What is a Card Network?
What is a card network? It’s the credit card companies you know. Visa is a card network. So are MasterCard, American Express, Discover, Diners Club, UnionPay and JCB.
What is a Card Network’s Function?
A card network is the intermediary between a buyer and a seller, and a credit card transaction can only happen if both parties are on the same network. In other words, you can’t take a Visa payment unless you can accept Visa payments.
Open Card Networks vs. Closed Card Networks
A credit card issued by a bank is an example of an open card network. It’s open in that financial institutions can use the network to acquire customers. Think of a bank offering new university students a Visa or MasterCard when they open a new account.
By contrast, cards from a closed network can only be obtained through that network. American Express and Discover are two examples of closed networks. So are store-issued credit cards.
What is a Card Network’s place in the Credit Card Payment Process?
We put together a full credit card processing guide that delves much deeper into the steps taken behind the scenes to complete a transaction. This is the general path:
- Your customer taps or swipes.
- Your card reader takes and sends the data to your bank (known as the acquirer).
- Your bank sends the request to the credit card network.
- The credit card network contacts the issuing bank to authorize and approve the transaction, or if they’re a closed network, they approve it themselves.
- When approval is given, the network informs the card reader and the transaction is completed.
Keep in mind that all this happens in a matter of seconds — and fewer seconds is better because any time lag gives your customer more time to reconsider their purchase.
How to Choose the Right Card Networks for your Business.
Think of joining a card network like a pathway to more customers. Fifty percent of consumers would abandon a purchase if they couldn’t use their preferred method of payment, so the more you can offer, the better off you’ll be.
As you weigh your card network options, take these factors into consideration:
Geography
If your customers are all local, then you can probably get away with being on the Visa and MasterCard networks, and maybe AmEx if you have that kind of clientele. But if your client base is international, you might want to consider expanding your network footprint to include more familiar payment options. If your market leans Chinese, you could look into the UnionPay network.
Price
Every network will have its own fee structure for different types of transactions. One to compare and contrast is the Card Not Present (CNP) fee, because that’s typically the highest. Also, some card networks have different fees for different types of businesses, so it’s wise to stack those potential charges up against each other to see which network offers the best value to you.
Users
A popular network will naturally have a lot of members. That’s what you want as a vendor or supplier because more members mean more potential customers. But what kind of customers are they attracting, and are they your customers? MasterCard’s lower fees and partnership with Costco seem to trend more towards “accessible for all.” American Express’s fees clearly position it for a more affluent crowd, but AmEx customers obviously think the rewards are worth the extra costs.
What is a Card Network Must-Have?
We mentioned it earlier but it’s worth repeating: you can’t be on a network unless you have a compatible card reader.
For simplicity, it would make sense to have one reader that took payments through multiple networks. It would make even more sense if your reader opened you up to Global Acceptance, so you could also accept methods like Alipay and WeChat Pay. In those circumstances, an OTT Pay card reader would be your best bet — especially because our solution automatically converts your customer’s payment into American or Canadian dollars. And we can provide you with a POS terminal and e-Commerce solutions to accept all kinds of payment methods using an all-in-one Global Acceptance payments solution.
Unlock new markets with new card networks that open your business up to the world.