VISA vs Mastercard [Benefits, Differences, Which One to Choose]

If you’re on the hunt for a new credit card, two obvious options come to mind: Visa and Mastercard. However, it’s important to know what distinguishes them from one another in order to choose the best one for you.

Here, we’ll go through all the Visa vs Mastercard pros and cons, and help you decide whether one is better than the other.

Visa vs Mastercard: Is There Really Any Difference Between Them?

First and foremost, Visa and Mastercard are the two largest payment processing networks in the world. It’s important to note that they are not banks but only network payment processors. Visa and Mastercard payment cards are distributed as a result of co-branding relationships.

Though they’re often called credit card networks, it’s more accurate to call them a “payment network”, as they support debit card transactions, too. Visa and Mastercard credit and debit cards are issued directly to customers by member banks and credit unions, as well as by co-brand credit card agreements with airlines, hotels, and national retailers.

In addition, Visa and Mastercard provide benefits that often depend on the card issuer. The main difference between Visa and Mastercard isn’t in the payment processing networks themselves, but rather comes from the member banks, credit unions, and other co-branding facilities that issue them to customers.

What is a Visa Card and How Does it Work?

Firstly, let’s look into the Visa card definition: A Visa card is a payment card that uses the Visa network and is branded by Visa. That said, let’s break down all the features in detail:

  • Visa core products: debit, credit, and prepaid cards

Visa products include debit, credit, and prepaid cards. Financial institutions issue Visa credit cards to creditworthy consumers. Check out all the types of credit cards you can get. Visa debit cards provide consumers with access to their banking accounts including checking and savings accounts, while prepaid cards have a set amount of money on them that serves as a credit cap.

  • Cards on three levels: Traditional, Signature, and Infinite

There are many different Visa cards, the most popular of them being Traditional, Signature, and Infinite Visa cards. Traditional Visa cards provide basic services and give cardholders fewer benefits. Signature Visa cards offer more rewards and benefits, whereas Infinite Visa cards reward the most creditworthy cardholders with premium services and benefits.

  • Business tools such as Visa payments, commercial solutions, Visa Direct, Visa security, etc.

Visa offers different business tools in order to reach more potential clients. For e.g. Visa Direct is a payment solution that allows companies to send money to billions of endpoints around the world using card and account rails.

  • Reportable business segments that offer service, data processing, and international transactions.

Visa’s business segments include service, data processing, and international transactions which make up 95% of the company’s revenue. The company’s data processing operations generate the largest portion of revenue.

  • Fees

Visa’s fees vary in rate and can be:

  • Service fees charged to the card issuer by the transaction volume (in average from 1.29% + $0.05 to 2.54% + $0.10)
  • Data processing fees charged to the card issuer per transaction which in turn charges the merchant to cover them. These are small, fixed fees.

What is a Mastercard and How Does it Work?

So, the Mastercard definition is: Mastercard is a financial services business that primarily generates revenue from gross dollar volume (GDV) fees. With that out of the way, let’s break down all the Mastercard card features in detail:

  • Mastercard core products: debit, credit, and prepaid cards

Mastercard facilitates payment transactions using their patented global payments network, which includes the Mastercard account holder and a merchant, as well as the financial institutions. There are three Mastercard types: credit, debit, and prepaid cards.

  • Cards on three levels: Standard, World, and World Elite

Mastercard offers three levels of credit cards: Standard, World, and World Elite. Your tier is determined by the card you have and other variables such as your credit history and relationship with your card issuer. Higher tiers usually come with higher fees.

  • Business tools for small and medium businesses, large enterprises, banks and credit unions, public sector

Mastercard offers specific business tools to support small and medium businesses, as well as to provide services to enterprises.

  • Reportable business segments and payment solutions that offer service and data processing

Mastercard’s real-time, comprehensive, and anonymous transaction data is the world’s best. Mastercard offers service and data processing as part of their Payment Solutions.

  • Fees:

Mastercard’s fees vary in rates and are as follows:

  • Service fees that are negotiated and calculated as a percentage of the global dollar volume (which is a key difference between Visa and Mastercard)
  • Data processing fees, called switching fees, which are small, fixed fees per transaction charged to the issuer

What Benefits Do Visa and Mastercard Offer?

