Credit Card Issuers vs. Networks – What’s the Difference?

Credit Card Issuers vs. Networks – What’s the Difference?

There is certainly no shortage of credit card choices available for consumers. In fact, there are so many choices across credit card networks and issuing banks that it can get downright confusing. Filling your wallet with the right credit cards is a process that’s going to be different for each of us. However, understanding the following regarding the credit card environment can help you make the right choices. First, it’s important to understand the difference between credit card networks and credit card issuers.

Credit Card Networks

The purpose of credit card networks is to control where credit cards can be accepted and to facilitate transactions between merchants and credit card issuers.

There are six major credit card networks:

  • Visa
  • Mastercard
  • Rupay
  • American Express
  • Diners
  • Discover

A credit card network sets the interchange or “swipe” fees that merchants are charged to accept a credit card transaction, but credit card networks do not control fees a cardholder pays such as the interest rates, annual fees, late fees, foreign transaction fees and over-limit fees.

Credit Card Issuers

Visa and Mastercard do not actually issue credit cards to consumers. Instead, financial institutions, like banks or credit unions, will work with credit card networks to issue cards.

The “issuer” is the bank or credit union that backs the card financially. You may also hear the issuer referred to as the “issuing bank” or even just the “credit card company.”

The issuing bank of a credit card is in charge of:

  • Approving or denying credit card applications
  • Setting the terms and most of the benefits on the account
  • Paying for transactions on behalf of the cardholder
  • Collecting payments from the cardholder
  • Providing customer service

Although credit card networks and credit card issuers serve entirely different purposes, there is no rule that prevents a company from both processing and issuing credit cards.

American Express and Discover are both credit card networks and credit card issuers.

Credit cards from the Visa and Mastercard networks are issued to consumers by different banks.

Global Acceptance

Though all four major credit card networks are largely accepted by most retailers, a consumer will occasionally come across a retailer or merchant that does not accept specific cards. So, It’s not a bad idea for consumers to have a credit card from each of the six major credit card networks as long as all of the accounts are managed responsibly.

It is worth noting that having multiple credit card accounts from multiple networks or issuing banks does not make a consumer more vulnerable or more prone to going into credit card debt. For the responsible consumer there is no bigger temptation to overspend on one credit card versus overspending on four or more credit cards. But, if you have more credit cards and access to more credit, if you’re irresponsible you could dig yourself into a bigger hole.

Payment Network Member Types

Visa network Service Levels

  • Visa Electron
  • Visa Classic
  • Visa Gold
  • Visa Platinum
  • Visa Signature
  • Visa Infinite

Mastercard Service Levels

  • Titanium Mastercard
  • Platinum Mastercard
  • World Mastercard
  • World Elite Mastercard

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