What’s a Credit Card Network - credit card being swiped

What is a credit card network

Friday, December 19, 2014
Credit card networks are essential to today’s economy. They help power millions of transactions across the globe every day. Chances are you use credit cards in transactions all the time as a customer. But how much do you know about the networks behind the credit cards? Knowledge of credit card networks is especially important for small business owners like you who are likely to accept credit or debit card payments. In this article, we’ll take a look at the card networks and how they work. To start, let’s define a card network.

What’s a card network?

A card network or card provider is a company that is the bridge between your company as a merchant and the card-issuing bank. The card network does a variety of things – they authorize, process, and set the terms and conditions of the transactions. They transfer payments between shoppers, merchants, and their banks. Some card networks also issue credit cards.
You may be familiar with the different credit card network names, but there are four major credit card networks you’ll need to know as a small business owner. Let’s take a look at each one.


Visa is the industry leader when it comes to payment networks. It claims the largest market share of any of the card networks. Visa projects 300 million contactless Visa cards in use within the United States by the end of 2021.


The second largest card network is Mastercard with 249 million Mastercards in circulation in the United States at the end of March 2021.

American Express

Also known as Amex, they are the third largest card network. Unlike Visa and Mastercard, American Express acts as both a credit card network and a card-issuing bank. That means they service American Express cardholders directly. 


The fourth largest card network is Discover. Like Amex, Discover also acts as both a credit card network and a card-issuing bank. Customers who own Discover cards can receive cash back and other perks, just like any other card.

Now that you’re more familiar with the credit card networks, let’s take a look at how card networks work.

How do credit card networks work?

Knowledge of the credit card transaction process is important for small businesses because payment processing represents one of the biggest costs businesses will have. Let’s look at how a credit card network works by looking at a credit card transaction. 

When a customer wants to buy something from your business using a credit card, they'll insert the card, swipe the card, or tap the card on the EMV chip reader. Next, the credit card terminal “talks” to the credit card network to see if the transaction will be approved. If the credit card network is different from the card issuer, the credit card network acts as an intermediary that connects the merchant with the financial institution that issued the card to process it and see if the transaction will be approved. Visa and Mastercard are examples of intermediaries. The merchant is then notified that the transaction is either approved or declined.

Let’s look at an example transaction to see this in action. Let’s say you own a small business, Jake’s Cakes. A customer comes in to buy a cake. Here’s how the transaction works:

  1. The customer finds a cake they like, and they use their Chase Visa credit card to buy the cake.
  2. The point of sale (POS) system “talks” to Visa (the credit card network) who then talks to Chase and shares the customer’s card information.
  3. Chase informs Visa whether the transaction is approved or declined.
  4. Visa then relays the approval or denial to Jake’s Cakes via POS and the transaction is complete.

It’s important to note how fast this process takes place. From the time you insert, slide, or tap your card, to finding out if the transaction is approved, all happens within a few seconds, thus helping to keep your business moving.

As you can see, the card network serves as the facilitator to help merchants like you talk to the card-issuing banks. Even though you can choose to accept payments from any of the card networks, most customers expect a company to accept credit cards from each of the top four card networks mentioned earlier. 

Now that you know how card networks work, let’s take a look at the difference between a credit card issuer and a credit card network.

What’s the difference between a credit card issuer and a credit card network?

When it comes to credit cards, the difference between credit card networks and credit card issuers can be difficult to grasp. As you know, credit card networks help facilitate transactions; they make it possible for customers to use credit cards and for your business to accept them. But it might be more difficult to know what a credit card issuer is. Issuers are responsible for financially backing a credit card. In other words, issuers are banks or credit unions. Some of the biggest credit card issuers include Citi, Capital One, Bank of America, and Wells Fargo. Again, they have a financial stake in these credit cards. In addition to giving out credit cards, the card issuer is responsible for some other things as well:

  • Approving or denying credit card applications
  • Setting credit limits, APRs, terms, foreign transaction fees, and handling other account benefits
  • Paying transactions on behalf of the cardholder
  • Collecting payments from the cardholder

In the case of Visa and Mastercard, they are card networks that work with the financial institutions that are the card issuers. That’s why you might see a Chase Visa credit card or a Bank of America Mastercard. 

In contrast, American Express and Discover are both credit card networks and card issuers. Therefore, they service the cards more directly than Visa and Mastercard. American Express and Discover are responsible for not only processing the transaction but also approving the transaction. The two companies also manage the loyalty or rewards programs for their respective customers. Each offers customer perks like cash back that help entice their customers to choose them over the other card issuers.

Does it matter which card networks your business accepts?

If you’re wondering if it matters which card networks your business accepts, the short answer is yes, it does. One of the responsibilities of each card network is to set their interchange fees. These interchange fees are also known as processing fees or swipe fees and dictate the percentage of each transaction that the merchant has to pay to the card networks, depending on the type of credit card. These rates vary by card network; some cards have higher rates than others which is one reason some businesses choose not to accept certain credit cards.

However, in today’s business environment, consumers want a wide variety of payment options and expect businesses to take at least all four of the major credit card networks. 

In this article, we’ve touched on credit card networks and how they work, including a rundown of the four major credit card networks. Now that you know about credit card networks, you can decide which ones make sense to accept at your business. 

Ready to work with a payment processor that can help you accept credit card payments?

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