Card Network

A card network, also called a card scheme, routes card payments between the bank that issued the card and the merchant's bank. Visa, Mastercard, American Express, and Discover are the major networks. They set the rules and carry authorization and settlement messages. Visa and Mastercard don't issue cards or hold accounts themselves.

What the network does

• Carries the authorization request from the merchant's acquirer to the customer's issuer, and the answer back.
• Sets the operating rules, security standards, and fees that banks and merchants follow.
• Coordinates settlement, the movement of funds between banks that pays the merchant.

The network charges its own scheme fee. It is a small part of the cost of a card payment, separate from the larger interchange fee that goes to the issuer.

Four-party and three-party networks

Visa and Mastercard are four-party networks. The cardholder, issuer, acquirer, and merchant are separate parties, and banks issue the cards. American Express has traditionally been a three-party network that acts as issuer, acquirer, and network at once. That is why Amex pricing and acceptance can differ.

Why it matters

The network affects what a payment costs you. Interchange and scheme fees vary by network, card type, and region, and each network has its own dispute and settlement timelines. This is why two charges for the same amount can cost different fees.