To understand the difference between Visa vs Mastercard we need to go over all standard and specific benefits. Although both cards cover similar territories and have similar offers, some smaller aspects could prove beneficial for your needs.

  • Standard Benefits

Visa and Mastercard offer a lot of similar benefits, which cover basic cardholder necessities. Here are some of the most important features you benefit from when getting a Visa or a Mastercard:

  • Both are Accepted Almost Everywhere

Both Visa and Mastercard are accepted by roughly 33 million merchants, making it impossible to find a business where they wouldn’t be accepted.

  • Ensure Merchants Follow the “Honor All Cards Rule”

The “honor all cards rule” ensures that both debit and credit cards are accepted by merchants.

  • Protect Your Card Against Unauthorized Charges

Both Visa and Mastercard offer Zero Liability policies, where they promise that fraudulent transactions made through your account or with your account details will not be kept against you.

  • Offer Auto Rental Collision Damage Waiver

Both Visa and Mastercard offer Auto Rental Collision Damage waivers providing insurance protection for car rentals made with your card. However, the amount of coverage varies by card network, issuer, and form. For example, Visa’s loss-of-use coverage has no limit, while Mastercard’s is capped at $500.

  • Extended Warranties

Both Visa and Mastercard offer extended warranties. For a lifetime of 24 months, the Mastercard program doubles the original warranty on qualifying products, which only applies if the initial warranty is less than 24 months. As for holders of Visa payment cards, Visa’s Extended Warranty Protection will double the duration of your eligible US manufacturer’s warranty by up to one year, for qualifying warranties of three years or less.

  • Offer Secured Cards

Both Visa and Mastercard offer secured cards which are credit cards that offer you an opportunity to build or rebuild your credit with responsible use. You also need to make a refundable security deposit for a secured credit card as collateral for the account. No interest is applied to the security deposit. Check out our Capital One Secured Mastercard review to see all the benefits of getting a secured card.

  • Specific Benefits

Although Visa and Mastercard have a lot of similarities, they differ when it comes to specific benefits related to promotional offers, discounts, and travel perks. Here are some of the best benefits you can get from each network payment processor, more specifically the World Mastercard vs Visa Signature perks and benefits:

  • Mastercard World and World Elite cards include discounts and promotional offers with ride-sharing, food delivery, and online shopping services. For example, the World Elite Mastercard gets you 5% back on every HelloFresh order for use on future purchases, or a free ShopRunner membership.
  • Visa gives discounts, free nights, complimentary meals at hotels, discounts for online shopping, and travel perks. These Visa card benefits include up to 10% cashback on accommodation bookings with Visa on Booking.com and discounts at some of your favorite retail stores.

What Is the Role of the Card Issuer?

In the use of your credit card, both networks and issuers play important but distinct roles. Card networks and issuers collaborate to manage transfers from one bank to another, as well as to make it easier for you to use your card in different locations. The card issuer’s roles are:

  • To issue the appropriate card (debit, credit, or prepaid) on the selected level
  • To set the terms of use for the cards (interest rates and other fees)
  • To determine the benefits associated with the card (bonus points, rewards, and discounts)
  • The issuer is not obligated to inform the client about the Visa or Mastercard benefits and offers

To illustrate that the card issuer and the network payment processor are not one and the same, let’s take a look at one of the Visa payment cards. For example, you are using the US Bank Cash+™ Visa Signature® Card at Zara. When you go to pay with your card, you swipe, insert, or tap your card at checkout. The merchant (in this case Zara) sends the transaction to Visa. Then, Visa sends the transaction to the US Bank where it is reviewed and approved or denied. This decision is sent back to Visa, which is then sent to Zara and you will see that your transaction has either been approved or denied. All of this happens in seconds, without you even knowing.

Eligibility

When it comes to Visa vs Mastercard acceptance, all credit card applications function based on three criteria: age requirements, income requirements, and credit score.

