October 2, 2023

3 Reasons Your Credit Card’s Network Matters

All credit cards have both an issuer and a network. The issuer is the bank…

3 Reasons Your Credit Card’s Network Matters

All credit cards have both an issuer and a network. The issuer is the bank that backs the card. For example, Chase credit cards are issued by Chase bank. In other words, it’s Chase that puts up the money that backs your credit line. There are dozens, if not hundreds, of banks that issue credit cards.

The credit card network, meanwhile, is responsible for processing your card transaction. It is the intermediary between the issuer and the business where you are making your purchase.

In the U.S., there are four major credit card networks:

In the case of Amex and Discover, the issuer and the network are the same company, as they issue and process their own cards.

While you typically only interact with your issuer, your credit card’s network is also important. Here are three ways your card’s network matters.

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1. Acceptance

Businesses have complete control over which credit card networks they accept for payments. They can accept all four networks — or none at all.

Domestically, the acceptance rates for each of the four major networks is pretty similar. Some brands have specific associations (think Costco and Visa), but most places will accept cards from any of the networks.

When you travel abroad, you may run into more cases where businesses accept one or two networks, but not all four. Mastercard and Visa tend to be the most widely accepted, though American Express and Discover have ramped up their international acceptance rates quite a bit over the last decade or so.

2. Processing costs

Each network charges a per-transaction fee to process credit card purchases. The business accepting the card is responsible for paying the fee, though some companies may pass the fee on to the customer.

The credit card processing fee can vary, both by network and by card. Premium rewards credit cards tend to be the most expensive and usually range between 1% and 5% of the transaction amount. American Express usually has the highest processing fees, while Mastercard and Visa are generally the least expensive.

If a business doesn’t accept certain cards, it’s often due to the cost of processing those transactions. So if you frequent small businesses, you may want to consider using a card with a lower processing fee to help the business keep its costs down.

3. Cardholder benefits

Most of the perks that come with your credit card are provided by the issuer. This includes things like purchase rewards, travel credits, and elite status. But there are also a number of benefits that actually come from the network, not the issuer.

Each network has its own slate of benefits it provides to most cardholders, which can include things like purchase protection or partner discounts. Most World Elite Mastercards, for instance, come with cellphone protection when you use your Mastercard to pay your cellphone bill.

The type and quality of the benefits you receive can depend on the type of card you have. For example, Mastercard credit cards can have three different tiers:

  • Mastercard®
  • World Mastercard®
  • World Elite Mastercard®

Similarly, there are also different types of Visa credit cards:

  • Visa
  • Visa Signature®
  • Visa Infinite®

The basic levels of each network have the fewest benefits, while the top tiers — World Elite Mastercard® and Visa Infinite®, respectively — have the most benefits. Cards in the top tier are usually premium rewards or travel credit cards.

Amex doesn’t have distinct tiers, but its more expensive cards do offer more robust benefits than its cards with no annual fee. Discover cards all have the same benefits.

How to determine your card’s network

Every credit card that operates on a credit card network will have the network logo somewhere on the card. However, the logo is not in the same spot on all cards. It could be on the front on one card and on the back for another card — even if both cards are on the same network.

In the case of Visa and Mastercard, the logo will also indicate which type of card it is. If the logo is just the basic Visa or Mastercard logo, the card is in the bottom tier. The middle and top tiers each have their own distinct logos.

If your credit card doesn’t have a network logo on it at all, then your card doesn’t operate on a credit card network. This is most common with store credit cards that you can only use to make purchases with that retailer. These cards simply won’t work if you try to use them anywhere else.

Although you may not give your credit card network much thought, it can impact when, where, and how you use your card. At the very least, having cards from a couple different networks means you’re more likely to have a card that works when businesses only accept certain networks.