All credit cards have both an issuer and a network. The issuer is the bank supporting the card. For example, Chase credit cards are issued by Chase Bank. In other words, it’s Chase who sets up the money that supports your line of credit. There are dozens, if not hundreds, of banks that issue credit cards.
The credit card network, on the other hand, is responsible for processing your card transaction. It is the intermediary between the issuer and the company in which you make your purchase.
In the United States, there are four main credit card networks:
In the case of Amex and Discover, the issuer and the network are the same company, as they issue and process their own cards.
While you usually only interact with your issuer, your credit card network is also important. Here are three ways your card’s network matters.
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Businesses have full control over the credit card networks they accept for payments. They can accept all four networks, or even none.
Nationally, the acceptance rates for each of the four major networks are quite similar. Some brands have specific associations (think Costco and Visa), but most places accept cards from any network.
When traveling abroad, you may encounter more cases where companies accept one or two networks, but not all four. Mastercard and Visa tend to be the most widely accepted, although American Express and Discover have significantly increased their international acceptance rates over the past decade.
2. Processing fees
Each network charges a per-transaction fee to process credit card purchases. The company that accepts the card is responsible for paying the fees, although some companies may pass the fees on to the customer.
Credit card processing fees may vary, both by network and by card. Premium Rewards credit cards tend to be the most expensive and typically range between 1% and 5% of the transaction amount. American Express generally has the highest processing fees, while Mastercard and Visa are generally the cheapest.
If a business does not accept certain cards, it is often because of the cost of processing those transactions. So, if you frequent small businesses, you may want to consider using a card with a lower processing fee to help the business keep costs down.
3. Benefits for cardholders
Most of the benefits provided with your credit card are provided by the issuer. This includes things like purchase rewards, travel credits, and elite status. But there are also a number of benefits that actually come from the network, not the sender.
Each network has its own list of benefits that it offers to most cardholders, which can include things like purchase protection or partner discounts. Most World Elite Mastercards, for example, come with cell phone protection when you use your Mastercard to pay your cell phone bill.
The type and quality of benefits you receive may depend on the type of card you have. For example, Mastercard credit cards can have three different levels:
- World Mastercard®
- World Elite Mastercard®
Likewise, there are also different types of Visa credit cards:
- Visa Signature®
- Visa Infinite®
The base tiers of each network have the fewest benefits, while the higher tiers – World Elite Mastercard® and Visa Infinite®, respectively – have the most benefits. Higher tier cards are usually premium rewards or travel credit cards.
Amex doesn’t have separate tiers, but its more expensive cards offer stronger benefits than its no-annual fee cards. Discover cards all have the same benefits.
How to determine your card’s network
Every credit card that operates on a credit card network will have the network logo somewhere on the card. However, the logo is not in the same place on all cards. This can be on the front of one card and on the back of another card, even if both cards are on the same network.
In the case of Visa and Mastercard, the logo will also indicate what type of card it is. If the logo is just the basic Visa or Mastercard logo, the card is on the lower level. The middle and upper levels each have their own distinct logos.
If your credit card does not have a network logo at all, then your card does not work on a credit card network. This is most common with store credit cards that you can only use to make purchases from that retailer. These cards just won’t work if you try to use them elsewhere.
While you may not think much about your credit card network, it can affect when, where, and how you use your card. At the very least, having cards from several different networks means you’re more likely to have a card that works when companies only accept certain networks.