Payment networks are the systems that authorise, process, and settle transactions between buyers, sellers, and their banks – the underlying "rails" that move money from one account to another. Most small-business owners and their teams closely monitor the funds moving in and out of their business bank accounts, whether they are customer or vendor payments, employee payroll, or electric-bill payments. Knowing how these networks operate can help clarify how your business payments move from one place to another, and what role each network plays along the way.

Businesses should spend time learning about payment networks. There are many ways for businesses to accept and issue payments, and your choice of payment methods can significantly impact your bottom line. A solid understanding of payment networks can help you decide how your business will send and receive money.

With that in mind, here’s what you need to know about payment networks.

What's in this article:

• What are payment networks?
  
• Types of payment networks
  
• How do the different payment networks work?
  
• Payment networks vs. payment gateways vs. payment processors
  
• How Stripe Payments can help
  

What are payment networks?

Payment networks are organisations, such as card associations and electronic-funds-transfer (EFT) networks, that facilitate financial transactions. The term “payment network” refers to any interconnected structure of financial entities – and their respective authorised agents and affiliates – within which funds can be transferred between individuals, businesses, or institutions.

Every payment network operates differently, but they share some basic similarities. Most payment networks comprise many participating entities, such as credit card companies, banks, credit unions, and other financial institutions. These groups of entities are connected by an electronic network through which funds are transferred under the guidance of a shared set of regulations and guidelines. The network itself is maintained and operated by a governing organisation, which is often an association composed of participating members.

Payment networks generally make money by charging fees for each transaction that passes through their rails. These can include interchange fees, assessment fees, or per-transaction charges, which are typically paid by the merchant's bank and passed along to the business accepting the payment.

Every network is designed to solve the same problem: moving funds between two points as safely, quickly, and cheaply as possible. As we describe the different types of payment networks, you'll notice that some prioritise one of those three features over the others. Choosing the best payment network for your business requires deciding which of those features is most important to you.

Types of payment networks

Payment networks are organised into four categories:

• Credit card networks
  
• Electronic-funds-transfer systems (e.g., ACH and wire transfers)
  
• Peer-to-peer (P2P) payment networks
  
• Automated teller machines (ATMs)
  

Credit card networks

All credit card networks fall into one of two categories:

• Open network: Open credit card networks allow third parties to issue credit cards to customers.

• Closed network: Closed credit card networks don't allow third-party financial institutions to issue their credit cards on their behalf. Instead, the credit card companies issue all credit cards directly to customers.

Many credit card transactions – particularly those on open networks – run on what's known as the four-party payment model. This model involves four key participants:

• Cardholder: the customer making the purchase

• Merchant: the business accepting the payment

• Issuing bank: the financial institution that issued the cardholder's credit card

• Acquiring bank: the merchant's bank, which receives the funds on the business's behalf

In this model, the card network itself (such as Visa or Mastercard) doesn't issue cards or hold merchant accounts directly. Instead, it acts as the intermediary that routes transaction information and funds between the issuing bank and the acquiring bank. This is different from closed networks, where a single company can play multiple roles in the transaction at once.

For more information about card networks, including which major networks are open and which are closed, read our article on how credit card networks work.

Major US card networks

The US has four major credit card networks: Visa, Mastercard, Discover, and American Express. In 2025, Visa's market share was the largest.

Visa and Mastercard are open networks, and American Express and Discover are closed networks.

Major international card networks

Outside the US, other credit card networks dominate customer payments. The two biggest networks are:

• Interac: Interac is the primary issuer of debit cards in Canada, where major networks like Visa and Mastercard don't issue many debit cards. Interac includes more than 59,000 ATMs and is accepted by nearly half a million businesses.

• Japan Credit Bureau (JCB): Based in Japan, JCB not only dominates the Japanese card market, but it is also accepted in more than 20 countries worldwide.

