Card Payment Network

A card payment network refers to a system that facilitates financial partnerships between merchant establishments and credit card issuers. The most common form of this relationship is the ability of a consumer to pay for a purchase using a credit or debit card.

There are many card payment networks in existence, with Visa, Mastercard, American Express and Union Pay as perhaps the most well-known in Singapore and the region.

Card payment networks usually charge a fee, known as an interchange fee, for their services. The bulk of this fee goes to the card issuing bank, with the remainder going to the card payment network and the retailer's merchant account provider.

Because it also issues its own cards, American Express does not charge an interchange fee. This is unlike other card payment networks, such as Visa and Mastercard, which actively offer their services to card issuing banks in exchange for an interchange fee.

Interchange fees are partly used to fund the various rewards programmes that cardholders are entitled to.

As interchange fees are typically hidden from the consumer, (being deducted from the merchants? accounts) there have been calls for greater transparency so consumers can make an informed choice in the use of credit cards.