If you are looking for a new credit card for your wallet, you probably have wondered at least once about the VISA vs. MasterCard debate. Does one come with a better set of benefits and privileges than the other?
Both cards are accepted globally and offer very similar capabilities. As a result, many commentators joke that the only real difference between the two is the logo. So, how do vendors know which card offers the best features for their needs? Well, let us dive right in.
Before we get started, though, there is something to note. It is the card issuers, not the card companies themselves, that should be the focus of your attention.
Overview of Visa
Visa is the second-largest credit card network globally and commands 50% of total card payments, behind only China’s UnionPay which surpassed it in 2015. There are currently 3.9 billion Visa-branded cards currently in circulation worldwide, which are issued by nearly 15,000 financial institutions.
Originally founded by Bank of America in 1958, the program was expanded by licensing this payment technology to other financial institutions, eventually breaking off and becoming the independent financial services corporation we know today. In addition to prepaid, debit, and credit cards, Visa also offers a full suite of financial services. These include ATMs, retail partnerships, theft protection, business analytics, and more.
In 2020, Visa generated $21.8 billion in net revenue with a payments volume of $8.8 trillion. Visa’s core products include credit, debit, and prepaid cards as well as business solutions and global ATM services. The company’s reportable business segments include the following:
- Service ($9.8 billion in 2020)
- Data Processing ($11.0 billion in 2020)
- International Transactions ($6.3 billion in 2020)
- Other ($1.4 billion in 2020)
Like Mastercard, Visa earns revenue by charging the card issuer a fee in order to process transactions using its branded cards, which are usually passed to the merchants accepting Visa payments.
Overview of Mastercard
Mastercard was created by a consortium of banks in 1966 in an effort to compete more effectively with Visa, which at the time had a virtual monopoly on payment processing. Until its initial public offering (IPO) in 2006, Mastercard was under the cooperative ownership of over 25,000 financial institutions, which also issued its cards to consumers.
Now a global payment technology platform, Mastercard brands prepaid, debit, and credit cards in addition to offering a range of business and finance services globally. At the end of December 2020, Mastercard’s total U.S. credit purchase volume was $837 billion, with total net revenue of $15.3 billion.
Because Mastercard is not in charge of issuing its cards, it doesn’t make money via cardholder activity. Instead, it earns revenue from charging banks a fee to issue cards and process payments, which is also known as an interchange fee or ‘swipe’ fee. Mastercard also takes a fee during different steps of the payment process, such as when the issuer authorizes a transaction or when funds settle in an account.
Visa vs. Mastercard: Similarities
The Visa and Mastercard symbols are ubiquitous at checkouts across the world. So, what do these two major payment processing networks have in common?
Neither card network sets the terms and conditions of use
Unlike American Express, neither Visa nor Mastercard are in charge of issuing or distributing their own debit and credit cards. Instead, both companies license card issuing rights and provide the technology for banks to process credit card payments made between customers and merchants.
This means that the management of Mastercard and Visa cards is the responsibility of financial institutions, such as banks or credit unions. They act as debit and credit card issuers and are responsible for determining transaction fees and what rewards programs cardholders are eligible for.
Therefore, a Visa credit card issued by Bank of America may have quite different interest rates or payment terms than a Visa card offered by Chase. An Amex card, by comparison, is issued directly by American Express, which also decides annual fees and internet rates.
Near universal acceptance worldwide
Both Visa and Mastercard credit cards are accepted almost anywhere, as the world’s most extensive global card networks. If a store or online merchant shows the Visa or Mastercard symbols are their checkout, they must accept all cards that belong to the Visa or Mastercard network, no matter who the issuing bank is and what country the card originates from.
This makes both card brands very reliable options when traveling abroad, compared with more domestic payment networks such as Discover and Capital One.
Fees & reward tiers
As previously stated, the banks that issue cards under the Visa and Mastercard brands are responsible for deciding what fee structures and benefits they want to offer. However, most card offers fall into one of four categories:
- Premium credit cards: Premium cards boast the highest credit limits and annual fees. They also come with some of the best perks, such as concierge services, extended warranties, or rental cars, just to name a few.
- Low-fee credit cards: These cards come with fewer perks. However, they typically offer the lowest fees and interest rates, as well as greater flexibility in the form of balance transfers and adjustable repayment conditions.
- Frequent flyer credit cards: Travel-based cards allow cardholders to earn points that they can redeem on flights or travel rewards, usually with an airline that the bank partners with. Frequent flyer cards also offer associated benefits, such as travel insurance, lost luggage reimbursement, or emergency assistance.
- Rewards credit cards: This is the best option for consumers who want to earn cashback or loyalty points on their everyday spending, such as groceries or utility bills.
Mastercard offers four different card tiers with escalating benefits: Standard & Gold Mastercard, Titanium & Platinum Mastercard, Mastercard World, and World Elite Mastercard. Visa, meanwhile, offers three: Visa Traditional, Visa Signature, and Visa Infinite.
The specifics of these cards will vary depending on the bank that’s responsible for issuing them but generally include very similar benefits.
Security features
Visa and Mastercard both offer a range of security benefits. This is thanks to federal regulations and growing competition within the marketplace, which has helped make these features standard. They include:
- Purchase protection. If your card details are involved in an unauthorized or fraudulent purchase, both Visa and Mastercard will cover the most of issuing chargebacks once they are reported to the issuing bank. Mastercard offers purchase protection for all of its cards, but the most generous policy is reserved for the World and World Elite Mastercard options. Visa also offers additional options in the form of trip cancellation or interruption.
