Understanding MANIC in the Credit Card Ecosystem - Part 1
When we swipe, dip, or tap a credit card, a complex, yet seamless, series of steps ensures that the transaction is processed securely and efficiently. This journey can be remembered using the acronym MANIC, which breaks down the key players and processes in a credit card transaction:
M – Merchant
The merchant is the starting point of the transaction flow (e.g., Lululemon, H&M). They provide goods or services and accept credit cards as payment. Once a card is used, the merchant’s system initiates the payment process.
A – Acquiring Bank
The acquiring bank processes the transaction on behalf of the merchant (e.g., Chase bank, processes on Merchant’s behalf). This bank facilitates the merchant’s credit card transactions by providing a merchant account and exchanging funds with the issuing bank. It deducts applicable fees (interchange, reversals, and acquirer fees) before settling with the merchant.
N – Network
The network (e.g., Visa, Mastercard, American Express) acts as the bridge between acquiring and issuing banks. It authorizes, processes, and communicates transaction data while ensuring the smooth transfer of funds.
I – Issuing Bank
The issuing bank is the financial institution that provides the credit card to the customer (e.g., Bank of America – Issued card used by the customer). It verifies the cardholder’s identity, authorizes the transaction, and guarantees payment to the merchant through the network.
C – Customer/Cardholder
The cardholder is the individual who uses the card at the merchant’s point of sale to trigger the entire transaction flow. Their interaction with the merchant sets the process in motion.
The Transaction Flow
- The customer initiates the transaction by using their card at the merchant.
- The merchant sends the transaction details to the acquiring bank.
- The network communicates between the acquiring bank and the issuing bank for authorization.
- The issuing bank approves or declines the transaction based on available credit and fraud checks.
- The result flows back to the merchant via the acquiring bank and network.
Network: The Heart of the Ecosystem
At the core of MANIC is the Network, ensuring seamless communication and secure fund transfers between all parties. It serves as the backbone of every credit card transaction.
This interconnected system of players ensures every transaction is efficient, secure, and trustworthy, providing a smooth experience for customers and merchants alike.
In Part 2 we will explore examples of who these players are and the role they play.
About Flybits:
Flybits revolutionizes how financial institutions deliver personalization. Their award-winning framework simplifies the connection between financial institutions, their data, and their customers. Flybits’ platform accelerates the delivery of critical use cases with minimal IT intervention, empowering digital teams to seamlessly deliver data-led insights across all channels. Supported by leading fintech investors including Point72 Ventures, Mastercard, Citi Ventures, TD Bank Group, and Information Venture Partners, Flybits has offices in New York, London, and Toronto.