What is the difference between a credit card network and an issuer?

When discussing credit cards at TPG, we often focus on the bank that issues the card or the type of rewards the card accrues rather than which network the card belongs to. However, your card network is important. It can affect everything from where your card is accepted to some of the benefits you receive.

Today, we’ll look at the differences between credit card issuers and card networks and look at the four largest networks in the U.S.

Related: Compare benefits of Visa Signature and World Elite Mastercard

What is the difference between a card issuer and a network?

The easiest way to explain this difference is with an example. Let’s say you have Chase Hyatt World Credit Cardand you use it to pay for dinner at the restaurant. In this case:

• The issuing bank is Chase.
• The card network is Visa.
• The seller is a restaurant.
• The co-branding partner is World of Hyatt.

That’s why most credit cards have two or three different logos on them, representing the issuing bank (Chase), card network (Visa) and co-branding partner if applicable (in this case World of Hyatt).

But what exactly is the functional difference between a card issuer and a card network? It mainly focuses on the division of labor. Each party is responsible for different tasks to keep your credit card active.

Card issuers like Chase do the following:

• Processing and evaluation credit card application.
• Production and distribution of physical cards.
• Create account terms and benefits, including things like interest rate, annual fee And bonus categories. (For co-branded cards like this example, the co-branded partner — this is World of Hyatt – often helps negotiate terms and benefits).
• Pay the merchant on behalf of the cardholder (i.e. pay the restaurant when you swipe your card).
• Collect payments from cardholders and provide account services.

Meanwhile, the main functions of a card network (Visa in our example) include setting interchange fees (commonly known as swipe fee) and build payment infrastructure so more merchants can accept their cards.

If you’ve ever been to a store that accepts Visa payments, the cashier won’t stop and ask if you accept Visa payments. Chase or Bank of America issued your Visa because every card on the Visa network is available to them.

Related: How credit card issuers classify travel and dining purchases

Four major card networks

Four major credit card networks in the United States account for the majority of the market:

• American Express
• Detect
• Mastercard
• Visa

Although Visa and Mastercard work with many different issuing banks, American Express And Detect issue their own tokens, allowing them to play both roles. Because interchange fees are taken directly from the profits stores make from each transaction, some retailers around the world will not accept cards from certain issuers because of the higher fees involved.

Historically, Amex has lagged behind Visa and Mastercard in terms of acceptance because of higher interchange fees, but it has worked hard to close that gap in recent years.

Credit card issuers determine many of the specific card benefits they offer, but they often partner with card networks to apply preset service levels.

Related: The complete history of credit cards, from ancient times to today

Does it matter which card network you use?

For most people, card networks are an afterthought. They choose credit cards based on welcome bonus And benefits The package that matters most to them, is not Visa, Amex, Mastercard or Discover. It’s hard to say that one network is better than another for customers, but it’s important to diversify your wallet.

A few years ago, Visa experienced a major network outage that left all of its credit cards unusable across Europe. Since this is an issue with the network, it doesn’t matter whether you have a Visa issued by Chase or Capital One — all Visa cards are affected equally. Since then, I always carry cards from at least two different networks (usually Visa and Amex) just in case something similar happens.

The other point you will want to consider is the seller’s acceptance. You will certainly encounter individual merchants, both in the US and internationally, that will not accept Amex, Discover, Mastercard or Visa. Keeping cards from multiple networks in your wallet is a great way to ensure you’ll have credit when you want it.

Another thing to note is that certain card benefits are tied directly to the network. For example, some Visa cards are designated as Visa Signature Cardwhile some Mastercard cards are designated as World elite card. These cards offer guaranteed benefits as determined by their respective networks.

There are several popular types of Visa Signature cards on the market, including the Chase Sapphire Preferred® Card and Alaska Airlines Visa Signature® Credit Card. While these cards all earn different types of points and miles and offer different bonuses and interest rates, they all share some of the same benefits as the Visa Signature card, including extended protection, travel and emergency assistance as well as access to Visa Signature concierge services. .

Likewise, World Elite Mastercards, for example Citi Strata Premier℠ Card (see exchange rates and fees), female Premier IHG One Rewards credit card and Citi® / AAdvantage® Executive World Elite Mastercard® (see exchange rates and fees), providing specific additional benefits.

Related: 3 new Visa technologies can lighten your wallet and payments

Bottom line

Credit card networks provide the infrastructure that makes our cards work. But since they don’t issue rewards directly (except for Amex and Discover, which are both networks and card issuers), it’s easy to overlook their importance.

If not, take some time to review your wallet and make sure you have a diverse collection of cards from multiple issuers and networks, just in case.

Related: How to choose the best credit card for you

For Capital One products listed on this page, some benefits may be provided by Visa® or Mastercard® and may vary by product. See the respective Benefits Guide for details on when terms and exclusions apply.