What is a bank card network ?
Bank card networks provide the connection between issuing banks, customers, and merchants. They transmit payment data, validate authorizations, and ensure the secure processing of each transaction. They also determine acceptance rules, security levels, and pricing conditions applied to card payments.
Visa, Mastercard, American Express, and Cartes Bancaires dominate the market. Other bank card networks exist, but their mission remains the same : to allow consumers to pay and merchants to receive their funds quickly.
Which are the different players in card payments ?
In addition to bank card networks, banks are involved at every stage of a bank card transaction.
The issuing bank
The issuer of a bank card is the bank or financial institution that provides the card to its customer. If your card displays your bank’s logo and that of a network like Mastercard, your bank is the issuer and Mastercard provides the payment infrastructure.
When a purchase is made, a request is sent to the issuing bank. Its role is to verify your identity, available funds or credit limit, and then authorize or decline the transaction. The issuer finances the purchase for credit cards, and the cardholder then repays the amount spent.
Some bank card networks can also act as issuers. They then grant credit directly to users, without going through a third-party bank.
The acquiring bank
An acquiring bank, also called a commercial bank, is the financial institution that processes card payments for merchants. It provides the remote sales contract or payment terminal, transmits authorization requests to the networks, and then credits the merchant’s account once the transaction is validated. It plays a key role in the security, speed, and cost of payments accepted in-store or online.
The payment service provider
In the context of e-commerce or a marketplace, a payment service provider (PSP) is essential. The PSP acts as a technical and financial intermediary between the customer’s issuing bank and the merchant’s acquiring bank. It ensures the secure transmission of payment data, the processing of authorizations, and compliance with security standards such as PCI DSS.
The PSP can also offer additional services : risk and fraud management, currency conversion, recurring payments, and multi-channel integration (website, mobile, application). Its role facilitates card acceptance, simplifies accounting, and accelerates transaction settlement for e-commerce merchants.
What are the different types of bank card networks ?
There are two types of bank card networks. These can be open or closed and handle card issuance differently.
Open bank card network
Open card networks allow financial institutions (banks, payment institutions) to issue cards to their customers.
The two main open bank card networks are Visa and Mastercard.
Closed bank card network
When the company that issues the cards is also the one that distributes them, it’s called a closed network. In this model, the card network acts as both issuer and acquirer. It manages the authorization, processing, and settlement of transactions. Funds are paid directly to the merchants’ banks after deduction of the network’s commission.
The main closed card network in France is American Express.
Bank card networks: how do they work ?
Bank card networks act as intermediaries between the merchant and the customer. Here’s how it works.
1. Payment initiated by the customer
The customer initiates the bank card transaction using various methods. They can insert their card into the payment terminal, pay contactless, make an online purchase by entering their card details, or pay by phone with Apple Pay and Google Pay. Each method transmits payment information over the network for secure processing.
2. The payment terminal connects to the bank card network
Once the card information is transmitted by the merchant, the payment service provider contacts the card network to validate the transaction. If the network is also the issuer, it decides directly on the authorization. Otherwise, the network communicates with the issuing bank to verify the funds, the card’s validity, and determine if the transaction can be approved.
3. The transaction is accepted or refused
The card network’s response, whether it’s approval or rejection, is transmitted to the merchant within seconds. This allows the customer to quickly complete their purchase and ensures a smooth and secure payment experience.
Bank card fees : how do they work ?
Credit card transaction fees represent a significant cost for merchants. Understanding their composition allows you to optimize these expenses, better manage your margins, and improve the profitability of your business.
Interchange fees
Interchange fees represent the largest portion of credit card transaction fees. They correspond to the commission paid by the merchant’s acquiring bank to the buyer’s issuing bank. These fees finance the services provided by the issuer: fraud prevention, management of bad debts, and transaction approval.
The card network sets the interchange fee, which varies depending on the card type and geographical area. In Europe, Regulation (EU) 2015/751² governs payments between individuals. It limits interchange fees to 0.2% for debit or prepaid cards and to 0.3% for credit cards.
Network fees
Credit card networks such as Visa, Mastercard or American Express charge fees for the use of their infrastructure and services, called “scheme fees”. These fees are generally lower than the interchange commission, but can vary depending on several criteria:
- The type of card used : debit, credit, premium or business
- The geographical area of the transaction : domestic or international
- The sales channel : online or in store
- The level of security of the transaction
Since the entry into force of European Regulation No. 2015/751², acquiring banks must be transparent about these fees and provide merchants with a detailed breakdown of the “scheme fees”. Some payment service providers offer an aggregated presentation to facilitate the reading of statements and better understand the costs applied.
Payment service provider or bank fees
The commission charged by the payment service provider (PSP) or the bank covers transaction processing. It constitutes the PSP’s margin and finances its operating costs.
Costs vary depending on the provider and the size of the business. They generally include a per-transaction fee, either fixed or proportional to the amount paid, as well as a monthly subscription for service access. Some offers are tailored to small businesses, while others target companies with high transaction volumes.
CentralPay’s card payment offer
CentralPay offers a simple and secure credit card payment solution. We accept CB, Visa, Mastercard and American Express cards, as well as Apple Pay and Google Pay.
The offer allows merchants to easily collect online payments while providing customers with a variety of fast payment options.
