Table of Contents
- What Was Interbank Network for Electronic Transfer (INET)?
- Key Takeaways
- Understanding Interbank Network for Electronic Transfer (INET)
- Fast Fact on Processing Times
- Banknet’s Architecture and Features
- Important Note on Banknet’s Scale
- MasterCard vs. Visa
- What Is a Chargeback?
- How Long Has MasterCard Been Available?
- How Often Do People Use Credit Cards?
- The Bottom Line
What Was Interbank Network for Electronic Transfer (INET)?
Let me explain what the Interbank Network for Electronic Transfer, or INET, actually was. It processed credit and debit card transactions between financial institutions, handling the transfer of funds specifically for cards with the MasterCard logo. This was all before Banknet came into the picture.
Key Takeaways
You should know that INET managed MasterCard’s debit and credit card transactions directly. It worked in tandem with MasterCard’s Interbank National Authorization System, or INAS, which dealt with card authorizations. Eventually, these two systems merged into Banknet, creating a single entity that connects all MasterCard data processing centers and member institutions into one unified financial network.
Understanding Interbank Network for Electronic Transfer (INET)
INET focused on the transfer of funds, while INAS handled the authorizations for those cards. INAS marked the beginning of MasterCard’s global telecommunications network, shifting from old phone-based authorizations to electronic ones. Later, INET stepped in to provide electronic settlement services, replacing the outdated practice of banks exchanging physical paperwork.
Over time, INET and INAS combined into Banknet, a global network that links all MasterCard issuers, acquirers, and data processing centers into a single financial system. Banknet has been facilitating payments worldwide since 1997, capable of handling millions of secure transactions per hour through its network of over a thousand data centers around the globe.
Fast Fact on Processing Times
Here's a quick fact: Before Banknet, a MasterCard payment took about 650 milliseconds to process, but Banknet reduced that to just 210 milliseconds.
Banknet’s Architecture and Features
Banknet uses a peer-to-peer protocol to route transactions to various endpoints. Its data centers come with redundancy technology that automatically activates backups during shutdowns. This setup allows Banknet to regulate bandwidth and manage demand, which is essential during high-traffic periods like holiday shopping. It primarily partners with AT&T Inc. for this and other technologies.
Additionally, Banknet offers a transaction research service for chargeback requests, enabling cardholders to receive approvals in just a few hours.
Important Note on Banknet’s Scale
The Banknet hub and data warehouse ranks among the largest in the world, available for issuers and analysts to research payments and retail transactions.
MasterCard vs. Visa
MasterCard Inc. operates one of the largest credit and debit card networks. As of the first quarter of 2024, there were 279 million MasterCard credit cards in the U.S. and 1.54 billion worldwide, based on Statista data.
MasterCard’s Banknet gives it a significant edge over rival Visa. While Visa uses a centralized, star-based system connecting endpoints to a few main data centers, Banknet’s peer-to-peer approach means many alternatives are available if one data center fails. This reduces the impact of malfunctions compared to Visa, where a single failure could affect a larger portion of transactions. Still, MasterCard trails Visa in global dominance; Forbes noted in March 2024 that Visa accounted for 53.8% of credit cards in circulation.
What Is a Chargeback?
A credit card chargeback is essentially a refund to the consumer. If a charge stems from fraud, or if an online order arrives defective or not at all, the bank or lender reimburses the purchase. Resolving this involves the consumer, merchant, credit card company, network, processor, and payment gateway all working together.
How Long Has MasterCard Been Available?
MasterCard originated in 1966 when several credit card companies formed the Interbank Card Association, leading to the Master Charge card. It rebranded to MasterCard in 1979.
How Often Do People Use Credit Cards?
According to the Federal Reserve Bank of San Francisco in 2023, only 18% of consumer payments were made with cash in 2022, down from 20% in 2020.
The Bottom Line
The Interbank National Authorization System kicked off MasterCard’s global network but only managed authorizations. INET took care of the actual money transfers in transactions. Combining them into Banknet streamlined everything for handling all transaction aspects. As a MasterCard user, you interact with elements of INET, INAS, and Banknet daily without even noticing.
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