Credit card processing as an example of distributed
Mag. Markus Brandstätter, PMP
Dr. Julius-Hahnstraße 2/1/18, 2500 Baden bei Wien, Austria
Abstract. Credit card transactions are essential for doing business all over the
world. To ensure proper and smoothly processing, distributed systems are
needed. This paper provides an overview how credit card transactions work and
how the business processes are related to the distributed systems behind.
Credit cards where first issued in the United States in the 1920s, where they were
used to buy fuel at fuelling stations. In those days the credit card could only be used at
the merchant issuing it. In the late 1930s merchants started accepting each others
cards to provide more flexibility to the customers.
The concept of credit cards as it is known today was introduced by Frank X.
MacNamara, founder of Diners Club, in 1950 – originally to consolidate the
processing of multiple cards. Shortly
afterwards American Express entered the
market. In 1958 the BankAmericard was
the Bank of America
becoming VISA later on and in 1966
MasterCard was established.
Today the credit card companies have
subsidiaries all over the world using a kind
of franchising system. Normally local banks
become the partners; being then in the
position to emboss and issue cards, provide
the clearing, detect and follow up on frauds,
acquire merchants and so on.
The handling of credit cards can be split up into two major processes: the
authorization- and the settlement process. Especially in the authorization process
many security functions have been established to prevent frauds.
2 Mag. Markus Brandstätter, PMP
The authorization process checks whether a transaction can be processed or not. For
this the credit card number, the merchants data, the acquisitions bank data, the
expiration date and the transaction amount is needed (besides data for security checks
discussed later in this pa