Payments and fintech
Card scheme (card network)
The network that sets the rules and connects issuers and acquirers, such as Visa or Mastercard.
Last reviewedWhat does Card scheme (card network) mean?
A card scheme, or card network, runs the rules, brand and technology that let a card from any issuer work at any merchant signed by any acquirer. Visa, Mastercard, UnionPay and India's RuPay are examples. Visa and Mastercard run four-party schemes: they do not issue cards or sign merchants themselves, and they earn scheme fees on the volume that flows through them. American Express has mostly run a three-party model, acting as issuer and acquirer as well as network. Example: if a scheme earns 0.1 percent on 10 trillion of card spending, that is 10 billion of fees from a very small slice of each payment. Schemes also set interchange rates where the law does not.
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Related terms
- IssuerThe bank or firm that gives a customer a card and, for credit cards, takes the credit risk.
- AcquirerThe bank or firm that lets a merchant accept card payments.
- Interchange feeThe fee the merchant's bank pays the cardholder's bank on each card payment.
- Network effectsA product becomes more valuable as more people use it.
- Merchant discount rate (MDR)The total fee a merchant pays to accept a card or digital payment.
- Take rateThe share of each transaction's value that a platform keeps as revenue.
- Basis points (bps)One hundredth of a percent: 100 basis points make 1 percent.
- Buy now, pay later (BNPL)Paying for a purchase in a few interest-free instalments, with the merchant paying a fee.