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I am looking at the income statement for a (public) credit card company. It shows a certain amount of revenue. What I need to understand is what counts as revenue. For example, a credit card company processes a 100 dollar customer transaction. It pays the merchant 99 dollars and a few weeks later, receives 100 dollars from the customer. Does the credit card company get to report 100 dollars as revenue or does it report 1 dollar of revenue? It seems to me that it should report only 1 dollar of revenue but I do not know. What I would like to know is what the standard accounting practice is in this area?

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  • The endpoints (card issuer and merchant acquirer) are necessarily banks, so they follow bank rules for customer accounts and loans. Only the network (Visa, Mastercard) isn't, but they don't directly handle funds, a bank does.
    – user71659
    Commented Aug 28 at 20:31

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Credit Card companies charge a transaction fee (typically around 2-3%, but it can vary) for every transaction they process.

Their revenue is the fee that is collected from (or withheld from) the merchant, not what the consumer "paid".

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    I would also suspect that the credit card company would get some revenue to manage various branding cards they issue (United, Delta, Costco, ...).
    – Jon Custer
    Commented Aug 27 at 13:55
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    Yes but I think the point of the question is that the $100 charge is not considered revenue - only the transaction fee which the merchant pays.
    – D Stanley
    Commented Aug 27 at 14:21
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    In addition, of course, many people do not pay off their balance entirely every time, so there's some interest income from the card users. And some cards charge an annual fee. They may also use their customer base as a marketing target for other promotions, and charge for that service, or market additional banking services to the customer which have their own income streams.
    – keshlam
    Commented Aug 27 at 18:01
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    @keshlam I presumed that OP was looking at a credit card company (Visa, MC) and not a bank (which is who actually would collect the late fees and interest), but you are correct if the credit card company is also a bank (like Discover I believe).
    – D Stanley
    Commented Aug 27 at 18:22
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    "Network" is a better term. "Credit card company" is ambiguous between network and issuing bank. And if by "credit card companies", you mean network, then no, their revenue isn't 2-3%. Most of the interchange goes to the issuing bank, and the network gets a fraction of a percent.
    – Acccumulation
    Commented Aug 29 at 3:03

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