Card Network

A card network (also called a card scheme) is the system that routes a card payment between the bank that issued the card and the bank that banks the merchant. Visa, Mastercard, American Express, and Discover are the major networks. They set the rules every participant follows and move the authorization and settlement messages, but in most cases they don't lend money or hold accounts themselves.

What the network does

• Routing — carries the authorization request from the merchant's acquirer to the customer's issuer, and the approval back.
• Rules — sets the operating rules, security standards, and fee structures every bank and merchant must follow.
• Settlement — coordinates the movement of funds between banks so the merchant ultimately gets paid.

The network's own fee (an assessment or scheme fee) is a small slice of the total cost of accepting a card, separate from the larger interchange fee that goes to the issuer.

Two models

Networks come in two shapes. Four-party networks like Visa and Mastercard connect four parties — cardholder, issuer, acquirer, and merchant — and rely on separate banks to issue cards. Three-party networks like American Express historically act as issuer, acquirer, and network at once, which is why Amex acceptance and pricing can differ.

Why it matters

The network a card belongs to affects your costs and your acceptance rate. Interchange and scheme fees vary by network, card type, and region, and each network has its own dispute and settlement timelines. Knowing which network a payment ran on helps explain why two identical-looking charges can cost different amounts to accept.