Credit Card Brands vs. Banks & Issuers

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You’ve heard the advertisements: “Don’t Leave Home without It,” “What’s in your wallet,” “It Pays to Discover,” “Priceless!” The slogans are memorable and catchy, but do you know which credit card company is associated with each? More importantly, do you know how they relate, how they’re similar and how they’re different? There seems to be a lot of confusion out there:

Credit Card Brands vs. Issuers

Most people consider Visa, Mastercard, Discover and American Express credit card issuers, but they’re actually considered credit card “associations”. They set the rules for merchants and card-issuing banks. The largest associated brands, Visa and Mastercard, form relationships with other financial institutions who actually “issue” their cards. American Express and Discover form alliances as well, but they also issue their own lines of credit cards.

Credit Card Issuers vs. Banks

Credit card issuers are responsible for creating “terms and conditions”, approving new accounts and billing cardholders for charges. All financial institutions, including banks and credit unions, can be credit card issuers. But not all banks are issuers. For example, JP Morgan Chase is one of the largest banks and credit card issuers in the U.S. – issuing a wide variety credit card offers; including many co-branded cards for other banks and organizations. Merrill Lynch, another well-known banking institution, has several offers of their own – but they’re actually issued by Bank of America.

Major Credit Card Brands

  • VISA Card is a nonprofit corporation that is best described as a purchasing and marketing coalition of more than 21,000 banks and financial institutions around the globe. Visa itself does not issue credit cards or other financial services to consumers or merchants. All cards are issued by its member banks. “Terms and conditions” and approvals are also controlled by member banks.

    Acceptance & Popularity: With 54% market share, Visa is the most widely accepted brand in the world with cardholders in 150+ countries.

  • MasterCard is a multinational corporation much like VISA. Its principal business is processing payments between merchants and the 25,000+ financial institutions that issue cards with the MasterCard logo.

    Acceptance & Popularity: Mastercard is the second most recognizable credit card brand in the world. With 29% market share, it’s accepted almost anywhere Visa is accepted.

  • American Express is a diversified global financial services company. Not only do they process payments, but they’re a world leader in providing charge cards, credit cards and traveler’s checks to consumers, small businesses and corporations.

    Acceptance & Popularity: With 13% market share, American Express is the third most popular credit card brand.

  • Discover credit cards were originally introduced by the Sears Department Store in 1985 and today is operated by Morgan Stanley. Discover Financial Services issues credit cards and operates the largest independent credit card network in the U.S.

    Acceptance & Popularity: At 4% market share, Discover Card is neither issued nor widely accepted outside the U.S., but it can be used to obtain cash from ATM locations worldwide.

Although Visa, Mastercard, Discover and American Express make-up over 99% of credit card transactions, there are many other payment options. Credit cards are typically organized by the type of issuer. For example:

  • Bank Credit Cards: Visa, MasterCard, Discover, AMEX
  • Petroleum Cards: Sun, Exxon
  • Travel & Entertainment Cards: Diner’s Club, Carte Blanche
  • Private Label Cards: Department store cards, telephone cards, co-branded cards (cards that carry the logo of a third party, where the third party benefits from their use)

Major Credit Card Issuers

Credit card issuers are an exclusive bunch, with a relatively small number of names dominating a huge industry. The top 10 credit card issuers controlled approximately 88 percent of the credit card market during 2006. Of those, the leading U.S. credit card issuers were Bank of America, J.P. Morgan Chase, Citi Bank, Capital One, and HSBC Bank.