Visa and Mastercard: The Hidden Glue Behind Every Card Swipe
What do Visa and Mastercard do? An intro to card networks
Visa and Mastercard don't issue your card, lend you money, or print plastic. They run the invisible networks that connect cardholders, issuers, merchants, and acquirers. This deep dive explains their four core jobs: routing transaction messages like telecom switches, settling billions in daily payments, setting interchange fees that shape rewards and merchant costs, and enforcing a 923-page rulebook with a $600 arbitration fee. It also reveals why issuers keep the biggest cut and why the EU's fee caps explain its lack of rewards cards.
Arbitration is not a fair system, but it is an efficient one.
- losvedir
I play the credit card "game" because I hate feeling like I'm leaving money on the table, but I really wish I didn't have to. Some degrees of fees make sense, to run the network, and handle fraud, but it's ridiculous that people have this sense that shopping should somehow fund your vacation.
Where I am it's increasingly common to see credit card fees when checking out. I get it, because merchants are being charged 3-5% of their total revenue. I wish there was a low fee credit card network that merchants didn't charge a fee for, so I could continue the simplicity of digital payments but opt out of this crazy Visa Infinite rewards accounting boondoggle.
- maelito
Well I don't really know what they do, but what I know is that Visa transactions costs are 0,22 € out of a payment of 1 €, Mastercard's is 0,23 €, and the French CB network is 0,17 €.
All of them do the same : ensure I get the money from the customer. Of course it's a larger project to run this in the whole world, but shouldn't it scale to less along with the number of billions of customers instead of the other way round ?
This is an insane amount of money. They killed micro-transactions, they killed the business model of the Web in favor of ads, the only popular way to do microtransactions right now.
- techdmn
I remember reading a comment here a while back about merchants being offered a discount on the processing fee if they also transmitted detailed data about the purchase (essentially the data that would be on the receipt). That data could then be resold on to advertisers. Does anyone remember this or have links to more data? (Not having much luck with search, maybe I'm hallucinating the whole thing.)
- TheGoodBarn
If anyone is interested in this topic from a historical standpoint, the Acquired episode on Visa is phenomenal: https://www.acquired.fm/episodes/visa
- vavooom
I like the vibe and overall writing style of this blog! Keep up the short little segments. Charcoal Grill and Doing Things Ten Times are my favorites:
* https://tautology.town/2026/02/14/learning-charcoal-grilling...
- kriskrunch
How much do interchange fees increase prices in the US?
- 1970-01-01
>The merchant pays 2.5%
The best way to pay for poor services already rendered and move on with life is to simply pay via card. Didn't like that haircut? Terrible food at the restaurant? Hold onto your cash and slip them the card.
- sanjeevverma1
this article doesn’t do a good job of simplifying. the vast majority of Visa’s revenue comes from one thing called the ISO 8601 / ISO 20022 message, which is the name for a Visa’s authorization. the core service is transmitting this message between an issuer (cardholder bank) and an acquirer (merchant bank). all other revenue streams are basically a microservice on top of this core message transmission service.