Whenever an applicant apply for a new credit card, the bank you applied carefully screens your application.
A limit is worked out for the applicant determining the credit which could be sanctioned , based on your financial capability and other parameters like income levels, educational qualifications, age etc.
Generally cxredit card are issued by banks and big financing corporates like Reliance.
The bank that issues you the card is called the 'issuing bank'.
From the bank's point of view, credit cards are good business for two reasons:-
1)Banks make money through fees from merchant establishment.
2) The higher than normal interest rate paid by cardholders for the balance in their card.
Merchant establishments can be hotels, shops, travel agencies or any place where money transactions are made. The banks that enroll merchant establishments are called 'acquiring banks'.
The relationship between the bank and the merchant establishments is run via international networks such as Visa and Master card.
Your credit card is valid in any merchant establishment that accepts your network (ie Master Card or Visa), irrespective of the issuing bank. Most Indian card issuing banks are part of either Master Card network or Visa network, or both. There are others credit card networks like American Express and Diners Club too.
The merchant establishment finds the credit card a safer and efficient payment mode, and brings more business as it provide credit facility to there deemed customers thereby incresing the spending capacity of the customers. The merchant establishment pays a fee to the bank that enrolled it for the service.