Card Issuers

What are credit card networks?

The role of a card network is to facilitate transactionsTransactions transactions Interactions where value is exchanged for goods or services. between merchants and card issuers. To do this, card networks create virtual payment infrastructures and charge merchants interchange feesInterchange Fees interchange-fees Fees paid by the merchant’s acquirer to the cardholder’s issuer for transaction processing. for processing consumers’ credit or debit cardDebit Card debit-card A payment card that deducts money directly from a consumer’s checking account. May also support ATM withdrawals. transactions.

The four major credit card networks are MastercardMasterCard mastercard A global payments network enabling electronic transactions between banks, merchants, and cardholders., VisaVisa visa A leading global payment technology company connecting consumers, businesses, and banks., American ExpressAmerican Express american-express A global financial services corporation offering credit cards, charge cards, travel-related services, and merchant acquiring. and Discover. Out of the four networks, two are also card issuers — Amex and Discover — which we explain more in the next section.

In addition to aiding transactions, card networks determine where credit cards are accepted. Not every merchantMerchant merchant An individual or business that accepts payments in exchange for goods or services. accepts all networks, and you may notice different network logos at checkout or some merchants stating they don’t take certain cards.

Last, card networks have partnerships across numerous industries relating to travel, transportation, dining and entertainment. Having a card within a certain network may entitle you to travel perks, purchase protections and more depending on your terms and benefits.

What are credit card issuers?

Credit card issuers are financial institutions that provide cards and credit limits to consumers. Issuers manage numerous features of credit cards, from the application and approval process to distributing cards, deciding terms and benefits (such as annual fees and rewards), collecting cardholderCardholder cardholder The person or business to whom a payment card is issued. payments and more.

Card issuers also determine how much credit to extend to you and have the final decision on whether a transaction you make is approved or denied (more on how transactions are processed below).

Here are some major credit card issuers:

• American Express
• Bank of America
• Capital One
• Chase
• Citi
• Discover
• U.S. Bank
• Wells Fargo

How credit card networks and issuers work together

Card networks and issuers work together to process transactions that consumers make at merchants.

For instance, let’s say you have a Citibank Visa Card and use it to purchase food at Fairprice. The four players involved in the entire payment process include you (the consumer), FairPrice (the merchant), Visa (the network) and Citi (the issuerIssuer issuer A bank or financial institution that issues payment cards to consumers. Responsible for authorizations and chargebacks.).

The action of paying with your credit card initiates a sequence of events. Here’s the process:

1. You swipe, insert or tap your card at checkout.
2. FairPrice sends the transaction to Visa.
3. Visa sends the transaction to Citi.
4. Citi will review the transaction and approve or deny it, then send the decision back to Visa.
5. Visa passes it along to Fairprice and your transaction will be approved or denied.

This digital communication happens more or less instantaneously with every swipe of your card or scan of your chip.