Credit cards are the most popular payment method in the US with the total transaction value predicted to $3.843 trillion in 2025. As a small business owner, you are always going to have to deal with credit cards and the major credit card networks that power them. This is despite the fact that a lot of small business owners may not know what credit card networks are and how they work.
Accepting lots of payment methods is just good business and understanding how credit card networks work can give you the best insight into maximizing their potential and minimizing risks.
but knowing how credit card networks work can give business owners insight into how to maximize their usage and minimize risks. Here’s what businesses should know. In this article, we’re giving you the lowdown on all things credit card networks, including:
- What credit card networks are
- The difference between credit card issuers and credit card networks
- Types of credit card networks out there
- How do credit card networks work?
- Processing fees for major credit card networks
Let’s get started!
What are credit card networks?
Credit card networks help banks and businesses communicate with each other to process credit card transactions. These networks and the banks approve and handle the transactions. On top of this, they decide the terms for each transaction and move money between customers, businesses, and banks. Major credit card networks are Visa, Mastercard, American Express, and Discover, but there are others too.
What is the difference between credit card issuers and networks?
Now onto our next section, the difference between credit card issuers and credit card networks. A credit card issuer (also known as an issuing bank) is a financial institution that provides people with credit cards. For instance, if you’ve got a credit card with your main banking institution with the bank logo and the Amex logo on it, the bank is the credit card issuer and Amex is the credit card network.
Now, when you use a credit card to purchase something, the transaction request then goes on to the credit card issuer, who then decides whether they’re going to authorise it or not. The issuer is the bank that gives the cardholder credit. The cardholder then pays the bank back for any purchases made with the credit card.
Credit card networks can also act as issuers, giving credit directly to cardholders without needing a bank or another financial institution to do it.