![]() (Acquirers may also charge the merchant additional operational and risk fees.) As noted above, Visa and Mastercard are not banks, therefore they do not issue credit cards. All fees are charged to the merchant and deducted from the customer payments prior to depositing proceeds to the merchant’s bank account. The card networks also collect a network fee (~.05%). 3% for debit cards and ~1%-2.5% for credit cards in the U.S.) from the card networks. To pay for these risks and other operating expenses, issuing banks collect an interchange fee (avg of. They take all the credit risk of the cardholder not paying off their balance and the risk of fraudulent transactions. Issuing Banks issue credit cards to consumers. AMEX and Discover, on the other hand, do issuer credit cards to consumers because they are both the card network and the issuing bank. Only issuers can issue credit cards to consumers (look at the back of your credit card and you’ll see the name of your issuer/bank). Note: Visa and Mastercard do not issue any credit cards to consumers ! They only maintain the network connections and operating rules between acquirers and issuers. The rules include data exchange protocols that allow the different systems to communicate and exchange information. These rules ensure a fair and safe marketplace for consumers and Four Party Scheme participants. ![]() Card networks also establish payment transaction rules and stipulations that merchants, acquirers, and issuers must follow. Without card networks, each acquirer would have to set up a direct connection to every credit card issuing bank around the world. These gateways handle all payment processing activities, allowing the acquirer to focus on the banking and risk management side.Ĭard Networks connect the many thousands of acquirers to the many thousands of banks around the world. Acquirers will often outsource the technology piece to a payment gateway like Stripe, Square, Adyen,, Braintree or Cybersource. They also provide technology solutions that enable merchants to connect to popular payment networks that process credit card transactions (steps 1, 2, 5, and 6 in image 1 below). They allow merchants to receive funds from credit card transactions. Merchants accept credit cards in their physical stores or via their online shopping cartsĪcquirers provide banking services to merchants.
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