Electronic-funds-transfer networks

Electronic funds transfers (EFTs) are transactions that move funds electronically between different financial institutions, bank accounts, or individuals. EFTs are frequently referred to as "electronic bank transfers", "e-cheques", or "electronic payments". "EFT" is an umbrella term that captures a wide range of different transfer types and the networks that facilitate them. Here are a few of the most prominent EFT networks:

US networks

• Automated Clearing House (ACH): The ACH is a centralised US financial network for banks and credit unions to send and receive electronic payments and money transfers. It's used widely by businesses and individuals. In 2025, the ACH network processed 35.2 billion payments, a 4.9% increase over the previous year. If you've ever received a paycheque via direct deposit, that payment was sent using the ACH network.

• Wire transfers: Wire transfers are another common way to send funds electronically from US financial institutions. This network is called the Fedwire Funds Service, formerly known as the Federal Reserve Wire Network. Managed by the Federal Reserve, the Fedwire Funds Service is a real-time settlement system of central bank money used to electronically facilitate transactions between financial institutions. Businesses, customers, banks, and government agencies use this network to safely and quickly transfer funds. In May 2026 alone, the Fedwire Funds service originated over 18 million wire transfers.

• CHIPS: The Clearing House Interbank Payments System (CHIPS) is the clearing system that handles large bank transfers in the US. CHIPS is the largest private USD clearing system in the world – it settles US$2.2 trillion in domestic and international payments every business day. CHIPS and the Fedwire Funds Service together comprise the majority of US domestic transfers of funds and international transactions using US dollars.

International networks

While wire transfers can be used to send funds between the US and other countries, there are many other payment networks that operate in different regions of the world. These include:

• CHAPS: The Clearing House Automated Payment System (CHAPS) is used in the UK for processing same-day pound-sterling payments.

• Bacs: Bacs is a membership organisation made up of 16 top UK banks that facilitates transfers between those banks. In 2025, Bacs saw more than 5 million direct-debit payments and processed over £4 trillion in direct-credit payments.

• SEPA: The single euro payments area (SEPA) is an integrated payments system that allows bank account holders in the European Union (EU), the European Economic Area (EEA), and the UK to transfer funds between different banks in member countries.

• CIPS: In China, the Cross-Border Interbank Payment System (CIPS), which is backed by the People's Bank of China (PBOC), offers settlement and clearing services for international renminbi (RMB) transactions. Although CIPS currently relies on the SWIFT system, the development of CIPS is part of a broader effort from China to internationalise the use of RMB as a payment method.

Peer-to-peer payment networks

Peer-to-peer (P2P) payment networks, such as Venmo, Zelle, and Cash App, allow individuals to send funds without using financial institutions and the networks that facilitate those transfers. Instead, P2P payment networks let users select different payment methods (e.g., credit and debit cards, bank accounts, etc.) through which to send and receive funds, and then easily transfer those funds from the payment platform to their personal bank accounts.

Peer-to-peer payment networks are relatively new. Today, customers have many options for these types of transfers, and P2P payment networks are an easy way for customers to pay businesses, businesses to pay other businesses, and family and friends to exchange money.

ATM networks

Automated teller machines (ATMs) are a familiar sight to most customers. ATMs are electronic devices that allow customers to access their bank accounts to withdraw cash, make deposits, and initiate transfers. An ATM network, also known as an "interbank network", gives cardholders whose cards were issued by a financial institution that participates in that network the ability to conduct ATM transactions. ATM networks often give cardholders access to other services.

Major ATM networks that are widely recognised around the world today include Cirrus (owned by Mastercard), Plus (owned by Visa), Interac, and UnionPay.

How do the different payment networks work?

Most payment networks use the Internet to facilitate communication between member entities and the electronic movement of funds between accounts. Some payment networks that predate the Internet initially used other means; for example, wire transfers first conducted business via telegraph wires.

While there are some similarities, each payment network conducts business in a different way. Here’s a brief overview of how various types of payment networks tackle customer transactions.

ACH and wire transfers

ACH transfers and wire transfers both involve the transmission of funds through electronic networks. No cash, paper cheques, or physical credit or debit cards are used in these EFTs.

