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As credit card usage continues to grow in the United States, accepting this form of payment is increasingly essential for businesses of all sizes. Understanding the backend of credit card processing can help you save money and improve business operations.
Card brands are some of the most essential stakeholders in the credit card transaction process. The most notable card brands in the United States include Visa, Mastercard, American Express, and Discover. Each of these card brands has its own associated costs and rules, meaning business owners must understand each brand to reduce variable costs and avoid processing issues.
This guide explores card brands, how card brands impact your business, the benefits of accepting all major card brands, and other card brand-related topics. Let’s get started!
What is a Card Brand?
A credit card brand — also known as a card network or card association — is a company or organization that helps card issuers and merchants facilitate payments. By creating a virtual system for accepting payments, card brands make credit and debit card transactions possible. For their role in the payment process, card networks charge interchange fees. The merchant typically pays these fees.
The 4 Major Card Brands
While there are various smaller card brands operating around the world, the four major brands in the United States are Visa, Mastercard, American Express, and Discover. Let’s explore each in more detail below:
Visa, founded over 60 years ago, is now the one of the world’s most recognized card networks. Currently, the company is the largest card network in the United States, with almost 50% of the industry’s market share. The company provides a range of consumer and commercial credit cards and debit cards.
Mastercard is the second-largest card network in the nation. The company boasts over 240 million users in the United States alone. The company offers a range of standard and VIP credit cards, allowing users to take advantage of premium experiences and rewards opportunities.
3. American Express
American Express brands itself as a premium card network, offering a range of rewards-based credit cards and charge cards. The company allows customers to collect American Express Points, redeemable for flights, cash-back, and other benefits. More than 14% of Americans have an American Express card.
Discover is the fourth-largest card network in the United States. While this brand previously had low acceptance rates around the United States, it now has comparable acceptance numbers to American Express. Discover users benefit from no foreign transaction fees, cash-back rewards, budgeting tools, and more.
How Do Card Brands Impact Your Business?
As a merchant, you must pay credit card processing fees. Card brands charge interchange fees, which is one of the components in the overall fees you pay to a processor. Interchange fees vary depending on the card brand — let’s explore the interchange fees associated with Visa, Mastercard, American Express, and Discover:
- Visa: 1.30% – 2.60%
- Mastercard: 1.45% – 2.90%
- American Express: 1.80% – 3.25%
- Discover: 1.55% – 2.45%
The above figures represent ranges, as interchange fees can vary depending on whether your business is processing a credit or debit card. There are also other factors contributing to the variation in an interchange fee. Remember, an interchange fee is only part of what you will pay to process a credit card; credit card processors, issuing banks, and other transaction stakeholders also charge other fees.
In addition, card brands determine which businesses can accept cards. If your business generates too many chargebacks, a card brand may decide to charge additional fees to your business or rescind your right to process their cards. Losing access to card brand processing rights can significantly harm your business. It’s one of the many reasons chargeback prevention tools are essential.
Benefits of Accepting All Major Card Brands
As card brands have different interchange fees, you might wonder, is it worth accepting all major card networks? While there’s no doubt many businesses choose to accept only card brands with cheap interchange fees, there are benefits to accepting all four major brands.
As many credit card users benefit from air miles and other rewards programs, accepting all credit card brands improves convenience for customers. If you want to make paying for your products or services as effortless as possible, it’s best to allow consumers to pay with their card brand of choice.
Now that you understand card brands and how they impact your business, it’s time to decide which brands your business should accept. If you use a Merchant service provider (MSP), you’re likely paying a flat rate for card processing. However, if you’re using a traditional merchant account, you may pay fees based on the card network’s interchange fees. Choose wisely — it’s essential to balance the needs of your business with the preferences of your customers!
Frequently Asked Questions about Card Brands
A card brand is a company that issues credit and debit cards, such as Visa, Mastercard, American Express, or Discover.
Choosing the right card brand for your business can have a number of benefits, including increased acceptance, lower fees, and access to additional features and services.
There are a few factors to consider when choosing the right card brand for your business, including the types of cards that you want to accept, the fees associated with each brand, and any additional features or services that you may need. It is important to research and compare the different options available to find the best fit for your business.
There may be some downsides to accepting certain card brands, such as higher fees or less favorable terms. It is important to carefully consider these factors when choosing a card brand for your business.
Yes, you can typically accept multiple card brands at your business, allowing you to offer more options to your customers. However, you may need to sign separate agreements with each brand and may need to pay different fees for each.