What qualifies as a payment card

A payment card qualifies as any card issued pursuant to an agreement or arrangement that provides for the following:

1. Issuers: There must be one or more issuers of such cards.
2. Network of Unrelated Persons: There must be a network of persons who are unrelated to each other and to the issuer, who agree to accept such cards as payment.
3. Standards and Mechanisms for Settlement: There must be standards and mechanisms for settling the transactions between the merchant acquiring entities and the persons who agree to accept the cards as payment.

Additionally, the acceptance as payment of any account number or other indicia associated with a payment card is treated in the same manner as accepting the payment card itself. This definition encompasses credit cards, debit cards, and stored-value cards (including gift cards), as well as payment through any distinctive marks of a payment card, such as a credit card number.

However, certain transactions are excluded from being considered payment card transactions, such as:

• Withdrawals and cash advances using a payment card.
• Acceptance of convenience checks issued in connection with a payment card account.
• Transactions where the payee is related to the issuer of the payment card.

Examples of cards that do not qualify as payment cards include private label cards and gift cards that are only accepted by persons related to the issuer.

Sources:
PLR 201240005
Notice 2009-19
T.D. 9496
§ 1.6050W-1. Information reporting for payments made in settlement of payment card and third party network transactions.
Publication 1220 (9/2023)
§ 6050W. Returns relating to payments made in settlement of payment card and third party network transactions