). Further details on the different functions and acceptance rules for debit cards can be found under card types by processing channel.
When a card is processed, the transaction amount is debited from the available funds registered on the cardholder’s bank account that the debit card is tied to.
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Charge Cards
With a charge card, the cardholder has to repay the outstanding balance in full at the end of each month.
In the case of American Express and Diners Club, they not only issue their cards to their customers, but also acquire these card transactions as well.
To accept these card types, a merchant will need a separate individual agreement with each of these card schemes – their acquiring bank can help them to apply.
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Foreign issued cards
These are cards that have been issued by non-UK card issuers and an acquiring bank will provide instructions on how these can be accepted and processed by the terminal.
Not all countries are yet chip and PIN compliant and some cards may still use magnetic stripe technology and require the cardholder to sign a sales voucher - just as in the UK before the introduction of chip and PIN. In these cases, a merchant will have to swipe the card through the terminal using the magnetic stripe that is on the reverse of the card and follow the instructions from the terminal.
Other Card Types
Set out below are examples of the different card types issued in the UK and further information on accepting these more specialist card types can be provided by a merchant’s acquiring bank.
Business Card
Business cards are primarily used by small businesses as a business payment method; available as a debit, charge or credit card.
Corporate Card
A corporate card is generally used by mid-sized to large multi-national companies for travel and entertainment expenses. A feature of the card is being able to provide management information to help control expenditure and to manage and develop expenses policies.
Fuel or Fleet Cards
Fuel or fleet cards are specialist cards that can only be used to buy fuel and are, typically, issued to a company’s sales representatives. The company can access management information on fuel purchases made by their employees.
A specialist petrol terminal will be required to accept these card types.
Gift Card
Typically operates like a pre-paid card that can be given as a gift and allows the recipient to purchase items up to a specific value. The card may be restricted to certain retailers or, in some cases, can be used more widely. These can be re-loadable.
Pre-Paid
Fairly new to the UK, pre-paid cards are stored-value cards used to pay for goods and services, mainly as an alternative to cash. The card can be disposable or re-loadable. The stored value is reduced as purchases are made.
Purchasing Card
Primarily, large businesses, Government departments and other public sector bodies use purchasing cards. These cards allow companies to monitor and control expenditure and provide information to help improve cost efficiency and reclaim VAT.
Merchants should speak to their acquiring bank about the different levels of information that can be generated for purchasing card transactions. For example, when they need to send a VAT invoice to the cardholder’s company.
Store Card
Store cards are mostly issued by major high street stores and are either a charge card or can function as a credit card where they are supported by one of the card schemes (e.g. MasterCard or Visa).
The store card may only be used in designated shops which, typically, are part of the same group or chain of shops and this is know as a “closed loop” card. Alternatively, the store card, when supported by a card scheme, can be used in any shop that is displaying that card scheme’s logo and this is known as “open loop”.
