Payment card network providers

June 01, 2023

Card network providers, also known as payment card networks or card associations, are companies that facilitate the electronic transfer of funds between merchants, cardholders, and financial institutions. These networks establish the technical and operational standards for processing card transactions and play a crucial role in enabling the acceptance and usage of payment cards.

Card networks history

The history of payment card networks dates back to the 1950s-1960s and has seen significant advancements in technology, security, and global adoption.

Diners Club introduced the first general-purpose credit card in 1950. American Express followed suit in 1958, introducing its charge card. These early cards were primarily used by a select group of affluent individuals. Debit cards emerged in 1970s-1980s as an alternative to credit cards, allowing consumers to make purchases by directly accessing funds from their bank accounts.

In 1976, Bank of America introduced the first successful statewide debit card program in the United States. Later on, in 1970s-1990, major payment card networks, such as Visa and Mastercard, expanded their reach during this period. They transformed from association networks, owned and operated by member banks, into independent entities.

How card networks work

Payment card networks work by facilitating the authorization, clearing, and settlement of transactions made using payment cards. Here is a simplified explanation of how payment card networks typically operate:

  1. Transaction initiation: The process begins when a cardholder makes a purchase or transaction using a payment card (credit, debit, prepaid, etc.) at a merchant's point of sale (POS) terminal or online.
  2. Merchant's process: The merchant captures the transaction details, including the card number, transaction amount, and other relevant information. This data is sent to the payment card network for processing.
  3. Authorization request: The payment card network receives the transaction data from the merchant and routes it to the respective card issuer (the financial institution that issued the card to the cardholder). The card issuer then assesses the transaction's validity and available funds.
  4. Authorization response: The card issuer responds to the payment card network with an authorization code or decline message. If authorized, the network relays the response back to the merchant, allowing the transaction to proceed. If declined, the merchant may request an alternative form of payment.
  5. Clearing and settlement: After the transaction is authorized, the payment card network acts as an intermediary between the merchant's acquiring bank (also known as the acquirer) and the cardholder's issuing bank. The network consolidates authorized transactions for a specific period (usually a day) and initiates the clearing process.
  6. Clearing: During clearing, the payment card network ensures that the necessary funds are transferred from the cardholder's account to the merchant's account. This involves reconciling the authorized transactions and generating settlement files.
  7. Settlement: The payment card network facilitates the settlement process by transferring funds from the cardholder's issuing bank to the merchant's acquiring bank. Settlement typically occurs within a predefined time frame, depending on the network's rules and agreements between the banks.
  8. Bank's process: The card issuer records the authorized transaction and sends a monthly statement to the cardholder, detailing all transactions made during the billing cycle. The cardholder is then responsible for repaying the card issuer according to the terms of their card agreement.
  9. Reconciliation: Finally, the merchant reconciles the transactions and settles with their acquiring bank, receiving the funds owed for the authorized transactions minus any applicable fees.

Card networks security

Card networks, such as Visa, Mastercard, American Express, Discover, and JCB International, have their own security measures in place to protect cardholder data and ensure the security of transactions. They have implemented sophisticated fraud detection systems and algorithms to identify and prevent fraudulent transactions. These systems analyze transaction patterns, monitor for unusual activity, and employ machine learning techniques to identify potential fraud.

Payment Card Industry Data Security Standard (PCI DSS)

PCI DSS is a set of security standards designed to ensure the protection of cardholder data during payment card transactions. It applies to any organization that processes, stores, or transmits payment card data, regardless of its size or number of transactions.

Additionally, bank acquirers have implemented 3D Secure for online transactions. It adds an authentication step during online purchases, requiring cardholders to provide a password or use biometric authentication to verify their identity, reducing the risk of unauthorized use of the card.

Transaction costs

Each payment card network imposes fees on acquiring banks for the processing services they offer. These fees can vary based on several factors, including the type of card (credit, debit, prepaid), the transaction type (swiped, keyed, online), the merchant category (e.g., retail, e-commerce, hospitality), and the specific agreement between the network provider and the acquiring bank.

Additionally, the fees charged to the acquiring bank are often passed on to merchants indirectly, as part of the merchant service fees they pay to their acquiring bank for card processing services. As an example, a payment facilitator, or so called "Payment gateway" may charge $0.30 per transaction or 2.9% of the transaction amount, or a combination of both.

Here at Finexer, we do not use payment card network providers but have established direct integration with 99% of banks in the UK. By initiating payments directly with banks it has dramatically reduced fees and saved our customers thousands on transaction costs.

Most well-known card network providers

  • Visa Inc. (Visa): Visa is one of the largest card network providers globally. It operates a vast network that connects financial institutions, merchants, and cardholders. Visa offers a range of credit, debit, prepaid, and commercial cards.
  • Mastercard Incorporated (Mastercard): Mastercard is another major card network provider with a global presence. It operates a network that enables the authorization, clearing, and settlement of card transactions. Mastercard provides credit, debit, prepaid, and commercial cards.
  • American Express Company (Amex): American Express, commonly referred to as Amex, is a well-known card network provider. Unlike Visa and Mastercard, Amex typically issues its own payment cards, as well as operates its network, which connects cardholders and merchants.
  • Discover Financial Services (Discover): Discover is a card network provider primarily operating in the United States. It issues its own credit cards and operates a network that processes transactions for Discover cardholders and merchants.
  • China UnionPay (UnionPay): UnionPay is a leading card network provider in China. It operates an extensive network that connects banks, merchants, and cardholders within China, as well as offers acceptance internationally.
  • JCB Co., Ltd. (JCB): JCB is a card network provider based in Japan. It operates a network that facilitates payment transactions for JCB cardholders and merchants, primarily in Asia.

These are some of the prominent card network providers, but there are other regional and country-specific networks as well. Additionally, various local payment schemes and digital wallets have emerged, providing alternative payment methods and expanding the options available to consumers and merchants.


Card networks have been around for decades and have become a widely accepted method of payment globally. They have played a crucial role in establishing the infrastructure and standards that enabled seamless and secure transactions across the globe. However, there are several alternatives to card payments that have gained popularity in recent years such as Mobile and digital wallets, QR code payments, Bank transfers, cryptocurrencies, etc.

Finexer provides a secure solution to send money, collect donations or accept payments instantly for a business or on behalf of clients by making bank transfers and utilizing QR code payments. Find out more...