Interbank Network for Electronic Transfer (INET)

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Interbank Network for Electronic Transfer (INET)

What INET was

Interbank Network for Electronic Transfer (INET) was MasterCard’s system for moving funds between financial institutions. It handled settlement and the transfer of money for transactions on MasterCard-branded cards. INET worked alongside MasterCard’s Interbank National Authorization System (INAS), which handled electronic authorization of card transactions. The two systems were later merged into a single global network called Banknet.

How INAS, INET, and Banknet relate

  • INAS: Provided electronic authorizations, replacing earlier phone-based authorization methods.
  • INET: Managed electronic settlement and fund transfers, replacing paper-based interbank settlements.
  • Banknet: The unified global telecommunications network that combined INAS and INET, linking issuers, acquirers, and data centers worldwide to handle authorizations, routing, settlement, transaction research, and chargebacks.

Banknet overview and capabilities

  • Launched in its consolidated form in the late 1990s and operating globally since 1997.
  • Processes millions of secure transactions per hour via a distributed network of data centers.
  • Reduced typical transaction processing times from roughly 650 milliseconds (pre-Banknet) to about 210 milliseconds.
  • Uses a peer-to-peer routing architecture that distributes traffic across many endpoints, improving redundancy and limiting the impact of a single data-center failure.
  • Implements bandwidth and demand controls to manage capacity during peak periods (e.g., holidays); MasterCard partners with telecommunications providers such as AT&T for these capabilities.
  • Provides transaction research services to expedite chargeback investigations, enabling rapid resolution in many cases.
  • Maintains one of the largest payment data warehouses, available to issuers and analysts for payment and retail transaction research.

Chargebacks — quick definition

A chargeback is a consumer refund initiated when a cardholder disputes a transaction (for reasons like fraud, non‑delivery, or defective goods). Resolving chargebacks involves the cardholder, merchant, card issuer, network, processor, and payment gateway.

MasterCard vs. Visa: network architecture differences

  • MasterCard (Banknet): Uses a peer-to-peer, distributed model with many interconnected data centers. This architecture promotes redundancy and limits the scope of outages.
  • Visa: Operates a more centralized, “star” network that routes many endpoints through a smaller set of major data centers. A failure at a central node can affect a larger share of transactions.
  • Market context: As of early 2024 there were roughly 279 million MasterCard credit cards in the U.S. and 1.54 billion worldwide. Visa has historically held a larger share of cards in circulation.

Other context and facts

  • MasterCard history: Began in 1966 as the Interbank Card Association (Master Charge); the brand name MasterCard was adopted in 1979.
  • Consumer payment trends: Cash usage has declined — about 18% of consumer payments were made with cash in 2022 (down from 20% in 2020).

Bottom line

INET was MasterCard’s fund-settlement network that worked with INAS for authorizations. Both were merged into Banknet, which now handles authorization, routing, settlement, transaction research, and chargebacks on a global, distributed network designed for speed, redundancy, and scalability.

Sources

Statista; Forbes; Time; Federal Reserve Bank of San Francisco.