Which organization functions as a principal/proprietary member of Visa or MasterCard?

The correct answer is that an association functions as a principal or proprietary member of Visa or MasterCard. In the context of card networks like Visa and MasterCard, principal members are entities that have the ability to issue cards and have direct access to the network for processing transactions.

Associations, in the payments landscape, typically operate at a higher organizational level, which includes partnerships with various financial institutions, including banks and credit unions, allowing them to issue cards and process payments as part of the network's ecosystem. This structure enables associations to leverage their resources and networks to effectively serve both consumers and businesses.

Credit unions and retail banks may also participate in the card networks, but they do so as members or affiliates rather than as principal members or associations. Loan service companies typically do not engage in card issuance or payment processing, as their primary focus is on managing loans rather than facilitating payment transactions.

Thus, understanding the role of associations within the Visa and MasterCard frameworks clarifies why they are classified as principal members with the authority to operate and manage card services.