What’s the difference between a credit card network and issuer?

28.12.2024 - 19:29 / thepointsguy.com

When we discuss credit cards at TPG, we usually focus on the bank that issues the card or the type of rewards the card accumulates rather than which network it belongs to. Still, your card network matters a lot. It can affect everything from where your card is accepted to some of the benefits you receive.

Today, we'll examine the difference between a credit card issuer and a card network and take a look at the four biggest networks in the U.S.

Related: Comparing Visa Signature and World Elite Mastercard benefits

The easiest way to explain this difference is with an example. Let's say you have Chase's World of Hyatt Credit Card, and you use it to pay for dinner at a restaurant. In this case:

That's why most credit cards have two or three different logos on them, representing the issuing bank (Chase), the card network (Visa) and the cobrand partner if there is one (in this case, World of Hyatt).

But what exactly is the functional difference between card issuers and card networks? Mostly it boils down to a division of labor. Each party is responsible for different jobs that keep your credit card working.

Card issuers such as Chase do the following jobs:

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

If you've ever been to a store that accepts Visa cards as payment, the cashier won't stop and ask whether Chase or Bank of America issued your Visa because any card on the Visa network should work for them.

Related: How credit card issuers classify travel and dining purchases

Four major credit card networks in the U.S. account for an overwhelming majority of the market:

While Visa and Mastercard partner with several different issuing banks, American Express and Discover issue their own cards, allowing them to play both roles. Because interchange fees come directly out of the profit a store makes on each transaction, some retailers around the world won't accept cards from certain issuers because of the higher fees involved.

Historically, Amex has lagged behind Visa and Mastercard in acceptance because of the higher interchange fees it charged, but they've been working aggressively to close that gap in recent years.

Credit card issuers decide many of the specific benefits of the cards they offer, but they'll often partner with the card network to adopt a preset service level.

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

For most people, the card network is an afterthought. They pick a credit card based on the welcome bonus and benefits package that matters most to them, not whether it's a Visa, Amex,