Why mastercard vs. visa

Visa and Mastercard present distinct offerings, as neither company is involved with extending credit or issuing cards. This means that all Visa and Mastercard payment cards are issued through some type of co-branded relationship. Many people have a number of them, seeking to take advantage of all the rewards, cash back opportunities, and promotional benefits that issuers offer. Consumers are easily familiar with debit cards, which, along with credit cards and other forms of non-cash payments, accounted for around Visa and Mastercard are the only network payment processors involved in all three areas of the payments market.

Working exclusively as network processors, these two companies have a unique edge, but they operate differently. Visa and Mastercard are both publicly traded. As neither company extends credit or issues cards through a banking division, both have a broad portfolio of co-branded offerings.

The business models of both companies are very similar. Visa and Mastercard do not issue cards directly to the public but rather through partner member financial institutions such as banks and credit unions. The member financial institution then issues cards for individuals and businesses, either directly or in partnership with airline, hotel, or retail brands. Retailers usually work with a third-party financial institution.

For credit cards, the issuing bank is responsible for underwriting , interest rate structuring, and the full development of rewards programs. Card issuers can also offer other perks, such as identity theft and fraud protection, car rental insurance, and business purchase discounts. While differences in interest rates, credit limits, rewards programs, and perks are controlled by the issuing financial institution, Visa and Mastercard compete for the co-branded relationship and take part in the drafting of card terms.

Overall, the card payment industry is complex, involving merchants, merchant acquiring banks , issuer banking, network processing, and cardholders. Network processors, and specifically Mastercard and Visa, have the freedom to structure their fees any way that they like. This structuring and reporting is one of the biggest differences between the two largest network processors. Both Visa and Mastercard earn the majority of their revenue from service and data processing fees, but the two companies characterize these fees differently and have their own fee structures.

Service fees are charged to the issuer and based on card volume. Data processing fees are also generally charged to the issuer, who in turn retrieves these fees by charging merchants for each individual transaction. Data processing fees are typically very small, fixed fees, charged on a per-transaction basis, that cover the costs of providing transactional information communicated on the network.

In general, Visa is known for offering three card levels: traditional, signature, and infinite. These categories come with standardized provisions for issuers. While Visa is larger in terms of transactions, purchase volume, and cards in circulation, Visa and Mastercard have nearly identical global merchant acceptance footprints.

Mastercard has one reportable business segment, known as Payment Solutions, which is broken out by geographies across the United States and other countries. Like Visa, Mastercard earns the majority of its revenue from service and data processing fees.

You can use it anywhere that accepts Visa. When you buy something, Visa makes sure that the merchant gets its money and the transaction is reported to your issuer so that it shows up on your statement. Citi is the issuer of the latter card, and Mastercard is the payment network.

But that's not because it's a Mastercard rather than a Visa. It's because it's issued by Citi rather than Chase. There are hundreds of credit card issuers in the U. Unlike Visa and Mastercard, American Express and Discover are both card issuers and payment networks. Although there isn't a lot of difference between Visa and Mastercard, they aren't completely identical. Each payment network makes a suite of benefits available to cardholders.

But a couple of caveats apply:. It's often up to the issuer whether a particular card will carry a network benefit. In other words, Visa might offer a rental car coverage benefit, but that doesn't mean every Visa card will have it. Issuers may offer benefits that the network does not. For example, Mastercard doesn't provide rental car coverage itself, but some Mastercard cards have such coverage because it's provided by the issuer.

Visa offers three levels of benefits: Traditional, Signature and Infinite:. Traditional benefits include auto rental collision damage coverage; zero fraud liability; emergency card replacement; emergency roadside assistance; Shipt delivery services ; and Sofar Sounds exclusive presale tickets.

Signature benefits include all the Traditional benefits, as well as extended warranty protection, worldwide travel and emergency assistance services and a Skillshare membership. Infinite status provides all Signature benefits plus return protection; purchase protection; travel accident insurance; trip cancellation and interruption insurance; and lost luggage reimbursement.

Mastercard's three levels of benefits are Standard, World and World Elite:. Standard benefits include emergency card replacement; identify theft protection and zero fraud liability. Prior to July , you also got extended warranty protection and price protection, but those two perks have been eliminated. World Elite benefits include the World benefits, plus golf benefits and additional discounts and promotions.

Rental car insurance. Purchase protection. Price protection. Extended warranties. Return protection. A common question about credit cards is: "Which is better, Visa or Mastercard? What matters most are the card features determined by the issuer — fees , interest rates , rewards, sign-up bonuses , perks and more.

For some people, choosing Visa or Mastercard may provide a minor feature or two that acts as an added convenience. But you should check your Visa card, too, as some card providers have similar price protection policies. This might be based on the rates on offer, or perhaps the benefits. Both Visa and MasterCard can be used almost anywhere globally that accepts card payments, either in-store or online.

Either would be a fine choice. American Express is also a payment network. But it charges the retailer higher transaction fees to process your payment.

If you want to use your card abroad, most countries accept Visa and MasterCard equally. Yes, although both Visa and MasterCard offer protection when you shop online through their own online protection schemes. This is to protect you against fraud. MasterCard uses a protection scheme called Secured Code. Yes, both Visa and MasterCard offer deals that are only available to people who use their debit, credit or prepaid cards.

Both Visa and MasterCard have a three-tier benefits system ranging from basic to premium. However, not all cards using Visa or MasterCard will come with the full suite of benefits listed below. This is because each card issuer determines the benefits available to cardholders, rather than the network deciding on the package. For this reason, it is more important to look for a card issuer that provides the best value for you, rather than comparing payment networks.

Both basic benefits packages generally include similar perks like:. With Visa, you get unauthorised purchase coverage. With MasterCard, you get fraud liability protection. MasterCard also gives you discounts on sporting and travel tickets. The Visa card mid-range package is called Signature. With this, you get the basic benefits plus:. The MasterCard mid-range package is called World. You get the basic perks plus:. Perks at certain hotels such as room upgrades and late checkout.

The Visa Infinite package — and the others in the Visa Premium collection — gives you all the basic and Signature perks. But it offers additional premium benefits designed especially with super-wealthy clients in mind.

The World Elite MasterCard package gives you all the basic and World benefits, plus extras including:. Visa and MasterCard offer a variety of different prepaid, credit and debit cards. The terms and benefits vary depending on the credit card provider or issuer. Traditionally, the card providers are banks or building societies.