A Credit card though is a very important and beneficial financial tool that is made easy and straightforward to use for the ease of cardholders. But behind the front, there are so many parties working together to bring a smooth experience to the end-user. Two of the main parties are Credit Card Issuers and Credit Card Providers. Different issuers and networks have distinct policies and programs associated with the card which is why it is important to understand the difference closely.
Let us compare Credit Card Issuers vs Networks by taking a look at the meaning, features, and pros and cons of both to understand what is the difference between the two:
Credit Card Issuers:
What are Credit Card issuers?
As the name suggests, a credit card issuer is any bank or financial institution that issues credit cards, sets credit limits and eligibility requirements for cardholders. When customers use their credit cards for any transaction, the credit card issuer is responsible for transferring payments to merchants for transactions made using that bank's credit cards.
Responsibilities of a Credit Card Issuer:
The credit card issuers are responsible forthe following activities:
- The credit card issuers process one’s credit card request and undergo a background check of the applicant.
- Determines the credit limit for the applicant based upon his/her credit score, bill payment history, application status with other banks, etc.
- Checks if the credit card applicant meets the minimum eligibility criteria for the card applied for.
- Determines if a transaction is approved or denied.
- Sets the interest rates, APRs, and penalties associated with the credit card.
Top Credit Card issuers:
Some of the top credit card issuers in India are:
- HDFC Bank
- ICICI Bank
- SBI Bank
- Axis Bank
- American Express
Credit Card Networks:
What is Credit Card Networks?
A network acts as a link between different aspects of one system that shares necessary resources. Similarly, a credit card network acts as a link that approves, processes, and establishes the conditions of credit card transactions, as well as transfers funds between customers, merchants, and banks.
Responsibilities of a Credit Card Network:
A credit card network is responsible to get the following work done:
- Handles the operations of Credit Card transactions
- Determine whether a credit card will work beyond the geographical boundaries of a nation.
- Credit Card networks simplify transactions by transferring information between purchasing and supplying institutions.
- The Credit Card network in which your card runs determines where you may use it to make purchases with designated merchants or not.
Top Credit Card Networks:
Some of the major Credit Card Networks are:
- Amex Network Cards
- MasterCards
- Visa
- RuPay
Additional Reading - 5 Common Signs of Wrong Credit Card Usage