  • The network payment providers do not set age requirements which means that even a person under 18 can have a Visa or Mastercard. However, to apply for a credit card, you must meet the bank’s age requirements. Anyone under the age of 18 cannot apply for a credit card.
  • To obtain a credit card, you must have a steady source of income. The income requirements vary depending on the card’s features and specifications. You can get a credit card if you have a fixed deposit and meet the bank’s minimum income requirements.
  • Banks use your credit score to determine the likelihood that you will not repay your credit card debt. Your credit score indicates how risky you are and how likely you are to be eligible for a credit card. Check out our Indigo Platinum Mastercard review if you’re struggling with your credit score and are in need of a credit card.

However, to be eligible for a debit card, you must meet no specific requirements. Debit cards, unlike credit cards, do not require a credit score. Different types of debit cards are available from different banks; there are categories such as platinum, gold, silver, and so on. Perhaps think about what is better for your needs, and read more on debit card vs credit card advantages and disadvantages.

Pros and Cons of Visa and Mastercard

We can note that Visa processed 185.5 billion purchase transactions, while Mastercard processed 108.4 billion transactions in 2019. In terms of Visa vs Mastercard market share, Visa held the largest credit card market share with 41.93% while Mastercard had 27.54%. However, the reality of the situation is that Visa and Mastercard both offer very similar features. They all share the same amount of tiers, and each tier offers specific perks and advantages that differ slightly.

Visa credit cards are divided into three categories: regular (classic, gold, and platinum), Signature, and Infinite. The basic tier includes security, concierge, and ATM access, among other things. However, the perks differentiate. While the Visa Traditional credit card provides no benefits, the Signature and Infinite cards provide benefits such as lost luggage and trip delay reimbursements, purchase protection, etc.

Standard, World, and World Elite are the three levels offered by Mastercard. Mastercard’s standard tier is similar to Visa’s, with security, concierge, and ATM access as standard features. However, there are Mastercard advantages from the upper tiers: better VIP benefits than Visa’s premium options.

Can You Choose Between Visa and Mastercard? 

When applying for a credit card, it is possible to choose between a Visa and a Mastercard credit card. Visa and Mastercard offer a variety of different credit cards which include different perks. Begin by considering how you plan to use the credit card. Regardless of how you use your card, the most important consideration is whether you can pay off your balance each month or spread your payments out over time.

When you’re given information about a credit card, a review box with regular key details about the card, the interest-free duration, interest rate, and other charges should all be included. This allows you to quickly compare various cards and make the best decision for your financial situation.

Conclusion

The bottom line is that neither of the networks is superior to the other. Both have a wide range of international recognition and many of the same benefits. You won’t see much of a difference if you use a specific credit card or debit card on a regular basis, but the key difference lies in the card issuer i.e. the banks, credit unions, and other co-branding partnerships. They offer special perks and advantages that might slightly differ from one another depending on what you’re looking for.

Visa vs Mastercard Key Differences

Feature Visa Mastercard
Core products Credit, Debit, and Prepaid cards Credit, Debit, and Prepaid cards
Card levels Traditional, Signature, Infinite Base, World, and World Elite
Service fee Service fees are charged to the issuer and are based on card volume Service fees are negotiated and calculated as a percentage of global dollar volume
Data processing fee Average of 1.43% – 2.4% Average of 1.55% – 2.6%
Specific benefits Discounts, free nights, complimentary meals at hotels, discounts for online shopping, and travel perks Mastercard World and World Elite cards include discounts and promotional offers with ride-sharing, food delivery, and online shopping services
Best for Racking up travel rewards on domestic purchases Offering lower currency conversion rates, which may be important if you travel or make international purchases frequently

FAQ

Is every Visa card a credit card?

The company issues credit cards, as well as debit and prepaid cards at different levels. Visa credit cards are issued to creditworthy consumers. Visa debit cards provide consumers access to their banking accounts including checking and savings accounts, while prepaid cards have a set amount of money loaded on them that serves as a credit limit.

How does Mastercard make money?

Mastercard makes money by charging financial institutions a fee based on the gross dollar amount of operation when they issue Mastercard-branded payment items. The charges incurred by consumers are not charged directly to Mastercard; rather, they are paid to the issuing financial institution.

Is Mastercard a good choice?

The main debate between Visa vs Mastercard is which one is better. Although Visa has a bigger customer base worldwide, Mastercard offers very similar perks with some slightly different advantages. Mastercard is ideal for first-time credit users because you can apply for a credit limit raise every six months.

ABOUT AUTHOR

I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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