- Cell phone protection. Cell phone insurance to protect customers in the case of breakage or theft is a common offering by credit companies, including Citi and Chase in addition to Visa and Mastercard. World Mastercard offers cardholders $1,000 in annual coverage, while Visa Signature members get cell phone protection for one calendar month each time they pay their wireless bill using their Visa card.
- Return protection. This kicks in when a cardholder is unable to return a purchase made with their branded card. Mastercard offers a satisfaction guarantee policy, which offers refunds up to $250, so long as a request is lodged. within 60 days of the purchase taking place. Visa Infinite and Signature offer return protection for purchases made within 90 days, up to a value of $300 and $250 respectively.
Digital Payment Options
With the invention of mobile and contactless payment, both Visa and Mastercard have expanded their payment offerings beyond card transactions to adapt to changing consumer habits. Mastercard offers Tap & Go Payments, a parallel to Visa’s Contactless Indicator cards.
Both card companies have also expanded their digital offerings across Apple Pay, Google Pay, and Samsung Pay mobile wallet features.
Visa vs. Mastercard: Difference
As shown above, Mastercard and Visa have extremely similar offerings, as they are both payment processors and offer licensed card benefits. However, there are areas where the card companies differ:
They operate on different payment networks
The biggest (and most obvious) difference between Visa and Mastercard is that they operate on totally separate payment networks.
While a bank might issue both Visa and Mastercard branded cards, they are processed using different systems. This means that a cardholder cannot use a Mastercard at a merchant that only offers Visa and vice versa. Over the years, this has led to both card companies pursuing exclusive partnerships with retailers in an effort to gain market share.
They have different fee structures
Although both Visa and Mastercard earn the majority of their revenue through payment processing fees, how they go about doing this is slightly different. Mastercard charges issuing banks connectivity fees to use the Mastercard network itself during different stages of the payment processing workflow, while Visa charges data processing fees to the card issuer on a per-transaction basis.
Since financial institutions usually charge an annual fee to cardholders, their experience is very similar.
Rewards and benefits
Although the overarching structure of its card tiers is the same, Visa offers slightly more benefits for its lower-level credit cards than Mastercard does, which reserves the best perks for its premium cards. This being said, most of the standard features, such as price protection and warranty protection, are fairly comparable between card companies.
VISA Card Benefits
VISA credit cards come in three tiers: standard (which includes classic, gold, and platinum), Signature, and Infinite. The standard tier comes with a set of basic features like security, concierge, and ATM access. All three cards offer similar protection such as a zero liability policy, roadside dispatch, and auto rental collision damage waiver.
The higher tiers offer an even wider variety of travel-related protections.
The key difference between the cards becomes more apparent when it comes to their benefits and perks. While the Visa Traditional credit card does not offer any benefits, VISA Signature and Infinite cards provide lost luggage and trip delay reimbursements, airport lounge access, purchase security, and many more benefits.
The offers and perks offered by the three cards mainly vary by the amount of car rental and hotel discounts offered and the number of companies you can choose from. The benefits and perks offered by the VISA Infinite card exceed the highest level usually offered. It provides VIP services and perks in addition to the usual discounts on travel and rentals.
VISA Infinite cards are clearly designed for high-spenders who both care about and can afford luxuries. You can read more about Signature and Infinite on VISA’s website.
VISA Card Offers and Perks
- Car rental discounts
- Bus tour discounts
- Cruise discounts
- Helicopter and seaplane tour discounts
- Hotel and resort discounts
MasterCard Benefits
MasterCard also offers 3 tiers: Standard, World, and World Elite. MasterCard’s standard tier is similar to VISA’s with basic features like security, concierge, and ATM access. However, MasterCard definitely offers better VIP perks for its upper tiers than VISA’s premium options.
For instance, MasterCard World and World Elite’s perks provide SPG Gold access, which includes more and higher-quality hotels than VISA’s Hilton program. MasterCard World and World Elite also give you a wallet protection benefit of up to $100 if you ever lose your wallet. It also provides online purchase insurance of up to $200 if your online purchase gets lost or damaged.
Not only that, MasterCard World Elite also comes with free lounge access at over 600 airports around the world. It also provides discounts on luxurious services like private jets.
A concept called Priceless Cities is a part of MasterCard’s benefits. It is a program for Mastercard cardholders that provides access to incredible experiences in cities around the world. Categories include travel, culinary, arts, and culture, sports, shopping, and entertainment. Tickets can be purchased online and offer either discounted pricing or unique access for Mastercard customers.
MasterCard Priceless Cities Categories
- Travel
- Culinary
- Arts & Culture
- Sports
- Shopping
- Entertainment
Visa vs. MasterCard Conclusion: Which should you get?
Now we come to the final verdict: Which card offers the best credit card options for your needs? Visa or MasterCard?
Well, as we have explained, there are some significant similarities between Visa and Mastercard as payment networks. Both companies offer a range of prepaid, credit, and debit card options that are accepted globally. They also boast a decent range of security features.
The key factors that will determine your choice of credit card – fees, interest rates, rewards, perks – actually have nothing to do with the credit card companies, but the issuing bank. This is why it pays to shop around between different financial institutions to see who can offer you the very best terms.
You also really need to consider each card individually before applying. For example, banks often provide benefits like annual fee waivers, cashback promotions and sign-up bonuses, cash rebates, air miles, and even travel insurance.
For most people, it doesn’t really matter whether they get a VISA or a MasterCard. Both are equally secure and offer similar benefits. While VISA has a slightly higher market share and a greater amount of transactions worldwide, both VISA and MasterCard are equally well-accepted by merchants. Although MasterCard’s upper tiers provide a better set of benefits, there are a lot more perks offered by the issuing banks themselves.
At the end of the day, any real choice between the two networks should always come down to how the actual terms, benefits, and fees of a card fit with your budget.
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