While credit card networks and card issuers both play a role when you use your credit card to make a purchase, they do different things. Credit card networks facilitate transactions between merchants and credit card issuers. Meanwhile, credit card issuers are the ones that provide credit cards to consumers and pay for transactions on the cardholder’s behalf when they use their card.
Where it can get confusing is that some credit card networks are also card issuers. To get a better understanding, keep reading for a closer look at the differences between a credit card network vs. issuer.
What Is a Credit Card Network?
Credit card networks are the party that creates a digital infrastructure that makes it possible for merchants to facilitate transactions between merchants and the credit card issuers — meaning they’re key to how credit cards work. In order to facilitate these transactions, the credit card networks charge the merchants an interchange fee, also known as a swipe fee.
Here’s an example of how this works: Let’s say someone walks into a clothing store and uses their credit card to buy a pair of pants. They swipe or tap their credit card to make the purchase. At this point, the store’s payment system will send the details of this transaction to the cardholder’s credit card network, which then relays the information to the credit card issuer. The credit card issuer decides whether or not to approve the transaction. Finally, the clothing store is alerted as to whether or not the transition was approved.
Essentially, credit card networks make it possible for businesses to accept credit cards as a form of payment, making them integral to what a credit card is. Credit card networks are also responsible for determining where certain credit cards are accepted, as not every merchant may accept all networks.
The Four Major Card Networks
The four major credit card networks that consumers are most likely to come across are:
• American Express
• Discover
• Mastercard
• Visa
All of these credit card networks have created their own digital infrastructure to facilitate transactions between credit card issuers and merchants. These four credit card networks are so commonly used that generally anywhere in the U.S. it’s possible to find a business that accepts one or more of the payment methods supported by these merchants. When traveling abroad, it’s more common to come across Visa and Mastercard networks.
Two of these popular payment networks — American Express and Discover — are also credit card issuers. However, their offerings as a credit card network are separate from their credit card offerings as an issuer.
Does It Matter Which Card Network You Use?
Which credit card network someone can use depends on the type of credit card they have and whether the credit card network that supports that card is available through the merchant where they want to make a purchase. Most merchants in the U.S. work with all of the major networks who support the most popular credit cards, so it shouldn’t matter too much which credit card network you have when shopping domestically. When traveling abroad, however, it’s important to have cash on hand in case the credit card network options are more limited.
Merchants are the ones who are more likely to be affected by the credit card networks that they use. This is due to the fact that credit card networks determine how much the merchant will pay in fees in order to use their processing system.
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What Are Credit Card Issuers?
Credit card issuers are the financial institutions that create and manage credit cards. They’re responsible for approving applicants, determining cardholder rewards and fees, and setting credit limits and the APR on a credit card.
Essentially, credit card issuers manage the entire experience of using a credit card. Cardholders work with their credit card issuer when they need to get a new card after losing one, when they have to make their credit card minimum payment, or when they want to check their current card balance.
Credit card issuers can be banks, credit unions, fintech companies, or other types of financial institutions. Some of the biggest credit card issuers in the U.S. are:
• American Express
• Bank of America
• Barclays
• Capital One
• Chase
• Citi
• Discover
• Synchrony Bank
• U.S. Bank
• Wells Fargo
Credit Card Network vs Issuer: What Is the Difference?
Credit card issuers and credit card payment networks are easy to confuse. The main difference is that credit card networks facilitate payments between merchants and credit card issuers whereas credit card issuers create and manage credit cards for consumers. If you have an issue with your credit card — like in the instance you want to dispute a credit card charge or request a credit card chargeback — it’s the issuer you’d go to.
These are the main differences to be aware of when it comes to credit card networks vs. issuers:
| Credit Card Issuer | Credit Card Payment Network |
|---|---|
|
• Creates credit cards • Manages credit cards • Accepts or declines applicants • Sets credit card fees • Determines interest rates and credit limits • Creates rewards offerings • Approves and declines transactions |
• Processes transactions between credit card companies and merchants • Creates the digital infrastructure that facilitates these transactions • Charges an interchange fee to merchants • Determines which credit cards can be used at which merchants |
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How Credit Card Networks and Issuers Work Together
Credit card networks and issuers need each other to function. Without a credit card network, consumers wouldn’t be able to use their card to shop with any merchants, and the credit card issuer’s product would go unused. Credit card networks create the infrastructure that allows merchants to accept credit cards as payment.
