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The Difference Between Visa and MasterCard

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Visa and MasterCardWhen we think of credit cards, often we think of the logos that accompany the most commonly used credit cards: Visa and MasterCard. These two companies are often said in the same sentence, and many people think that they are essentially the same company.

However, this isn’t the case. Visa and MasterCard are two distinct companies, even though they are in the same business, and do a lot of the same things. Understanding this can help you make a more informed decision when trying to figure out which credit cards are the best for your situation.

The Similarities: What are Visa and MasterCard?

The first thing you need to understand is that Visa and MasterCard are both payment processors. They run payment networks that facilitate credit card transactions. When you make a purchase with your Visa or MasterCard, these payment processors connect the terminal (whether it’s online or offline) with your bank. You can only use a Visa or MasterCard with a business that uses the payment network.

Visa and MasterCard make their money from processing transactions. They receive money each time you swipe your card, and may also receive other fees from merchants that use their payment processing networks to accept credit cards. Visa and MasterCard do not, however, actually issue credit cards. Banks that are approved by the payment networks issue the credit cards.

Other well-known payment networks include Discover and American Express, but Visa and MasterCard are the most widely accepted payment networks, all over the world.

What’s Different Between Visa and MasterCard?

First of all, Visa has an edge when it comes to how many merchants accept cards branded with its logo. While MasterCard is very popular, Visa is accepted even more widely. Someone traveling to other countries might find that Visa is more convenient.

Other than that, it is mostly a matter of what perks are provided by the payment processors. MasterCard and Visa add fraud protection, purchase protection, extended warranties, and different types of insurance (such as travel insurance and rental car insurance). In many cases, these services are almost identical between MasterCard and Visa. However, Visa offers “Loss of Use” coverage on car rental insurance that is superior to what MasterCard provides. On top of that, you have a better chance of getting “return protection” when you want to obtain a refund for purchases you have made using your credit card with Visa.

For the most part, though, Visa and MasterCard are very similar. If there are some specific extras that you like when it comes to your credit cards, Visa might have the edge, providing you with just a little more. And, of course, Visa is more widely accepted. When you are offered a choice between a Visa and a MasterCard from a bank, understanding this small difference can help you make a decision that works better for you.

On the other hand, in many cases, what the bank offers (in terms of rewards programs and cash back) might mean more than whether the card is a Visa or a MasterCard. For example, when reviewing balance transfer offers, you should be worrying about the promotional rate, period, and any fees – not the logo. Consider your options, and what is likely to benefit you the most.

(Photo: roujo)

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14 Responses to “The Difference Between Visa and MasterCard”

  1. Wilma says:

    Visa is trading @ $123.23 and Mastercard is trading @ $454.44 as of 4 pm this afternoon. So I’m wondering why such a huge difference in cost per share. Just an interesting thought. I always went with Visa because the deals were better and it was excepted more places.

  2. Carol C. says:

    In reponse to Wilma’s question about Visa’s and Mastercard’s trading price:

    The stock price of a company’s shares doesn’t really matter. It is the market capitalization value that tells you what the total company is really worth today.

    Today, Visa’s market value is $100.1 billion, whereas MasterCard is only worth $57.7 billion. Investors clearly think that Visa is worth almost twice as much as MasterCard.

    The fact that Visa’s shares trade at $123 and MasterCard at $455, only tells you that MasterCard must have a lot more shares outstanding than Visa–that’s all.

    Hope that helps.

    -Carol C.

  3. Shirley says:

    My goodness, this post was so timely that I wonder if someone is looking in my window! ;-) Just yesterday I was told that a store didn’t accept Mastercard, but did accept Visa and Discover. That was a surprise since I had thought that Mastercard and Visa were nearly synonymous. Thanks, now I see the differences.

  4. Amy says:

    Sam’s Club accepts MasterCard but not Visa in its stores. Not sure why.

  5. Stephen - NYC says:

    I’ve only been reading it for a couple of days now, but check out “Priceless” by Lloyd Constantine to read about the anti-trust case against Visa & Mastercard. It’s not so much about us as consumers but more about what Visa & Mastercard did to the merchants.

  6. ChimChim says:

    Amex – #1 Card for US – there is NO substitute!

    Chase Sapphire Preferred – #1 Global Card with NO foreign transaction fees. Living in Switzerland now and traveling throughout Europe and never pay foreign fees (typically 2.75-3%). Also, when you call Customer Service, a person answers!

    Best

  7. DachsieLady says:

    I still say it would be best if we each could be independent of major credit cards. The entire banking system of the USA and the world is going into meltdown right now and the stories of their fraud are mounting fast.

    We the people are being forced into not using cash. That is a bad thing. I believe in reality MasterCard and Visa and ALL the major credit cards are part of ONE big fraudulent banking system.

    I know Jim Wang does not like this take on things and wants everyone to think about their credit card choices that meet their individual needs ONLY WITHIN the current, politically correct, crumbling banking system, money system and financial economic system. I do not think that narrow take on things presents people with the real choices in the face of reality that is best for them.

    • Matt says:

      With cashback/rewards credit cards save you money, and credit cards have forced merchants to raise prices so you might as well take advantage of the rewards that you pay for when buying in cash.

      • Ron says:

        I use the reward cards to get money back, but in the end, are you really “saving” money? Or are you paying higher prices so that the merchants get back the fees they are paying? Never think that businesses are going to eat extra expense, if they pay a higher minimum wage, the higher paid consumers ultimately pay higher prices as well as the higher paid minimum wage earner. Thought about this way, is the minimum wage earner better off? Or do the higher prices now bring the higher paid consumers down? Same goes for taxes, we all want to see the richer business owners taxed more. In the end it will be passed to the consumer so therefore you pay more so the owner can pay more tax….

        • Wilma says:

          I personally would rather have a really low interest rate than rewards. As the old saying goes…nothing is free…..(=

          • Matt says:

            Do you carry a balance on your cards? Because if you don’t rewards is all that matters, I would take 50% APR for great cash back any day.

  8. Sebastian Bermudes says:

    Just two different brands. You can get similar terms with either card. It’s the banks that set the terms, APR, limits, rewards, etc. At some banks you can get the exact same terms with a Visa or a MasterCard.


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