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Credit Card Network vs Credit Card Issuer

Credit Card Network vs Credit Card Issuer
Jason Steele
Jason SteeleUpdated November 22, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
While they may sound similar, credit card issuers and credit cards networks are two different things. The issuer is the bank that provides financial backing for your credit card, while the card network (think Visa or Mastercard) facilitates every transaction you make behind the scenes. Read on for a closer look at card networks vs. issuers to help you better understand how a credit card works, why you sometimes apply with a bank and other times with a network, and the benefits you may be able to get from each.

What Is a Credit Card Network?

Credit card networks facilitate credit card payments. When you dip, tap, or swipe your credit card to make a purchase (or enter your card number online), you are essentially requesting that your card issuer pay the merchant. For that to happen, however, that payment first has to go through a credit card network.The credit card network creates virtual payment infrastructures that allow merchants to receive payments from card issuers on the cardholder’s behalf. Networks then charge the merchant an interchange fee (sometimes called a “processing fee”) for processing a consumer transaction. The four major credit card networks are Visa, Mastercard, American Express, and Discover. Two of these – American Express and Discover – serve as both the network and issuer. To find out which network your credit card belongs to, you can look for the network’s logo on the front or back of your credit card.

How Credit Card Networks Work

Credit card networks work in different ways, depending on the set-up. If the credit card network is both the network and the card issuer, the network will both process and approve purchase requests. This is what happens when you use an American Express and Discover card.If the credit card network is different from the card issuer, the credit card network acts as an intermediary that connects the merchant with the bank that issued the card to process and approve credit card transactions. Visa and Mastercard function as intermediaries.In addition to processing credit card transactions, credit card networks determine where credit cards are accepted. You may see different network logos at retail checkouts showing which networks are accepted. These days, the four major card networks are fairly universally accepted in the U.S.Credit card networks also offer benefits to cardholders, like monitoring for fraudulent transactions and identity theft. Card networks also have partnerships with different companies in the travel, dining, and entertainment industries. Having a card within a certain network may entitle you to travel perks and more depending on your terms and benefits.

4 Major Credit Card Networks

In the U.S. there are four major credit card networks that account for the majority of the market. These include Visa, Mastercard, American Express, and Discover.Visa and Mastercard partner with a variety of issuing banks, while American Express and Discover issue their own cards. If you want a Visa or Mastercard credit card, you will need to apply through a financial institution. If you want an American Express or Discover card, you would apply with American Express or Discover directly.Most U.S. merchants will accept all card networks, but they are not required to. Since some networks charge higher fees, some retailers don't accept cards from those networks. However, this is more common outside the U.S. Retail store credit cards may operate on their own smaller credit card networks, limiting you to making purchases with your card only at those stores.

What Is a Credit Card Issuer?

A credit card issuer is a financial institution (like a bank or credit union) that provides cards and credit limits to consumers. Card issuers determine whether or not an applicant qualifies for a credit card and, if so, how much credit to extend. They also have the final decision on whether a transaction you make is approved or denied.You may also hear the issuer referred to as the “issuing bank” or even just the “credit card company.”Credit card issuers in the U.S. include American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Discover, Synchrony, USAA, U.S. Bank, Wells Fargo, among others.  Recommended: How to Find the Right Credit Card

How Credit Card Issuers Work

The credit card issuer is the company that actually “issues” the card. The issuer also manages many features of the credit card and sets interest rates, credit limits, credit card fees, and the card’s benefits.  When you swipe your card to buy something from a merchant, the card issuer decides whether to lend you the money to buy something. If the issuer lets the charge go through, eventually you repay the issuer for the money you borrowed — with interest — to make your purchase.The issuer also manages the cardholder’s account and provides customer support. Recommended: What Credit Card Numbers Mean 

Credit Card Networks vs Credit Card Issuers

Networks and issuers play very different but essential roles in how your credit card works.One of the key differences between credit card networks and credit card issuers is that issuers act as lenders, while networks act as facilitators. As a cardholder, you'll primarily deal with your card issuer (not the card's network) when taking actions such as paying your bill or reporting your card as missing.Here’s a closer look at how the responsibilities of issuers vs. networks break down.

What Credit Card Are Issuers Are Responsible For

  • Reviewing and approving credit card applications
  • Setting the credit limits, annual percentage rates (APRs), terms, and most of the benefits on the account
  • Issuing the physical cards you hold in your wallet
  • Providing funds up to your credit limit
  • Answering questions and providing other support to customers

What Credit Card Networks Are Responsible For

  • Deciding where credit cards can be accepted
  • Approving and processing transactions
  • Facilitating payments among cardholders, merchants, and issuers
  • Offering certain benefits and protections, such as travel perks, extended warranties, and identity theft protection

How Credit Card Networks and Issuers Work Together

There are several players involved in the payment process. These players include the consumer, the merchant, the network, and the issuer. How they all work together: When you pay a merchant for a product or service with your credit card, the merchant’s card reader sends the transaction to the network. The network then sends the transaction to the card issuer. The issuer reviews the transaction and approves or denies it, then sends the decision back to the network. The network passes it along to the merchant and the transaction is approved or denied. While it may sound like a long, involved process, it all happens digitally and virtually  instantaneously whenever you swipe your card or scan your chip.

Find Your Next Credit Card With Lantern

Knowing the difference between a card issuer and a card network can help you better understand the card in your wallet or help you choose your next credit card. While the network can impact where your card is accepted and offer certain benefits, the card issuer is the company you apply with, pay, and who you'll call if you have a question.  If you’re in the market for a new credit card, it can be a good idea to compare credit card rates, terms, and benefits offered by different issuers. With Lantern by SoFi, you can quickly compare multiple credit card offers matched to your needs and qualifications all in one place, and without making any type of commitment.

Frequently Asked Questions

Does it matter which card network you use?
Which credit card network is best?
Who is the largest issuer of credit cards?
How do I choose the best credit card network for me?
Photo credit: iStock/damircudic

About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
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