What is a credit card network?

When you tap, swipe or dip a credit card at checkout, a credit card network goes to work behind the scenes. In just a few seconds, it communicates between the card issuer and the merchant’s bank to approve the transaction.

Credit card networks manage the systems needed for credit card transactions. To understand how a credit card network works and may impact cardholders, read on.

Key takeaways

• Credit card networks help facilitate credit card purchases between merchants and card issuers.
• The four major credit card networks in the U.S. are American Express®, Discover®, Mastercard® and Visa®.
• A cardholder’s credit card network can determine things like which stores to shop at and credit card fraud protections.

Credit card networks build and maintain the technology behind credit card authorization and payment processing. They talk to card issuers and banks to help purchases go through—like making sure there’s enough available credit.

American Express, Discover, Mastercard and Visa are the four major credit card networks in the U.S. The credit card network logo can usually be found on the front or back of a credit card.

Credit card networks and credit card issuers play different roles in how credit cards work.

Credit card issuers are financial institutions that supply credit cards. For example, Capital One is a credit card issuer that works with Mastercard and Visa. Capital One offers card benefits and tools like the Capital One Mobile app and Eno, your Capital One assistant. But eligible cardholders can also access benefits from Mastercard or Visa.

While credit card issuers and networks are usually separate entities, there are two exceptions—American Express and Discover. These credit card networks also issue credit cards.

Let’s say you’re filling up your car at the gas station. Here’s how a credit card network makes the purchase happen:

1. You tap or insert a credit card at the gas pump or in-store register. 
2. The gas station’s point-of-sale (POS) system reads your card information and sends it to the gas station’s bank—called the acquiring bank—to request a charge.
3. The acquiring bank sends the request to the credit card network.
4. The credit card network contacts the card issuer to authorize and approve the transaction.
5. If the card issuer approves, the credit card network gives the go-ahead to the gas station’s POS system and charges a processing fee.

There are a couple of things that might vary depending on your credit card network:

• Processing fees: Credit card networks often charge credit card processing fees—or interchange fees. Merchants may not accept every credit card network, depending on the fees. So it helps to know which credit card networks are accepted by the grocery stores, gas stations and other retailers you shop at.
• Fraud protection: Credit card issuers usually work with customers who face credit card fraud from unauthorized purchases. But credit card networks help detect credit card fraud and put security measures in place. They also often offer liability protection. It can help to read the fine print on how you’re protected.

Credit card networks work with credit card issuers and merchant banks to process cardholder transactions quickly and securely. It helps to know which credit card network is linked to your card—just check the logo on the front or back.

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