There are certainly no shortage of credit card choices available for consumers. Filling your wallet with the right credit cards is a process that’s going to be different for each of us on the basis of our needs.
So it becomes important for us to understand the credit card environment can help you make the right choices. For your good understanding, you should first know what is the difference between Credit card networks and Credit card issuers.
Credit Card Networks
The purpose of Credit card networks is to control where credit cards can be accepted and to facilitate transaction between merchants and credit card issuers. The major Credit card networks includes Visa, Mastercard, American Express, etc.
Credit card networks set the inter charge fees that merchants are charged to accept credit card transaction. Although credit card networks do not accept other types of payments cardholder bears like late payment fees, interest rates, etc.
Credit Card Issuers
Visa and Mastercard do not issue cards directly to customers, but usually works with banks or credit unions to it. Banks or Credit unions are thereby called Credit Card Issuers.
Credit card issuers backs the card financially. The credit card issuers are in charge of:
- Approving or denying credit card applications.
- Setting the terms and most of the benefits on the account.
- Paying for transactions on behalf of the cardholder.
- Collecting payments from the cardholder.
- Providing customer service.
Credit card issuers and credit card networks have entirely different jobs. But there are many institutions who are both issuer and network. Means they are performing both the activities. For Example: American Express and Discover are both Credit card issuers and Credit card Networks.
Whereas credit cards issued by Visa and Mastercard are issued through various banks and financial institutions.