Browse Definitions :
Definition

open loop / closed loop payment cards

Open loop and closed loop, in the context of payment cards, are categories that stipulate whether a card can be used in businesses other than that of the card issuer.

An open loop payment card is one that can be widely used. The most common example is a credit card from a major payment processor, such as Visa or Mastercard. Somewhat confusingly, American Express (AmEx) and Discover are considered closed loop payment cards despite being fairly widely accepted for payment because the card issuer also processes payments. In contrast, a Visa card might be issued by a particular bank or retailer but Visa processes the payments.

Closed loop payment cards are limited in terms of where they can be used. The most common examples of a closed loop payment card are store-specific credit cards and gift cards. Store credit cards are generally limited to purchases from the issuing retailer. These cards typically offer customers benefits such as discounts and loyalty program points that can be redeemed on future purchases. For the retailer, the cards help to foster customer loyalty and incentivize purchases. Gift cards are convenient for the purchaser, quick and easy to buy. The retailer may benefit from the tendency for people to spend in addition to the card amount and the fact that many gift cards are never redeemed.

Stores may offer both open and closed loop cards, such as a store-branded Visa card in addition to a store-specific credit card.

This was last updated in November 2017

Continue Reading About open loop / closed loop payment cards

Networking
  • Telnet

    Telnet is a network protocol used to virtually access a computer and provide a two-way, collaborative and text-based ...

  • big-endian and little-endian

    The term endianness describes the order in which computer memory stores a sequence of bytes.

  • Address Resolution Protocol (ARP)

    Address Resolution Protocol (ARP) is a protocol that maps dynamic IP addresses to permanent physical machine addresses in a local...

Security
  • Mitre ATT&CK framework

    The Mitre ATT&CK (pronounced miter attack) framework is a free, globally accessible knowledge base that describes the latest ...

  • timing attack

    A timing attack is a type of side-channel attack that exploits the amount of time a computer process runs to gain knowledge about...

  • privileged identity management (PIM)

    Privileged identity management (PIM) is the monitoring and protection of superuser accounts that hold expanded access to an ...

CIO
HRSoftware
  • employee resource group (ERG)

    An employee resource group is a workplace club or more formally realized affinity group organized around a shared interest or ...

  • employee training and development

    Employee training and development is a set of activities and programs designed to enhance the knowledge, skills and abilities of ...

  • employee sentiment analysis

    Employee sentiment analysis is the use of natural language processing and other AI techniques to automatically analyze employee ...

Customer Experience
  • customer profiling

    Customer profiling is the detailed and systematic process of constructing a clear portrait of a company's ideal customer by ...

  • customer insight (consumer insight)

    Customer insight, also known as consumer insight, is the understanding and interpretation of customer data, behaviors and ...

  • buyer persona

    A buyer persona is a composite representation of a specific type of customer in a market segment.

Close