A card network is the payment system that processes transactions between merchants and card issuers. Examples include Visa, Mastercard, American Express, and Discover. The network ensures funds are transferred securely between the buyer’s bank and the seller’s bank.
How It Works
When you make a purchase, the card network communicates the authorization request, verifies the account, and facilitates the transfer of funds. The merchant pays a small fee (interchange fee) for each transaction, part of which goes to the network.
Key Networks
- Visa and Mastercard: Accepted worldwide and operate as payment networks (not issuers).
- American Express (Amex): Acts as both a network and an issuer, with slightly higher merchant fees.
- Discover: Functions as both network and issuer, with strong U.S. presence but less global reach.
Why It Matters
The card network determines where your card is accepted, the speed of transactions, and some benefits like fraud protection. Choosing a card with a widely accepted network ensures greater convenience when traveling or shopping.
Final Thoughts
While issuers set rates and rewards, the network powers the transaction system. Understanding networks helps cardholders choose cards that align with their spending habits and travel needs.