Credit Card Networks vs. Issuers: Understanding the Key Differences

If you’ve ever used a credit card, you’ve dealt with both credit card networks and credit card issuers. But what do they actually do? And what’s the difference between them?

In this blog post, we’ll clear that matter for you. We’ll start by discussing what credit card networks are and what their role is in transactions. Then, we’ll talk about credit card issuers and what they offer consumers. Finally, we’ll answer some common questions about credit card networks and issuers. Stay tuned!

What Is a Credit Card Network?

A credit card network is a company that facilitates transactions between merchants and consumers. They do this by providing the technology needed to process payments, as well as the rules and regulations that govern those payments.

What Are the Four Major Credit Card Networks?

The four major credit card networks in the US and globally are Visa, Mastercard, American Express, and Discover. Let’s have a closer look at each one of them.

Visa

Operating in over 200 countries and territories, Visa is the largest credit card network in the world. It processes more than 232 billion transactions a year, totaling more than $13 trillion in volume. Visa cards are accepted by more than 100 million merchant locations around the globe.

Mastercard

Mastercard is the second-largest credit card network in the world, with customers in more than 120 countries. It processes over 110 billion transactions each year at over 60 million merchants around the globe.

American Express

American Express is the third-largest credit card network in the world. It processes almost nine billion transactions each year, totaling more than $1 trillion. As of 2020, 99% of all merchants accepting credit cards in the US accepted American Express. The network also operates internationally in over 160 countries and territories worldwide.

Discover

Discover is the fourth-largest credit card network in the world, used in more than 200 countries. It processes almost six billion transactions each year, totaling more than 892 billion in purchase volume. While Discover’s international reach is similar to that of Visa’s, the number of merchants accepting its credit cards is almost half – 51 million.

What Is a Credit Card Issuer?

A credit card issuer is a company that issues credit cards to consumers. They are responsible for setting the terms and conditions of the card and approving or denying applications.

Some of the largest issuers in the United States are Chase, Bank of America, Citibank, and Wells Fargo. But there are plenty of other companies offering various products with features tailored toward specific needs. For example, credit cards with perks for international travel or  cards with zero interest.

How Credit Card Networks and Issuers work

When a consumer uses their credit card to make a purchase, the transaction goes through two steps.

First, the credit card network processes the payment. This is done by verifying that the card is valid and has enough funds available to cover the purchase.

Then, the credit card issuer pays the merchant for the sale. The credit card issuer is responsible for reimbursing the credit card network for any fees incurred during the transaction.

FAQ

Which cards are accepted in most locations?

In general, Visa and Mastercard are accepted in more places than American Express and Discover. However, there are a few exceptions. For example, American Express is often accepted by smaller merchants, while Discover is more commonly accepted by online merchants.

Are all merchants obligated to accept cards from all networks?

No, merchants are not required to accept cards from every network. However, most larger merchants do accept Visa and Mastercard, as well as American Express and Discover. In fact, some businesses only accept certain types of credit cards. For example, many gas stations only accept Visa and Mastercard.

Do you need to own a card from all credit card networks?

No, you don’t need to own a card from all credit card networks. In fact, most merchants only accept cards from a few of the major networks. Visa and Mastercard are accepted in the vast majority of locations in the United States. American Express is also fairly widespread, while Discover is somewhat less common.