Three-party model
A card network in which one company is issuer, acquirer and network at once, leaving cardholder, merchant and network as the only parties.
Diners Club, launched in 1950, and American Express, which followed in 1958, built their cards this way. The company issued the card, signed up the restaurant, received the transaction and sent the bill. It is also called closed loop: the money never leaves the company's own books. The upside is total control over data and pricing, and Amex spent decades charging merchants noticeably more on the grounds that its customers spent more.
The downside is that every merchant has to be signed one at a time, while Visa and Mastercard let thousands of banks do the legwork. The line has blurred since. After US courts confirmed in 2004 that Visa and Mastercard could not bar member banks from issuing rival cards, both Amex and Discover began licensing cards through banks, and in many countries acquiring is handled by local partners.