Card networks

What are card networks?

Card networks are the systems that enable a credit or debit card transaction to be authorized, processed, and completed between the cardholder, the merchant, and the financial institutions involved.

In a payment transaction, whether through a physical POS terminal, a virtual POS, or an online payment gateway, these networks act as intermediaries that coordinate communication between the customer’s issuing bank and the merchant’s acquiring bank to process card payments quickly and securely.

Types of card networks

Open networks

Open networks allow other financial institutions to issue cards under their brand. These networks function exclusively as processing infrastructure, leaving card issuance to third parties.

The two most important open card networks worldwide are Visa and Mastercard. PaynoPain is a principal member of both, increasing our autonomy, strengthening our brand, and enhancing our competitiveness within the global payments ecosystem.

Closed networks

In closed networks, the same company that provides the network also issues the cards directly to customers and, in many cases, acts as the acquirer as well. This means the network manages both card issuance and payment processing, as is the case with American Express.

How do card networks work in a transaction?

• Payment initiation

The customer uses their card at a physical point of sale or at the checkout page of an online payment gateway, either by entering card details, swiping the magnetic stripe, inserting the EMV chip card, or making a contactless payment.

• Network connection

The payment gateway sends the transaction request to the payment processor, which in turn contacts the card network to request transaction authorization.

• Authorization

The card network verifies whether the transaction can be approved. If the network is also the card issuer, it makes the authorization decision directly. Otherwise, the network communicates with the issuing bank to obtain approval.

• Response to the merchant

Within seconds, the card network sends an approval or decline response back to the merchant.