Credit card networks vs. issuers: What’s the difference?

Knowing the difference between issuers and networks could help you better understand your credit card choices.

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You have many options when it comes to a credit card — big-name brands, rewards and miles, even bank cards. But who issues the cards in your wallet, and why does it matter?

Simply put, a network decides where a credit card can be used, while an issuer distributes its branded cards to customers.

Major differences among networks and issuers

Visa Mastercard American Express Discover
Nationwide acceptance
Global Acceptance

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Credit card networks

Credit card networks are the bridge between merchants — the shops that accept your credit card — and the banks that issue the credit cards themselves.

Of the networks, you’ll find four major players: Visa, Mastercard, American Express and Discover. Visa’s network owns the wide majority of the market share worldwide, followed by Mastercard, Discover and American Express.

Networks set the fees that a retailer pays when you swipe your card for purchases. Called interchange fees, these costs can vary by credit card brand, swipe location and transaction type — for instance, in a store, online or by phone. In the US, merchants typically pay to the network about 2% of your total transaction in fees.

Credit card networks also:

  • Decide where credit cards can be accepted.
  • Approve and process transactions.
  • Facilitate payments among cardholder, merchants and issuers.

Networks don’t determine fees that a cardholder pays, like your card’s annual, overlimit, interest, late or foreign transaction fees. They also are not responsible for customer service.

American Express and Discover: Network and issuer

Unlike Visa and Mastercard, American Express and Discover are both networks and issuers. This means that even if your American Express or Discover card is branded with a bank or company, your card will likely comes directly from them.

As issuers and networks, American Express and Discover set the fees for both the cardholder and the merchants who make sales through their network.

Unlike Visa and Mastercard, American Express and Discover handle their own customer service. If you lose your Amex in France, you’ll contact American Express directly, whereas you’ll have to call your issuing bank if you lose your Visa.

Credit card issuers

A credit card issuer is who you actually get your credit card from.

Visa and Mastercard are networks only, its branded cards issued directly from what we call credit card companies — or the banks and credit unions themselves, like Chase, Capital One and USAA. To learn who issues your card, take a good look at it: You’ll often see the logo of the bank that issues your card somewhere near the Visa or Mastercard logo.

As underwriters, these credit card issuers or companies are responsible for:

  • Reviewing and approving credit card applications.
  • Setting the terms and conditions of individual credit cards.
  • Issuing the physical cards you hold in your wallet.
  • Providing funds up to your credit limit.
  • Answering questions and providing other support to its customers.

How do credit card issuers make money?

Credit card issuers profit from both the cardholder and the merchants who accept payments on its cards. Specifically, revenue can come from:

  • Interest fees charged to the cardholder on purchases and balance transfers.
  • Annual fees cardholders pay to use these cards.
  • Overlimit fees when charges and interest nudge a balance over a cardholder’s credit limit.
  • Late fees when a payment is received after a statement date.
  • Credit monitoring and protection along with other optional services provided to the cardholder for a fee.
  • Swipe fees charged to the merchant, typically split between the issuer and the network.

Visa and Mastercard

Visa and Mastercard are the two of the most popular credit card brands in the world. They don’t directly issue credit cards. Rather, they brand cards issued by banks and credit unions.

Rewards and interest rates are decided by the bank, credit union or other company — for instance, an airline or hotel — they’re working with to issue the card.

Both cards come with global acceptance, but Mastercard is more widely accepted worldwide: It can be used in 210 countries to Visa’s 170, which could be important depending on where you travel.

Card types

Visa and Mastercard come with four general membership cards, each offering such benefits as car rental coverage, fraud protection, emergency assistance, card replacements and extended warranties. Upgraded cards come with travel advisors, extended price protection and hotel or travel upgrades.

Visa

  • Visa Traditional
  • Visa Signature
  • Business Visa
  • Professional visa

Mastercard

  • Standard Mastercard
  • Gold Mastercard
  • Platinum Mastercard
  • World and World Elite Mastercard

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What is an issuing bank?

An issuing bank is the bank, credit union or other financial institution that provides its branded credit card to a cardholder. The bank determines a cardholder’s line of credit and shares any liability for default with the acquiring bank — or the bank or financial institution that actually processes payments on behalf of a merchant.

Bottom line

It can be hard enough to narrow down your options when it comes to choosing a credit card. Knowing the difference between a network and an issuer can help you better understand how you ultimately use and benefit from your choice. Compare credit cards to find one that best suits your financial needs.

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