When we discuss credit cards at TPG, we usually focus on the bank that issues the card or the network it belongs to rather than what kind of rewards the card collects. However, your card network is very important. It may affect some of the benefits you receive from where your card is accepted.
Today, we’ll examine the difference between a credit card issuer and a card network and take a look at four of the largest networks in the US.
Related: Comparing Visa Signature and World Elite MasterCard Benefits
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 World of Hyatt credit card, and you use it to pay for dinner at a restaurant. In this case:
- The issuing bank is Chase.
- The card network is Visa.
- The merchant is a restaurant.
- The co-brand partner is World of Hyatt.
That’s why most credit cards have two or three different logos, representing the issuing bank (Chase), the card network (Visa), and a cobrand partner, if any (in this case, World of Hyatt).
But what is the functional difference between a card issuer and a card network? Mostly it boils down to division of labor. Each party is responsible for various jobs that keep your credit card running.
Card issuers like Chase perform the following jobs:
- Administration and evaluation of credit card applications.
- Production and distribution of physical cards.
- Creating account terms and benefits, including things like interest rate, annual fee, and bonus categories. (For cobranded cards like this example, the cobrand partner — here it’s World of Hyatt — often helps negotiate terms and benefits).
- Paying merchants on behalf of the cardholder (ie, paying restaurants when you swipe your card).
- Collecting payments from cardholders and providing account services.
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Meanwhile, the primary functions of a card network (Visa in our example) include setting interchange fees (commonly known as swipe fees) and building 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 if Chase or Bank of America issued your Visa because any card on the Visa network should work for them.
Related: How credit card issuers categorize travel and dining purchases
Four major card networks
Four major credit card networks have the majority market share in the US:
- American Express
- Find out
- MasterCard
- Visa
While Visa and MasterCard partner with different issuing banks, American Express and Discover issue their own cards, allowing them to play both roles. Because the interchange fee comes directly from the profit earned by the store on each transaction, some retailers around the world will not accept cards from certain issuers due to the high fees involved.
Historically, Amex has lagged behind Visa and MasterCard in acceptance because of the high interchange fees it charges, but they’ve been working aggressively to close that gap in recent years.
Credit card issuers determine many specific benefits for the cards they offer, but they will partner with card networks to adopt preset service levels.
Related: The complete history of credit cards, from antiquity to the present day
Does it matter which card network you use?
For most people, the card network is an afterthought. They choose a credit card based on this Welcome bonuses and benefits packages that matter most to them, be it Visa, Amex, MasterCard or Discover. It’s hard to say that one network is better than another for a consumer, but it’s important to diversify your wallet.
A few years ago, Visa suffered a major network outage that blocked all of its credit cards from being used across Europe. Since this was a network issue, it didn’t matter whether you had a Visa issued by Chase or Capital One — all Visa cards were affected equally. Since then, I’ve made it a point to carry cards from at least two different networks (usually Visa and Amex) at all times just in case something like this happens.
Another point you may want to consider is merchant acceptance. You must contact individual merchants in the US and internationally who do not accept Amex, Discover, MasterCard or Visa. Holding 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 cards, while some MasterCards are designated as World Elite MasterCard. These cards offer guaranteed benefits as determined by their respective networks.
Chase Sapphire Preferred® Card on the market and Alaska Airlines Visa Signature® Credit Card. Although these cards earn different types of points and miles and offer different bonus categories and interest rates, they all share a number of common benefits as Visa Signature cards, including extended warranty protection, travel and emergency assistance, and access to Visa Signature concierge service. included. .
Similarly, World Elite MasterCards, viz Citi Strata Premier℠ Card (see Rates and Fees), IHG One Rewards Premier Credit Card and Citi® / AAdvantage® Executive World Elite Mastercard® (see Rates and Fees), offer certain additional benefits.
RELATED: 3 New Visa Technologies Can Lighten Your Wallet and Payments
The bottom line
Credit card networks provide the infrastructure that keeps our cards working. But because they don’t directly issue rewards (with the exception of Amex and Discover, which are both networks and card issuers), it’s easy to overlook their importance.
If you haven’t already, spend some time going through your wallet and make sure you have a diverse collection of cards from multiple issuers and multiple networks.
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. For details of conditions and exclusions applicable see the relevant guidelines for benefits.