The Difference Between Credit Card Networks and IssuersYour credit card may just be one piece of plastic, but for many people there are actually two forces at work that make their cards function: the card issuer and the card network. These two entities both control different aspects of your card, from the rewards and interest rate to which stores will accept your card and how the transaction is processed. In order to find a card that works exactly the way you want it to, it can help to be familiar with what they do. Read on as we break down the functions of both credit card issuers and credit card networks, and how those function affect you.

Credit card issuers

Your credit card’s issuer is the company, generally a bank, that financially backs the card, sending payments to merchants to pay for the credit card purchases you make. The issuer is responsible for setting the terms of cards, fulfilling most of the rewards and benefits, providing customer service and collecting payments from customers. When you apply for a card, redeem rewards points or pay your credit card bill, you’re dealing with your credit card issuer. Because of this, your choice of issuer is probably the biggest decision that will affect your experience when using a particular credit card, and it’s the decision you likely have the most freedom of choice over. There are a lot of credit card issuers (way too many to name here), but some of the biggest are Citi (a NextAdvisor advertiser), Chase, Bank of America, American Express (a NextAdvisor advertiser) and Discover.

Credit card issuers make money in a variety of ways, the most obvious of which is through credit card interest. When you carry a balance on your card, the interest you pay every month goes directly into the credit card issuer’s pockets, helping to make up a substantial part of its revenue. Credit card fees are also a big money maker, as paying late, transferring a balance or getting a cash advance can all come with not insignificant charges. One thing you may not be aware of, though, is that issuers also make money every time you pay with your credit card, through something called interchange fees. Merchants who accept credit cards pay a small percentage of every credit card transaction, which gets split between the credit card network and the card issuer. This means that issuers not only make money when you pay your bill, but also by getting a small percentage of every transaction you make with the card.

Credit card networks

Credit card networks facilitate your card transactions, making sure the right amount of money goes to the right people in a timely manner in return for a percentage of the transaction total, which is split with the card issuer. In the U.S., the big four credit card networks are Visa, Mastercard, Discover and American Express. They’re typically less customer-facing than the issuers, but even though you’ll communicate with issuers more than you will networks, the network your credit card is on still matters a great deal, as it affects where you can actually use your card. Not every credit card is accepted by every merchant, and some merchants only accept cards from a single network, such as how Costco only accepts Visa cards. Visa, Mastercard and Discover all have roughly the same level of reach with their network size, with around 9 million merchants domestically and 40 million merchants worldwide accepting each of them. Discover’s international coverage is a bit spotty compared to the other three, but it partners with other card networks such as Diners Club International and China’s UnionPay to expand its reach. Meanwhile, American Express lags behind with acceptance numbers of only 6 million merchants domestically and 25 million merchants worldwide, likely due to its high interchange fees. Credit card networks are the ones that set the fees that merchants pay on each credit card transaction, and American Express’ fees can be nearly double those of the other networks, which puts some merchants off.

If you’re wondering what other things networks do, the answer is a bit complicated because two of the major U.S. networks, Discover and American Express, also act as issuers. Visa and Mastercard only handle a few other tasks, such as arbitrate chargeback disputes, facilitate foreign transactions (while charging foreign transaction fees) and offer auxiliary benefits like roadside assistance, while partnering with card issuers to distribute credit cards on their respective networks. Discover and American Express also sometimes function like that, but for the most part they issue their own cards. This makes it fairly easy to get a Discover or American Express network card if you want one, since you can just directly apply for a card on one of those networks. If you specifically want a Visa or a Mastercard, though, you’ll have to find an issuer that distributes cards on the network you want while also offering benefits you like. That’s more time-consuming since you have to do research, but as a result you can find Visas and Mastercards with a greater variety of different perks.

To be completely satisfied with your card, it’s important that it’s from an issuer you like and on a network you’re okay with. For more on finding credit cards that completely fit your consumer needs, follow our credit cards blog. Also, check out our reviews of the best credit cards to find the right card for your needs and spending habits.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.