In the United States, there are four major credit card networks, VISA, MasterCard, Discover, as well as American Express. These processing networks set guidelines for credit card processing, set a fee for processing credit cards, and facilitate credit card transactions. The credit card processing network can work with a separate issuing bank that provides credit cards to consumers. The issuing bank also bills the consumer's transactions and collects the unpaid balance.

Credit card issue

While all four major credit card networks have the infrastructure for mobile credit card transactions, only American Express and Discover are also banks that work with merchants and consumers to handle financing.

If you have a VISA or MasterCard, you may notice that you pay to your credit card issuer instead of processing the network. Visa and MasterCard do not issue credit cards themselves. Instead, these networks work with issuing banks that bear the risk of providing credit to consumers. Whenever you see a Visa or MasterCard credit card, another bank will issue a credit card. Bank of America, Capital One, and Chase are examples of issuing banks and are also known as credit card issuers.

American Express and Discover

American Express and Discover are not working with banks and credit unions to issue their credit cards, but rather act as the processing network and card issuer for most credit cards. Until 2004, both Visa and MasterCard blocked the issuance of American Express and Discover cards from banks issuing credit cards. After the successful antitrust lawsuits in Visa and MasterCard, American Express and Discover began issuing credit cards through other banks, but still issued most credit cards and assumed the risk of extending credit cards to consumers.

American Express initially issued only charge cards, which require cardholders to pay their balances in full each month. American Express has added recurring credit cards to its products, tending to cater to more affluent cardholders and has a larger market share among commercial credit card users.

Global recognition

Credit cards from these four processing networks are accepted by merchants around the world, but once you travel outside the US, you will find fewer merchants accepting American Express and Discover. American Express was accepted in more than 140 countries and regions. Discover is accepted in 190 countries and regions. VISA is accepted in more than 200 countries and regions, and MasterCard is accepted in more than 210 countries and regions around the world.

Credit card processing fee

Most consumers may not know the cost associated with processing a credit card. Completing credit card transactions requires a lot of companies and resources. The credit card processing network sets an exchange rate, and the merchant pays the exchange rate to accept the credit card. Merchant banks can charge an additional fee based on the exchange rate charged by the processing network.
The four processing networks also differ in terms of exchange fees, which are charged based on various factors such as the type of business and the type of credit card. VISA and MasterCard often set similar exchange rates. The exchange rate of Discover may be slightly higher. American Express credit cards have a higher exchange rate than other processing networks. Usually, when the company does not accept American Express, this is due to the higher exchange rate.

Debit transaction processing

Some major processing networks also handle debit card transactions. The function of a debit card is similar to that of a credit card, but one major difference is that the source of funds for a debit card transaction is the consumer's bank account, not the credit line. In the United States, most debit card transactions are conducted through a network owned by Visa and MasterCard. The bank works with VISA and MasterCard to provide debit cards to customers.

Which network is the best?

For many people, choosing a credit card based on the characteristics of a credit card issuer and a personal card is better than selecting a credit card based on a credit card processing network. If most of your transactions are going to be in the US, then you won't have much trouble with the credit cards that use any of the four major processing networks. However, if you plan to travel internationally, Visa or MasterCard may be a better option as they have more worldwide acceptance.