However, it’s up to the credit card issuers to approve or decline the transaction. The credit card issuer is also the one responsible for getting credit cards into consumers’ hands when they’re eligible and old enough to get a credit card, thus creating a need for the credit card networks’ services.
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Looking for a new credit card?
Credit cards can be a useful financial tool, but it’s important to understand their ins and outs before swiping — including the difference between a credit card network vs. card issuer. Both are critical to credit card transactions, with the credit card network facilitating the transaction between the issuer and the merchant, and the credit card network approving or denying the transaction.
While the major credit card networks are available at most merchants in the U.S., this may not be the case abroad, which is why it’s important to be aware of when choosing a credit card. This among many other considerations, of course, such as searching for a good APR for a credit card and assessing the fees involved.
For a limited time, new credit card holders† who also sign up for a SoFi Checking and Savings with direct deposit can start earning 3% cash back rewards on all eligible credit card purchases for 365 days*. Offer ends 12/31/23.
FAQ
What is a credit card network?
A credit card network is the party that creates the necessary infrastructure to process transactions between a credit card issuer and a merchant. Whenever someone makes a purchase with a credit card, it is processed by a credit card network. In return for processing the transaction, the merchant pays the credit card network an interchange fee, which is how the credit card networks make money.
How do I know my credit card issuer?
To find out a credit card’s issuer, simply look at your credit card. There will be a string of numbers on the credit card, and the first six to eight digits represent the Bank Identification Number (BIN) or the Issuer Identification Number (IIN). The Issuer identification number identifies who the credit card issuer is.
Who is the largest credit card issuer?
The four largest credit card networks are American Express, Discover, Mastercard, and Visa. Most merchants in the U.S. work with all four credit card networks. When traveling abroad, it’s more common to come across Visa and Mastercard networks.
†SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS PROSPECTIVELY BASED ON MARKET CONDITIONS AND BORROWER ELIGIBILITY. Your eligibility for a SoFi Credit Card Account or a subsequently offered product or service is subject to the final determination by The Bank of Missouri (“TBOM”) (“Issuer”), as issuer, pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated. Please allow up to 30 days from the date of submission to process your application. The card offer referenced in this communication is only available to individuals who are at least 18 years of age (or of legal age in your state of residence), and who reside in the United States.
*You will need to maintain a qualifying Direct Deposit every month with SoFi Checking and Savings in order to continue to receive this promotional cash back rate. Qualifying Direct Deposits are defined as deposits from enrolled member’s employer, payroll, or benefits provider via ACH deposit. Deposits that are not from an employer (such as check deposits; P2P transfers such as from PayPal or Venmo, etc.; merchant transactions such as from PayPal, Stripe, Square, etc.; and bank ACH transfers not from employers) do not qualify for this promotion. A maximum of 36,000 rewards points can be earned from this limited-time offer. After the promotional period ends or once you have earned the maximum points offered by this promotion, your cash back earning rate will revert back to 2%. 36,000 rewards points are worth $360 when redeemed into SoFi Checking and Savings, SoFi Money, SoFi Invest, Crypto, SoFi Personal Loan, SoFi Private Student Loan or Student Loan Refinance and are worth $180 when redeemed as a SoFi Credit Card statement credit.
Promotion Period: The Program will be available from 10/1/22 12:01 AM ET to 12/31/23 11:59PM ET
Eligible Participants: All new members who apply and get approved for the SoFi Credit Card, open a SoFi Checking and Savings account, and set up Direct Deposit transactions (“Direct Deposit”) into their SoFi Checking and Savings account during the promotion period are eligible. All existing SoFi Credit Card members who set up Direct Deposit into a SoFi Checking & Savings account during the promotion period are eligible. All existing SoFi members who have already enrolled in Direct Deposit into a SoFi Checking & Savings account prior to the promotion period, and who apply and get approved for a SoFi Credit Card during the promotion period are eligible. Existing SoFi members who already have the SoFi Credit Card and previously set up Direct Deposit through SoFi Money or SoFi Checking & Savings are not eligible for this promotion.
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The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
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