Credit Card Issuers and Credit Card Networks [Complete Guide]

By: Yara Pollard

When applying for credit cards, there are a myriad of options that you can choose from. However, you might have the wrong idea about who issues your card. In the world of credit cards, there’s the credit card issuers and credit card networks.

Both play a significant role to ensure that the cards are safe to use and that they function the way they should. There’s a huge difference between credit card issuers and credit card networks. 

Knowing the difference of both can help you better optimize the use of your credit cards. All credit cards contain the logos of the credit card issuers and credit card networks that they are partnered with. 

However, how do you know which are the issuers and which are the networks?

Credit Card Networks

According to The Balance, credit card networks “authorize, process, and set the terms of credit card transactions, and transfer payments between shoppers, merchants, and their respective banks”.

The four largest credit card networks are:

  1. Visa
  2. Mastercard
  3. American Express
  4. Discover

These are big names yet credit card networks does not mean that they issue the credit cards themselves. Out of the four, Visa and Mastercard has the most credit card holders. Visa has the top spot with 323 million cardholders while Mastercard has 191 million.

To give you an idea of just how much they dominate the industry, here are some other credit card companies with their respective number of cardholders according to ValueWalk:

  • Visa – 323 million
  • Mastercard – 191 million
  • Chase – 93 million
  • American Express – 58 million
  • Discover – 57 million
  • Citibank – 48 million
  • Capital One – 45 million
  • Bank of America – 32 million
  • Wells Fargo – 24 million
  • US Bank – 18.5 million

Notice how the combined number of cardholders from Visa and Mastercard can trump all the rest. Even Mastercard is over 100 million cardholders away from Visa. This huge gap can be explained when you learn more about the history of credit cards.

Being capable of using the services of the top credit card networks matter because they have the best global reach. Merchants don’t just accept all types of credit networks. For example, a store may accept Visa but may not accept American Express.

Using top credit networks can prove to be more convenient as most merchants accept them. However, both Visa and Mastercard are just credit card networks. They don’t issue their own cards.

Meanwhile, Discover and American Express are both credit card networks and issuers. As mentioned earlier, credit card networks just function as a bridge between the merchant and the bank. 

While it might seem like using credit is straightforward, five parties are involved when you use credit. They are:

  1. The Consumer
  2. Issuing Bank
  3. Network
  4. Acquiring Bank
  5. Merchants

When you purchase something using credit, all parties are bridged together by the credit card network. For example, if you pay for clothes at Target using your Target Red Card, the system begins when you swipe your card.

Target then sends your credit details and the amount you paid to the acquiring bank, the bank that acquired Target. The acquiring bank then sends the request to the credit card network, Mastercard.

Mastercard then coordinates with the issuing bank, the bank that issued you your credit card. At this point, it’s up to the issuing bank to approve or deny the transaction. If no fraudulent use of the card is detected, the transaction is approved.

You would then be charged the cost of the clothes through your account and payment is sent to Target’s account. That’s how the credit card network works to link all parties together to complete a transaction. 

Credit Card Issuers

Credit card issuers are banks or financial institutions that gave you your credit cards. According to Finder, these are the responsibilities of credit card issuers:

  1. Reviewing and accepting credit card applications.
  2. Making the terms and conditions of each credit cards.
  3. Issuing physical credit cards.
  4. Providing funds to your account up to your credit limit.
  5. Providing customer support.

While there are different types of credit cards, credit card issuers earn through all of them and from merchants through interest fees, annual fees, overlimit fees, late fees, swipe fees and more.

There are a lot of advantages with using credit cards. Regardless of the credit card issuer or network that you have, it’s important to know how to improve your credit score and retain it. To do this, you need to know the do’s and don’ts when it comes to using credit cards.

Now that you know more about credit card issuers and credit card networks, you can better understand which cards to choose for your own personal convenience. Do you have a credit card in mind you wish to apply for? Let us know about it!

Related post