What is a card scheme?
A card scheme, or card network, is an organization that sets the rules, the brand and the technical standards for card payments between issuers and acquirers. It lets a card issued by one institution be accepted by a merchant contracted with another. Visa and Mastercard are four-party schemes, while American Express traditionally acts as issuer and acquirer itself.
In detail
A card scheme is the organization behind a card brand. It defines how card payments work between the institutions involved.
What a scheme provides
- Rules: who can issue and acquire, how transactions are processed, how disputes are resolved.
- Brand: the logo on cards and at points of sale.
- Infrastructure: in most cases, the switch that routes authorization, clearing and settlement messages.
- Security standards: authentication, tokenization and data protection requirements.
Four-party and three-party schemes
EU law distinguishes two models. In a four-party scheme, payments pass through the scheme, an issuer on the cardholder’s side and an acquirer on the merchant’s side. Visa and Mastercard work this way. In a three-party scheme, the scheme itself provides issuing and acquiring. American Express, Discover and JCB were built on this model, and they now also work with partner banks.
Schemes can be global or domestic. Cartes Bancaires in France and girocard in Germany are domestic examples, often co-badged with an international brand.
The terms "card scheme" and "card network" are used for the same thing. See card networks for the full comparison and scheme fees for what schemes charge. Operators reach several schemes through a global payment network of acquirers.