Plenty of factors go into choosing a credit card -- finding a low interest rate, calculating your cash-back potential and browsing through rewards programs. A card’s particular processing network isn’t likely to be a key part of most people’s criteria. But whether your card is backed by Visa, Mastercard, American Express or Discover has implications for where and how you can use it.
The four major credit card processors oversee every part of the purchase process -- including approving or declining a transaction, protecting shoppers and merchants from fraud and making sure that money flows to and from the appropriate accounts. Here’s everything you need to know about credit card processors and the differences among them.
Read more: The Best Cash-Back Credit Cards
Major credit card processors, compared
| Visa | Mastercard | American Express | Discover | |
|---|---|---|---|---|
| Processor | Yes | Yes | Yes | Yes |
| Issuer | No | No | Yes | Yes |
| Global merchants | 52.9 million | 52.9 million | 25.3 million | 44 million |
| Countries supported | 200 | 210 | 130 | 185 |
| Popular partners and co-brands | Chase, Bank of America, Wells Fargo, US Bank | Citi, Capital One, United, SunTrust | Delta, Hilton, Marriott | NHL |
Processing vs. issuing
Credit card processors act as the liaison between your bank and a merchant’s bank. When a payment is initiated, a processor analyzes the request -- making sure that the request is real and you are the one making it. If everything looks legit, it approves the transaction, takes the money out of your bank (or applies the charge to your credit card) and pays the merchant. Visa, Mastercard and Square are all credit card processors.
Issuers provide credit cards to consumers. They do all of the vetting -- reviewing applications to see if you’re qualified and reporting payments (and missed payments) to credit bureaus. They also handle customer service: If you ever have a concern about a transaction or want to dispute a payment, call your card issuer using the number on the back of the card. Chase, Bank of America and Wells Fargo are examples of credit card issuers.
American Express and Discover are the only major processors that also issue cards. If you have a Visa or Mastercard card, it’s always going to be linked to an issuing bank such as Capital One or Barclays. American Express and Discover may offer cards through separate issuers, too, but they have the capacity to issue their own cards. For instance, Discover serves both as the issuer and processor for its Discover it® Cash Back card.
Acceptance
Credit card processors make money by collecting a percentage of every transaction that comes through their network. Part of the reason that American Express cards aren’t accepted as widely as others is that it charges merchants a higher fee on average than others.
Still, each of the four major credit card processors do business with millions of merchants in more than 100 countries. According to Nilson Report, both Visa and Mastercard have the most merchants worldwide -- 52.9 million -- while Discover has 44 million and American Express has 25.3 million.
Eligibility
There are dozens of different kinds of credit cards in the market -- from airline and travel cards to cash-back cards. Each comes with its own set of eligibility requirements that take into account credit score and history. American Express may be the most stringent issuer when it comes to eligibility; most of the company’s cards require applicants to have a credit score of at least 670.
There are also credit cards designed for those with fair credit (580-669), bad credit (300-580) and no credit. These cards will typically come with less perks, but they can help you build your credit.
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