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The Difference Between Visa and MasterCard

Posted By Miranda Marquit On 05/01/2012 @ 12:10 pm In Credit | 14 Comments

When 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 [3] 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 [4], 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 [5])


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[3] which credit cards are the best: http://www.bargaineering.com/articles/cash-credit-cards-april-2012.html

[4] reviewing balance transfer offers: http://www.bargaineering.com/articles/list-of-cards-with-0-balance-transfer-offers-for-12-months.html

[5] roujo: http://www.flickr.com/photos/tekmagika/498149807/

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