Historically, wire transfers were faster than ACH transfers. But today, that’s only true some of the time. Recent changes to the Automated Clearing House operating rules mean that most ACH transfers are now settled within one working day.

Although ACH transfers and wire transfers use different networks and have slightly different operating rules, the overall process is similar:

1. Originating bank initiates transfer: In ACH transfers, the Originating Depository Financial Institution (ODFI) is the bank where the request for funds transfer comes from. Because ACH transfers can be initiated from either end – the account where the funds are being deposited or the account from which the funds will be withdrawn – the ODFI can be either bank.

2. Receiving bank fields request: The Receiving Depository Financial Institution (RDFI) is the bank that receives the request for funds transfer. Like the ODFI, the term "RDFI" does not necessarily refer to the bank where funds will be deposited, but to the financial institution that does not initiate the funds transfer. It's possible for the RDFI to receive a request to send funds from one of their accounts to an account with the ODFI.

3. Available funds are confirmed: The ODFI and RDFI communicate to confirm that the requested funds are available.

4. Funds are settled: ACH and wire transactions are settled, meaning the funds are transferred to their final destination, on different timelines. Typically, wire transfers are settled in real time, and usually cost more because of this. ACH transfers work a little differently: outstanding transaction requests are held in a queue, and at certain intervals, all outstanding requests are settled at once. (This happens at 06:00, 12:00, 16:00, 17:30, and 22:00 Eastern Time.) This means ACH transfers can take longer than wire transfers, but they are usually less expensive.

Here's more detail about the standard transfer time and fees for ACH and wire transfers:

Credit card payments

In the US alone, 165 million credit card transactions were processed per day in 2025. There are four major credit card networks that operate in the US, and dozens of others that operate in different regions of the globe, but payments on these networks generally function in a similar way:

1. Customer initiates payment: The process begins when a cardholder submits their credit card to a business's point of sale (POS) terminal, card reader, or online checkout, initiating the transaction. The customer can enter their card number manually, swipe the card, insert the card's EMV chip, or tap the card to engage their card's contactless payment mechanism. If the customer is paying using a card stored in a digital wallet, they will also tap to pay, as they would with a card enabled with near-field technology (NFT).

2. Business's payment terminal connects with credit card network: If the card network is also the issuer, and if the card network did not issue the card.

3. Card network tells business if transaction is approved or denied.

Stripe supports all major global credit card networks, in addition to regional networks such as Cartes Bancaires in France and Interac in Canada.

For more detailed information about credit card payments, card networks, and how they work, read more information from Stripe about credit card networks and the card payment authorisation process.

ATMs

ATMs allow people to access cash from their bank accounts, deposit cheques and cash, and view their account balances without visiting a bank branch. Since the first ATM appeared at a London Barclays in 1967, ATMs have spread worldwide – there are now about 40 ATMs per 100,000 people globally (as of 2021) – and they are located in places well beyond bank branches, such as delis and nail salons.

ATM technology varies by age, but most machines share the same basic parts:

• Card reader
  
• Display
  
• Keypad
  
• Cash dispenser
  
• Printer
  

Using an ATM generally follows the same flow, though available options depend on the machine:

• Insert your card and enter your personal identification number (PIN).

• Choose a transaction: withdraw cash, deposit cash or cheques, check your balance, transfer funds, or pay a bill.

• For deposits: insert the cash or cheques, confirm the amount on screen, and (if requested) get a receipt.

• For withdrawals: pick the account, enter an amount, and the ATM dispenses cash if funds are available, plus a receipt on request.

Payment networks vs. payment gateways vs. payment processors

A payment network is the infrastructure that routes and settles transactions between banks and card issuers, while a payment gateway is the technology that securely captures and transmits payment data from the customer to the payment processor.

The payment processor, in turn, handles the technical transmission of that transaction data between the merchant's bank and the customer's bank – working within payment networks, but distinct from the networks themselves.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business – from scaling startups to global enterprises – accept payments online, in person and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods and Link, a wallet built by Stripe.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalise interactions, reward loyalty and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customisable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments or get started today.