MasterCard and Visa are two of the most popular credit card payment companies in the world, so it’s no surprise that people often get them confused with each other. If you’re thinking about applying for one or both of these credit cards, however, it’s important to know their strengths and weaknesses so you can make an informed decision as to which one you choose.
Each credit card or debit card option has its own unique benefits. While some cards offer cash back or reward points, others let you make payments via phone, online or through mobile apps. It’s important to research which options will work best for your needs before choosing a credit or debit card. In fact, there are more than 500 different options currently available for consumers in North America alone.
Visa is a third-party payment processing company that provides electronic funds transfer services. It operates as a not-for-profit enterprise, meaning that while it can set its own operating rules, it has to charge its users reasonable fees for those services. For example, you can use your Visa card to make purchases at most stores, but if you want to withdraw cash from an ATM or pay for something in another currency (like overseas travel), you'll be charged additional fees. Reasonable is obviously open to interpretation--but does that mean 1 percent of your withdrawal should go to Visa? What about foreign transaction fees on retail purchases? What about ATM withdrawal fees? It's up to you. As consumers, we hold all of these companies accountable through word of mouth and our wallets.
MasterCard is a service that lets you pay for goods and services through credit card payment networks. It allows businesses to issue MasterCards, which can be used at any other business that accepts this credit card brand. MasterCard doesn’t issue cards directly to consumers. Instead, it relies on banks or financial institutions (called issuers) to distribute its cards. There are currently over 24 billion active accounts worldwide . The system works without exchanging cash by using a series of systems called intermediaries - such as banks, processors and merchants' acquirers – that determine whether transactions are approved or denied based on a customer's available balance in their bank account or credit line provided by an issuer.
To be clear: Neither Visa nor MasterCard are banks (that would be an issuer), so they don’t actually issue credit or loans to consumers. They simply help make payments more secure.
Other than both being a credit card, what are some of their differences? Well for starters, many people get them confused when they look at their statements because they are both issued by banks. One of their biggest differences is where you can use them. For example, if you have a Bank of America Visa credit card, it will not work at CVS stores as it is using another company’s terminal to process payments (in addition to any associated rewards or points that come with a different credit card). This means that each credit card has its own benefits specific to each vendor such as airline miles or cash back on purchases depending on how often you spend money there.
The other main differences between these two payment networks are security, size, ubiquity and ease of use. The most significant difference is security. While both networks employ sophisticated encryption protocols to keep your data safe as it moves from your card to a merchant’s POS (point-of-sale) system, Visa has a significantly larger scope than MasterCard in terms of global reach. This means that you can find more vendors that accept Visa than those that accept MasterCard worldwide. Additionally, there are more ATMs supporting Visa around the world compared to those supporting MasterCard.
On the other hand, MasterCard has an edge when it comes to average processing time. Although both Visa and MasterCard promise a 24-hour turnaround time, MasterCard typically approves transactions in around two hours (compared to three or four with Visa). That may not seem like much of a difference, but when you consider that both platforms process millions of purchases per day—that could mean a significant savings in terms of time for retailers.
When choosing a credit card, it's important to think about what you'll be using it for. Do you have a specific store or brand that you prefer to use? If so, consider getting that brand's card. Or maybe there are certain categories of spending that make more sense with one network over another (Visa has better category bonuses than MasterCard, for example).
Remember: A credit card can be a good financial tool to help you track spending habits, build your credit history (if used responsibly), earn points for free hotel stays, or earn cash back on gas. Today's consumers have so many options when it comes to choosing a credit card that knowing which cards offer rewards and low interest rates can be overwhelming. The first step in deciding whether you should choose Visa or MasterCard is understanding how each company works. Once you've learned about how each company functions, comparing cards will be easier because they'll all look very similar!