Visa vs. MasterCard: What Are the Differences?

Visa and Mastercard are two of the most recognizable brands in the world and dominant players in the payments industry globally. From a consumer standpoint you end up encountering these brands generally you’re shopping for debit or credit cards. Generally, the differences between the two payment brands aren’t too significant, as both card issuers offer many of the same credit card-specific features. But that doesn’t mean one card network’s perks won’t be more beneficial to you than the other. This article will compare the two networks so you can make a more informed decision.

How Card Networks Work

Perhaps the key feature is that both Visa and MasterCard are card networks. It’s essential to understand what this means. Each company manages a specific financial payment network. However, neither company issues cards directly to consumers.

In fact, you’ll find that all of the best national banks in the United States, such as Wells Fargo, Chase Bank, and Bank of America have credit cards that are Visa or MasterCard. As of this writing, all of Chase Bank’s credit cards are Visa while Bank of America has credit cards from both Visa and MasterCard.

This is different from how American Express or Discover structured their business model. Both financial institutions operate payment networks and also issuing cards directly to customers.

A card from one network can’t work on the other. That may sound like a huge deal. But if you’re looking to get a credit card or debit card, this might not matter as much as you think.

What You Need to Know About Visa

In 2020, Visa handled a payments volume of $8.8 trillion. Just like MasterCard, Visa makes its revenue from processing fees. The company charges the issuing bank or credit union a fixed data processing fee according to its internal fee structure. In return, the issuer recoups those fees by charging merchants on their transactions. Visa offers three card levels: Traditional, Signature and Infinite.

What You Need to Know About MasterCard

In terms of volume of business, MasterCard isn’t far behind Visa. In 2020, the organization handled $6.3 trillion in payment volume. Similar to Visa, the company uses a fee-based business model to generate revenue. Its structure is different from that of Visa, however. Its card levels are: Standard, World and World Elite.

Both Now Have a Global Presence

Four payment networks dominate the electronic payment industry. Along with Visa and MasterCard, there is also Discover and American Express. However, the former two companies have the largest market shares. Naturally, when someone’s debating Visa vs. MasterCard, size tends to matter.

One might easily assume that the company with the highest numbers is the most logical choice. But it’s not always the case. For example, in 2020, Visa had net revenue of $21.8 billion, compared to MasterCard’s $15.3 billion. Visa also wins in the volume of transactions that go through the network every year. Visa even has more cards in circulation.

Yet if you’re wondering if it has significantly more merchant acceptance, it doesn’t. In this category, both payment networks are nearly identical on a global scale. Visa works with over 28 million merchants, while MasterCard has a network of upwards of 30 million strong.

Compared to other alternatives, it’s next to impossible to run into a situation where a Visa or MasterCard credit card isn’t accepted. That can make the picking between them even harder.

Both Offer Very Similar Benefits

So, if paying at merchants is a non-issue, what about perks? Does one network have the edge over the other in that category? Just slightly.

Visa and MasterCard are known for working with banks that issue rewards with credit cards such as, but not limited to:

  • Free food and beverages.
  • Discounts at restaurant chains.
  • Cashback programs.
  • Travel rewards usable for hotel stays and airfare.
  • Store-specific reward programs.

Visa also has the SavingsEdge program, which directly rivals MasterCard’s Easy Savings program. In both cases cardholders can get automatic refunds and discounts from various qualifying merchants if they enroll in the programs.

In terms of other benefits, these can be network-specific. For example, while Visa offers some travel benefits for Sonoma County winery events, MasterCard has something called Priceless Golf, which offers special golf discounts and experiences for cardholders.

Visa Signature comes with discounts and other perks at over 900 properties in their Luxury Hotel Collection. MasterCard does the same with over 3,000 luxury hotels and resorts around the world.

Why It’s Hard to Put Your Finger on a Clear Winner

While the payment networks go into partnerships with banks and other card issuers willing to offer many perks, something else should drive your decision. Most people pick their card network based on fees. But fees aren’t set by Visa and MasterCard. Remember that unlike Discover and American Express, Visa and MasterCard don’t issue credit or debit cards directly to cardholders. They’re simply the networks tasked to verify transactions and handle payments.

It’s up to the issuer to set fees for cardholders, and those can vary greatly from one organization to another. So, if you’re looking to save money, you might need to start comparing the banks or card issuers instead of the networks they work with.

With that in mind, some of the benefits you can get are network-specific. Therefore, depending on where you like to travel or your favorite activities, you might find that MasterCard offers discounts to more of your favorite destinations and events than Visa doesn’t or vice versa.

The same thing applies to merchant cash backs, concierge services, etc. Again, this may also depend on what type of card you’re willing to get and if the issuer provides worthwhile deals.

Conclusion: Visa Gets a Slight Edge

When you look at the two payment networks, you can become so overwhelmed with a list of similarities that it can seem like the differences between them are not worth dissecting. But, there’s one particular instance when Visa might be the better choice.

At the time of writing this article, Visa offers more in terms of purchasing protection and insurance. Depending on the card type, you could benefit from reimbursements for lost luggage, trip delays, airline incidental fees, hotel theft protection, and much more.

MasterCard, for now, only offers ID theft protection, cell phone protection, and zero liability protection. If you’re looking for the most complete security package, then Visa’s three-tier card lineup looks more attractive.

However, these extra features can also mean that the card is more costly and often not worth the risk. Besides, card issuers have a say in what they’re willing to offer from the network, and they’re not mandated to give you everything that Visa offers.

If you’re not looking for anything special or insurance-oriented, then cards that use either network will do. And here’s something else that might help: many banks partner with both Visa and MasterCard. You might consider switching if one service isn’t suitable for your specific needs down the line.